UG Healthcare Corporation has reported earnings of $34.3 million in the 1QFY2021 ended March, 56.7 times higher than earnings of $606,000 in the year before.
The higher earnings marks the fourth consecutive quarter of earnings growth from the 4QFY2020 ended June, says the group.
Revenue surged 2.4 times to $93.5 million from $38.6 million, surpassing the $91.8 million recorded for the 9MFY2020, mainly due to the higher volume of gloves produced and sold.
Relatively stable average selling prices (ASPs) of both nitrile and natural latex gloves in the 3QFY2021 across UG Healthcare’s key markets also contributed to the surge in revenue.
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Gross margin surged over 7.7 times to $58.6 million from $7.5 million the year before as the group recorded higher margins for both its upstream manufacturing and downstream distribution businesses, driven by the group’s original brand manufacturing (OBM) business model.
The group says its production capacity of 500 million pieces of gloves per year commenced in April, bringing the group’s total annual production capacity to 3.4 billion pieces of gloves.
Its production capacity of 1.2 billion pieces of gloves per year will begin from 1QFY2022 ended September.
The group says it will announce a further expansion in its capacity when plans are finalised.
It adds that it will continue to invest and grow its proprietary “Unigloves” brand and strengthen its distribution capabilities with local warehousing and logistics infrastructure.
Cash and bank balances stood at $60.1 million as at March 31.
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“The group had registered four sequential quarters of strong earnings from 4QFY2020 to 3QFY2021. We are, however, mindful of the impending challenges ahead such as rising costs and the surge in production capacities, which could lead to the average selling prices adjusting correspondingly to the increase in the global supply of gloves as competition warms up at the upstream manufacturing level,” says Lee Jun Yih, executive director and finance director of UG Healthcare.
“At UG, we will continue to focus on growing together with our customers at the downstream distribution level, and continue to invest in expanding our distribution network beyond our core markets,” he adds. “Capacity expansion would allow the group to benefit from economies of scale in our OBM model and bolster our margins as the average selling prices are likely to converge with the increase in the global supply of gloves over time.”
Shares in UG Healthcare closed 1.5 cents lower or 2.3% down at 65 cents on May 10.
