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Friday, August 10, 2018

New gloves to account for 10% of Hartalega’s export volume

Friday, 10 Aug 2018

Kuan: There is good response to our new product in Europe

KUALA LUMPUR: Hartalega Holdings Bhd
image: expects its newly-created antimicrobial gloves (AMG) to account for 10% of its export volume in the first year from the launch of the product in May.

Group managing director Kuan Mun Leong revealed that the shipment of the AMG would begin next month, following the securement of an order from a major pharmaceutical company in Germany.

“The initial shipment of AMG may not be huge in terms of volume, but that’s because we need time to build a market presence for the product,” Kuan said.

“We estimate the volume of AMG sales to be around 10% of our overall export volume of nitrile gloves in the first year,” he added.

Hartalega exports about 28 billion pieces of nitrile gloves annually.

The world’s largest producer of nitrile gloves in May this year launched the world’s first non-leaching AMG with built-in antimicrobial technology that is proven to kill micro-organisms and prevent the spread of infections.

The new gloves, which Hartalega called a “game-changing” product, was developed in collaboration with antimicrobial research and development company Chemical Intelligence UK.

To encourage better take-up of the AMG, Kuan said the new product would be priced competitively at 5% premium to the average selling prices of nitrile gloves.

“There is good response to our new product in Europe,” Kuan said.

“The next market (for our AMG) is the United States by next year,” he added.

Kuan said Hartalega is expected to secure the US Federal Drug Administration (FDA) approval for the distribution of AMG in the US market within the first half of next year.

“We are likely to get it in March 2019. But just to be conservative, we put it at the first half of 2019,” he explained.

Kuan said he is optimistic that AMG sales in the United States would pick up immediately once the FDA approval is granted.

“Our US customers are waiting for the FDA approval.

In fact, they are following very closely every development in connection with the AMG,” Kuan said, citing the greater awareness among US health professionals of the danger of healthcare-associated infections.

Once launched in the United States, shipment of AMG could grow to account for more than 50% of Hartalega’s export volume of nitrile gloves by its financial year ending March 31, 2020, Kuan said.

He said he is hopeful that the AMG will eventually replace all the group’s nitrile glove orders in the future.

Hartalega started off its financial year on a strong note, registering a 30% year-on-year growth in net profit to RM124.87mil for the first quarter ended June 30.

The growth was driven by favourable demand and additional production capacity. The lower costs of nitrile, chemicals and upkeep of plant and machinery also contributed to the higher earnings.

Hartalega expected the prospects for the rubber glove manufacturing sector to remain strong, with increasing demand arising from switching trends to nitrile gloves.

Currently, nitrile gloves account for 60% of Malaysian rubber glove export.

In meeting the rising demand, the Hartalega’s next-generation integrated glove manufacturing complex (NGC) began commissioning Plant 5 in August 2018, with construction of Plant 6 to follow, which will each have an annual installed capacity of 4.7 billion pieces.

The new Plant 7 is also in the expansion pipeline, with an annual installed capacity of 2.6 billion pieces, tailoring to small orders and specialty products.

The increasing contribution of NGC to Hartalega’s revenue will help to consolidate margins and contribute further to group earnings.


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