Rubber glove maker Hartalega Holdings Bhd expects its top line growth to remain flat for its financial year ending March 31, 2015, as its operations are currently running at full production capacity.
Its executive chairman Kuan Kam Hon said however that production was expected to go up by another five billion pieces in the financial year 2016, bringing the total capacity projection to around 18 billion pieces.
“The five billion pieces represent about 40% of our existing production capacity of around 12 billion pieces. So, obviously, our bottom line will grow in absolute terms,” he told reporters after the group AGM yesterday.
Hartalega, the world’s largest synthetic glove manufacturer, registered its highest turnover to date of RM1.1bil for its financial year ended March 31.
For its first quarter ended June 30, it registered a lower net profit of RM57.1mil compared with RM62.9mil a year earlier and increased revenue of RM279.2mil from 278mil.
This increase in production capacity will begin from November, when the first two production lines at its new next generation integrated glove manufacturing complex (NGC) begin operations.
The NGC is expected to provide average year-on-year capacity growth of 15% per annum over the next eight years, with total production capacity increasing to 42 billion pieces per annum once fully completed.
For the financial year 2015, Kuan said Hartalega was expected to take a 2% to 3% hit to its profit margin due mainly to internal costs spent on NGC, including on staff training for the managers and engineers who would be based there.
Hartalega managing director Kuan Mun Leong said that despite the challenging economic climate and impact of lower average selling prices, the group’s results were buoyed by the robust demand for nitrile gloves.
He said this demand had outpaced the demand for natural rubber gloves for the first time last year and was expected to continue growing at around 15% over the next two years.
During the AGM, the group recommended a final single-tier dividend of 4 sen per share, bringing the total dividend paid out for its financial year 2014 to 14.5 sen per share.