Hartalega: Expansion plan on track

By Murielle Gonzalez 4-Apr-2019

The nitrile glove manufacturer is optimistic about the long-term prospects of the business as the FDA approval of new antimicrobial glove is on the horizon

Photo as seen on Twitter <a href='http://twitter.com/dorinlim/status/638356726647926786'>@dorinlim</a>

Photo as seen on Twitter @dorinlim

Hartalega Malaysia, deemed the world’s largest nitrile glove manufacturer, reported revenue of 723.39 million ringgit (US$177 million) in the quarter ending 31 December 2018, up 19.9% year-on-year.

Commenting on the financial report, Managing Director Kuan Mun Leong (pictured above), said the business environment continues to be challenging due to competition and increasing manufacturing costs, but the long-term outlook is positive. The executive is bullish on the expansion plan currently underway to boost production capacity by 15% in three years’ time. Hartalega’s current output volume marks 30 billion pieces annually.

“We remain optimistic on the long-term prospects for the group. The first four plants of our Next Generation Integrated Glove Manufacturing Complex (NGC) are fully operational and we have commissioned six out of 12 lines for Plant 5, with the remaining lines set to come on stream progressively," he said in a statement.

Plants 5 and 6 will each have an annual installed capacity of 4.5 billion pieces. The Hartalega MD revealed that construction of Plant 6 is on track and construction of Plant 7, designed to focus on speciality products, is scheduled to commence in May 2019. The site has been designed with a capacity of 2.6 billion pieces annually.

FDA pending approval

Hartalega has not replied to press enquiries, but CT understands the management anticipates its new antimicrobial medical examination glove (AMG), launched in June last year, will account for 10% of its export volume in the first year.

According to press reports, a German pharmaceutical company ordered the first shipment in Q4 2018.

Affin Hwang Capital, the specialist Malaysian investment banking group, has revealed the new glove’s contribution to Hartalega’s sales volume is under 1%, based on estimates.

Photo for illustration purpose only

Photo for illustration purpose only

The financial analyst company argued that the acceptance rate of the product is still low as it has yet to receive the approval of the US Food and Drug Administration (FDA). Hartalega expects to secure the agency's approval for the distribution of AMG in the US market within the first half of 2019.

“Our US customers are waiting for the FDA approval," Malaysia news website, The Star, quoted the Hartalega executive. For Kuan Mun Leong, once launched in the US, shipment of AMGs could grow to account for more than 50% of Hartalega’s export volume of nitrile gloves by its fiscal year ending 31 March 2020.

It has been reported that 30% of the Hartalega’s exports go to US consumers and that 60% is destined to non-FDA markets including Japan, Korea and other European countries.

With biotech built into the glove, Hartalega's AMG does not need applications of further solutions or chemicals. Bacteria coming into contact will be exposed to the antimicrobial activity which, in independent testing, achieved up to a 5-log (99.999%) kill within just five minutes of contact.

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The new AMG glove was developed in collaboration with antimicrobial research and development company Chemical Intelligence UK.