UG Healthcare Corporation has reported earnings of $10.7 million for the 3QFY2022 ended March, 68.9% lower than the net profit of $34.3 million in the same period the year before.
For the nine-month period, the group’s earning’s fell 64.2% y-o-y to $31.9 million.
Earnings per share (EPS) for both the 3QFY2022 and 9MFY2022 stood at 1.71 cents and 5.16 cents respectively.
The lower figures were due to the declining average selling prices (ASPs) of gloves. The fall in ASPs were due to the increased market supply of disposable examination gloves and higher competition among disposable gloves manufacturers.
According to the group, the impact was mitigated by its own-brand manufacturing (OBM) model, as it produced higher volume on its own at 3.4 billion pieces of gloves per year.
Revenue for the 3QFY2022 fell 31.2% y-o-y to $64.3 million, again due to the relatively lower ASPs and buffered by the higher sales volume of disposable gloves.
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Gross profit for the quarter fell 65.1% y-o-y to $20.4 million as ASPs normalised to pre-Covid-19 pandemic levels.
As a result, gross profit margin fell 30.9 percentage points to 31.8%.
Profit before tax also fell 66.3% y-o-y to $15.7 million.
As at end-March, cash and bank balances stood at $92.0 million.
UG Healthcare Corp’s net asset value (NAV) per share stood at 35.76 cents.
“The ramp up of our productivity in the second quarter (October to December 2021) following the temporary closure and 60% manpower capacity in the first quarter (July – September 2021), allowed us to record higher revenue sequentially in 3QFY22,” says Lee Jun Yih, executive director and finance director of UG Healthcare.
“We are, however, mindful that the prevailing manpower shortage in Malaysia could potentially impede our progress to achieve optimal utilisation rate as we increase our total production capacity to 4.6 billion pieces of gloves per annum,” he adds.
He continues: “While the ASP normalises, we are also experiencing better visibility on the demand for our proprietary ‘Unigloves’ brand of disposable gloves with our customers at our downstream distribution. The additional production capacity of 1.2 billion pieces of gloves per annum that is coming onstream progressively from end May this year, is catered for our existing customers as disposable examination gloves remain essential for hand protection.
“We will continue to grow prudently at both our upstream and downstream operations, while managing the rising operating costs. We believe the benefits derived from economies of scale through our OBM model outweigh the adverse impact of ASP adjustment and higher operating cost,” he says.
Shares in UG Healthcare Corp closed 1 cent lower or 4.55% down at 21 cents on May 12.
