KUALA LUMPUR (Nov 8): Harlatega Holdings Bhd earnings fell 2% to RM46.13 million in the second quarter ended Sept 30, 2011 from RM47.01 million a year ago as it was impacted by high raw material prices.
It said on Tuesday that with the sharp increase in nitrile material price and recent high volatility of US dollar, challenging time is ahead.
“In view of the current economic condition and competition, the contraction of profit margin in current year is within our expectation,” it said.
Hartalega said revenue rose 24.5% to RM229.54 million from RM184.31 million. At the profit before tax level, it dipped 2.4% to RM59.55 million from RM61.02 million. Earnings per share were 12.68 sen compared with 12.96 sen. It declared an interim dividend of 6.0 sen per share.
The significant increase in revenue is in line with the group’s continuous expansion in production capacity and increase in demand, it said.
“However, the increase in raw material prices of both natural and nitrile latex prices has resulted in the operating profit before other operating expense/income margin reduced to 28.5% from 32.3% for the current quarter compared with the corresponding quarter.
“The profit before tax margin reduced to 25.9% from 33.1% due to the above mentioned reasons and the recognition of net unrealised loss in foreign exchange and changes in fair value in forward foreign exchange contracts of RM8.65 million in the current quarter compared with a net unrealised gain of RM1.58 million in the corresponding quarter,” it said.
Hartalega said the inventory level has increased from RM64.7 million as at March 31, 2011 to RM114.5 million as at Sept 30, 2011 due to increase in raw material prices and also as a result of the group’s stocking up of raw materials.
“The group targets to keep higher inventories to reduce pressure on meeting growing sales demand,” it said.
For the first half, its earnings increased 13.9% to RM100.90 million from RM88.56 million a year ago. Its profit before tax rose 13.5% to RM130.22 million from RM114.78 million. Its revenue was 26.7% higher at RM448.91 million from RM354.27 million.
On the outlook, Hartalega said the switching from natural rubber to nitrile glove has gather momentum in Europe and demand is growing rapidly.
“We expect the nitrile glove demand will continue to grow by 30% for calendar year 2011 and our group is well positioned to take advantage of such demand growth. In addition, we are also targeting the emerging market and have set up a distribution company in China.
“Currently more producers are switching their production facilities to produce nitrile glove and we may see some overcrowding of nitrile gloves producers. With the sharp increase in nitrile material price and recent high volatility of US dollar, challenging time is ahead. In view of
the current economic condition and competition, the contraction of profit margin in current year is within our expectation,” it said.
It said on Tuesday that with the sharp increase in nitrile material price and recent high volatility of US dollar, challenging time is ahead.
“In view of the current economic condition and competition, the contraction of profit margin in current year is within our expectation,” it said.
Hartalega said revenue rose 24.5% to RM229.54 million from RM184.31 million. At the profit before tax level, it dipped 2.4% to RM59.55 million from RM61.02 million. Earnings per share were 12.68 sen compared with 12.96 sen. It declared an interim dividend of 6.0 sen per share.
The significant increase in revenue is in line with the group’s continuous expansion in production capacity and increase in demand, it said.
“However, the increase in raw material prices of both natural and nitrile latex prices has resulted in the operating profit before other operating expense/income margin reduced to 28.5% from 32.3% for the current quarter compared with the corresponding quarter.
“The profit before tax margin reduced to 25.9% from 33.1% due to the above mentioned reasons and the recognition of net unrealised loss in foreign exchange and changes in fair value in forward foreign exchange contracts of RM8.65 million in the current quarter compared with a net unrealised gain of RM1.58 million in the corresponding quarter,” it said.
Hartalega said the inventory level has increased from RM64.7 million as at March 31, 2011 to RM114.5 million as at Sept 30, 2011 due to increase in raw material prices and also as a result of the group’s stocking up of raw materials.
“The group targets to keep higher inventories to reduce pressure on meeting growing sales demand,” it said.
For the first half, its earnings increased 13.9% to RM100.90 million from RM88.56 million a year ago. Its profit before tax rose 13.5% to RM130.22 million from RM114.78 million. Its revenue was 26.7% higher at RM448.91 million from RM354.27 million.
On the outlook, Hartalega said the switching from natural rubber to nitrile glove has gather momentum in Europe and demand is growing rapidly.
“We expect the nitrile glove demand will continue to grow by 30% for calendar year 2011 and our group is well positioned to take advantage of such demand growth. In addition, we are also targeting the emerging market and have set up a distribution company in China.
“Currently more producers are switching their production facilities to produce nitrile glove and we may see some overcrowding of nitrile gloves producers. With the sharp increase in nitrile material price and recent high volatility of US dollar, challenging time is ahead. In view of
the current economic condition and competition, the contraction of profit margin in current year is within our expectation,” it said.
