UG Healthcare has announced earnings of $10.6 million for the 1QFY2022 ended September.
The lower figure was attributable to the temporary closure in Malaysia from July 9 to 22, which affected the group’s upstream manufacturing operations based in Seremban.
The mandated 60% workforce capacity in the country, when operations resumed on July 23, also resulted in lower production volume of disposable examination gloves.
See: Analysts mixed on UG Healthcare following halt in glove production due to EMCO
To this end, the group’s downstream distribution operations in six key markets were also affected by the downward adjustments in average selling prices (ASPs) of disposable gloves and customers’ preference to hold lower inventories due to the lower urgency for stockpiling.
As such, revenue fell 15.5% y-o-y to $60.1 million, while gross profit fell 44.2% y-o-y to $24.1 million.
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Gross profit margin (GPM) fell 20.5 percentage points to 40.1% during the 1HFY2022 due to the lower production volume and the relatively low ASPs of disposable gloves.
Profit before tax fell 61.5% y-o-y to $13.8 million mainly due to lower gross profit and higher operating expenses.
As at end-September, the group’s cash position stood at $80.5 million.
“With countries reopening borders and life returning to new normalcy, the significant price hikes in personal protection equipment including disposable gloves a year ago, have inevitably undergone downward adjustments over the last two financial quarters. This led to disruptions and uncertainties across the supply chain as unforeseen risks and opportunities may arise from the evolving business environment,” says Lee Jun Yih, executive director and finance director of UG Healthcare.
That said, the group continues to experience “strong demand” for its ‘Unigloves’ brand at its downstream distribution operations.
“However, we had to pace our sales to ensure our customers have adequate inventory due to the lower production volume of disposable examination gloves produced at our upstream manufacturing in 1QFY2022. Sequentially, our gross margin decreased from 44.8% in 4QFY2021 to 40.1% in 1QFY2022,” continues Lee.
“The group believes the higher priority is to safeguard the interests of our stakeholders amid the uncertainties. Hence, the group is determined to utilise our cash resources on our intended expansion plans and non-glove business opportunities to generate sustainable returns for the long term,” he adds.
“Disposable examination gloves are the foundation of our OBM business and we will continue to excel in what we do best.”
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Shares in UG Healthcare closed 0.5 cent lower or 1.79% down at 27.5 cents on Nov 11.
Photo: UG Healthcare
