Malaysian glove maker UG Healthcare has reported earnings of $54.9 million for the 1HFY2021 ended December, surpassing earnings of $13.4 million for the FY2020 ended June, and about 64.9 times more than earnings of $846,000 for 1HFY2020.
Earnings per share (EPS) for the half-year period stood at 9.05 cents on a fully diluted basis, compared to EPS of 0.14 cents for the corresponding period a year ago.
Revenue for the 1HFY2021 tripled y-o-y to $159.4 million, and stood higher than FY2020’s revenue of $144.2 million. This is mainly attributable to the higher volume produced and sold on the back of better efficiency and increased production capacity. The higher revenue was also due to the higher average selling prices (ASPs) of both nitrile and natural latex gloves in the key markets.
Revenue in all of UG Healthcare’s markets more than doubled in the 1HFY2021 with the exception of North America, which registered a 20.7% y-o-y increase.
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Gross profit increased over 11 times y-o-y to $99.2 million in 1HFY2021 mainly due to the higher gloves selling price arising from the increased demand amid the Covid-19 pandemic.
The higher gross profit was also due to the increased production efficiency which resulted in an increase in manufacturing capacity.
Accordingly, 1QFY2021 gross profit margin (GPM) increased 43.8 percentage points to 62.2%.
Administrative expenses rose 111% y-o-y to $13.5 million due to the expenses incurred for expansion of the group’s distribution networks in Brazil, UK, China and Nigeria, along with the increase in staff costs.
Other expenses were also up three times to $1.7 million from $353,000 the year before mainly due to the loss from foreign exchange amounting to $1.5 million.
The Brazilian real has been volatile against the US dollar, as well as the volatility of the Chinese yuan and British pound against the US dollar.
A special dividend of 0.105 cents per share has been declared for the 1HFY2021 reflecting the group’s improved performance.
As at Dec 31, 2020, cash and cash equivalents stood at $43.2 million, significantly higher than the $3.2 million recorded a year ago.
The group says it will continue to focus on building its own “Unigloves” brand of disposable gloves by cultivating demand through its local presence in the key markets.
Looking ahead, the group expects to produce a total of 3.4 billion pieces of gloves per annum by March or April 2021.
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The warns that the MCO restrictions in Malaysia till Feb 18 is inevitably slowed down the construction of its new factory for the additional capacity of 1.2 billion pieces of gloves per year.
However, it expects to commission the production lines in the 3Q2021, which will up the group’s total manufacturing capacity to 4.6 billion pieces of gloves per year.
“Our OBM model comprising both upstream manufacturing and downstream distribution with our own ‘Unigloves’ brand, allows the group to manage our supply chain efficiently to ensure all our customers receive their required inventory of gloves,” says Lee Jun Yih, executive director and finance director of UG Healthcare.
“With the shortage in the supply of gloves likely to persist, arising from challenges such as delays in capacity expansion and shipment of goods, we will continue to balance the increasing average selling prices of gloves and the rising costs across the supply chain to make it palatable to our customers,” Lee adds.
“While we continue to experience demand outstripping supply across our markets, we are also mindful of new challenges caused by the pandemic and uneven global economic recovery. We are studying and planning the possibility of further capacity expansion beyond 4.6 billion pieces of gloves per annum, and will continue to invest in building and expanding our distribution network, local warehousing and logistics infrastructure, as well as marketing to further entrench and enhance the brand awareness of our proprietary ‘Unigloves’ brand.”
Shares in UG Healthcare closed 1 cent lower or 1.3% down at 76.5 cents on Feb 4.
