UG Healthcare posts S$34.3m Q3 net profit

IN a business update, glovemaker UG Healthcare posted a net profit of S$34.3 million for the third quarter ended March 31, 2021, almost 57 times its net profit in the previous year.

The group produced and sold a higher volume of gloves and had relatively stable average selling prices of both nitrile and natural latex gloves in key markets during the quarter.

As a result, revenue more than doubled to S$93.5 million from S$38.6 million, even surpassing the S$91.8 million recorded for the nine-month period ended March 31 the year before.

Gross profit jumped to S$58.6 million from S$7.5 million, translating to a 43.2 percentage-point increase in gross margin to 62.7 per cent. The group had higher margins for both its upstream manufacturing and downstream distribution businesses.

UG Healthcare noted that it has recorded four consecutive quarters of earnings growth from Q4 FY20. It said it continued to operate at optimum efficiency in Q3 FY21, with its upstream manufacturing capacity of 2.9 billion pieces of gloves per annum. Around 85 per cent of gloves were sold under its Unigloves brand through its own downstream distribution companies.

"We are, however, mindful of the impending challenges ahead such as rising costs and the surge in production capacities, which could lead to the average selling prices adjusting correspondingly to the increase in the global supply of gloves as competition warms up at the upstream manufacturing level," said Lee Jun Yih, executive director and finance director.

The group has commissioned the production capacity of 500 million pieces of gloves per annum since April 2021, bringing its total annual production capacity to 3.4 billion pieces of gloves.

The Covid-19 situation in Malaysia has caused slight delay to the construction of the new factory for the additional capacity of 1.2 billion pieces of gloves per annum. This means the company will gradually commission the production lines from Q3 of calendar year 2021, bringing its total annual production capacity to 4.6 billion pieces of gloves in the financial year ending June 30, 2022.

The counter closed at S$0.65 on Monday, down 1.5 Singapore cents or 2.26 per cent.