KUALA LUMPUR: Glove prices are slipping, blurring the prospect of Malaysian players such as Hartalega Holdings Bhd.
Amid the challenging outlook, chief executive officer Kuan Mun Leong said Hartalega had been making price adjustments to compete in the market and maintain market share to protect shareholders’ interests.
“In terms of ASP (average selling price), we are almost at the bottom because prices are really low,” Kuan said during the media briefing after Hartalega’s annual general meeting here today.
To compare, Hartalega chief business officer Kuan Mun Keng said China was selling its stock below US$20 while Malaysia’s prices were still above the figure.
Mun Keng noted that the company had been making price adjustments for ASPs to ensure it did not lose market share.
“Price adjustment has been ongoing since mid-2021, when we moved to the endemic phase. We are also reacting to the market and what we do not want to see happening is for Malaysian companies, especially Hartalega to lose market share so we will definitely remain competitive,” he said.
On its inventory, Mun Keng noted that the company had always maintained a lean inventory within the factory as it did not hold a lot.
“Inventory adjustments had started last year and should have been done by end-2021 but that has flowed to this year and it is still ongoing.
“During the peak of the pandemic, there was a lot of panic buying and old purchases so I think the market needs to digest all these over purchases that were made,” he said, adding that inventory adjustment might be done either by the end of the year or in the first quarter (Q1) of next year.
Meanwhile, Hartalega executive chairman Kuan Kam Hon said the company had delivered a profit of RM90 million in its Q1 ended June 30, 2022 (FY23) despite the declining ASP.
“Moving forward, it will be challenging given that there is no clarity or visibility. We will do our best to ensure we remain strong and competitive.”
Kam Hon added that Hartalege was still a dominant player in the market given its proven track record in the last three decades.
Therefore, he said the company should not be too concerned about other emerging players such as China which holds 20 per cent of the market share, compared to Malaysia’s 51 per cent.
“Relative to the younger companies, I believe we must have done something right for us to be profitable and growing in the last 30 years. So I do not think we should be overly concerned about producers in China that take about 20 per cent of the whole market.
“If our government policies are right and still wants to promote manufacturing in the industry, it should also create an environment that is conducive for glove sectors to compete,” he added.
Source: New Straits Times