UG Healthcare H1 net profit jumps to S$54.9m; special cash dividend declared

GLOVEMAKER UG Healthcare Corporation reported a more than 60-fold increase in net profit for its fiscal first half ended Dec 31, 2020, arising from the significant increase in demand for gloves amid the ongoing coronavirus pandemic.

In an exchange filing on Thursday, the company reported net profit of S$54.9 million for H1 FY2021, up from S$846,000 in the year-ago period. On a per-share basis, earnings grew to 9.05 Singapore cents for the first half, from 0.14 cents a year ago.

A special cash dividend of 0.105 cents per share was declared, compared to no dividend a year earlier.

Revenue for the six months tripled to S$159.4 million, from S$53.2 million in H1 FY2020. The revenue for H1 FY2021 surpassed the total revenue of S$144.2 million recorded in the previous financial year ended June 30, 2020.

UG said in a statement: "The stellar financial performance was underpinned by the significant increase in demand for gloves at higher selling prices amid the ongoing coronavirus pandemic."

It added: "The group benefited from this trend with its increased production capacity and efficiency, supported by its own local distribution capabilities and networks in its key markets."

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The disposable-gloves manufacturer has its own global downstream distribution business that markets and sells disposable glove products under the "Unigloves" brand.

Executive director and finance director Lee Jun Yih said the group's model, with both upstream manufacturing and downstream distribution, allows it to manage the supply chain efficiently to ensure all customers receive their required inventory of gloves.

"With the shortage in the supply of gloves (arising from challenges such as delays in capacity expansion and shipment of goods) likely to persist, 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," he added.

The company reported higher gross profit margins of 62.2 per cent in the latest period, compared to 18.4 per cent a year earlier, helped by higher selling prices, and improved production efficiency of its enlarged manufacturing capacity at 2.9 billion pieces of gloves per annum.

UG currently expects to increase its capacity for glove production to 4.6 billion pieces per annum. It will also open new facilities later this year, but construction of a new factory has slowed down, due to the movement control order in Malaysia.

Mr Lee said: "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."

UG shares closed at 76.5 Singapore cents on Thursday, down 1.3 per cent or 1 cent before the announcement.