KUALA LUMPUR (Feb 6): Hartalega Holdings Bhd recorded a second straight quarterly profit of RM22.38 million in the third quarter ended Dec 31, 2023 (3QFY2024), versus a net loss of RM31.91 million a year before, as lower raw material prices and cost savings from its operational rationalisation exercise more than offset decreased revenue.

The improved performance for 3QFY2024 was also due to lower utilities expenses, better production efficiency arising from higher capacity utilisation, coupled with higher interest income and a reversal of certain provision no longer required during the quarter.

Earnings per share stood at 0.66 sen in 3QFY2024, versus a loss per share of 0.93 sen in 3QFY2023, the glove maker’s bourse filing showed on Tuesday.

Quarterly revenue was down by 10% year-on-year to RM415.64 million, from RM461.84 million a year before, dragged by lower sales volume as the industry is still facing supply chain inventory adjustment, coupled with a decrease in average selling prices.

Compared to 2QFY2023, its revenue declined by 8.06% quarter-on-quarter (q-o-q) from RM452.09 million, while net profit sagged by 21.17% q-o-q from RM27.7 million.

According to Hartalega, the drop in revenue, against the backdrop of the group’s sales volume, was approximately 3% as it faced logistical challenges arising from the ongoing Red Sea crisis which has disrupted key shipping routes and caused shipment delays.

For the nine-month period in FY2024, it reported a loss of RM2.39 million, versus a net profit of RM84.71 million a year before, while revenue fell by 30.88% to RM1.31 billion, from RM1.89 billion previously.

In a separate statement, Hartalega chief executive officer Kuan Mun Leong said despite continued challenges in the glove sector, he saw positive indicators that the ongoing global oversupply is gradually being addressed through key capacity rationalisation efforts, thus easing some pressure on excess supplies in the market.

"On the demand front, recent demand stabilisation after the notable decline in 2023 and the expected gradual return to pre-pandemic levels in the later part of 2024 or early 2025 also bodes well for prospects in the industry over the long term,” he added.

On glove prospects, Hartalega reckoned that the pressure on average selling prices would remain amid challenging demand-supply fundamentals.

Its operational rationalisation exercise is currently in the final phase and slated to be completed by the first quarter of the calendar year 2024.

Hartalega’s share price closed down three sen or 1.09% to RM2.72, bringing the group a market capitalisation of RM9.32 billion.

Over the past one year, the stock has risen 72%.