SINGAPORE (May 13): Glove manufacturer UG Healthcare Corporation reported earnings of $0.7 million for the 3Q ended March, down 41.3% from $1.1 million a year ago due to higher operating expenses.
This brings the group’s earnings for 9M19 to $2 million, representing a 34.5% decline from $3 million in 9M18.
The lower quarterly bottomline comes despite a 22.3% rise in 3Q revenue to $23.7 million from $19.4 million a year ago, mainly due to a higher volume of gloves produced and sold from the commencement of new production lines and an expanded distribution network.
In line with the expanded distribution network and increase in marketing campaigns, marketing and distribution expenses rose 25.6% to $0.8 million from $0.6 million previously.
Administrative expenses grew 48.7% to $3.2 million over 3Q19 mainly due to higher expenses incurred for the expansion of distribution networks in Brazil, UK, China and Nigeria, on top of higher staff costs resulting from hiring of key personnel across all departments.
Other expenses rose to $0.2 million from $28,000 a year ago, mainly due to an increase in unrealised foreign exchange losses. In particular, the appreciation of Ringgit, in which the group’s trade payables are denominated.
Finance costs, too, more than doubled to $0.5 million from $0.2 million in 3Q18 due to higher increase in interest from the utilisation of trade facilities, as well as higher interest from term loans for constructing a new production facility.
“We expect the overall utilisation of our production capacity to improve incrementally as we continue to pursue optimal utilisation for our production capacity. To achieve effective branding and marketing campaigns for our proprietary ‘Unigloves’ products, we have also strengthened our marketing and distribution infrastructure to market and sell the anticipated higher volume of gloves,” says Lee Jun Yih, executive director of UG Healthcare.
“These concurrent twin efforts resulted in an increase in our operating expenses in the short-term, but this will enable us to maximise the value in our integrated supply chain, and thereby enhance value for our shareholders in the long term.”
Shares in UG Healthcare closed flat at 18 cents on Monday.
