UG Healthcare sees 8-fold surge in full-year earnings to S$118.8m amid strong demand for gloves

GLOVEMAKER UG Healthcare reported a nearly eightfold surge in net profit to S$118.8 million for its financial year ended June 30, with the Covid-19 pandemic boosting the use of disposable gloves.

For the first six months of 2021, net profit jumped more than fourfold to S$63.8 million, up from S$12.6 million in the same period last year, according to an interim financial statement released by the Catalist-listed company on Friday after market close.

Revenue for H2 swelled 96.6 per cent to S$179 million, bringing full-year revenue to S$338.4 million. This represents a 135 per cent increase in revenue compared with FY2020.

Asia, followed by Europe and Africa saw the largest year-on-year revenue growth for the Malaysian company.

Earnings per share for FY2021 was 19.42 Singapore cents, compared with 2.28 Singapore cents in the previous financial year.

The company's directors have proposed a final dividend of 0.406 Singapore cents per share and a special dividend of 0.1 Singapore cents per share.

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Together with the special interim dividend declared in March, this brings the total dividend for FY2021 to 0.611 Singapore cents per share.

"While global gloves demand remains strong, as heightened hygiene awareness led to the structural change of increased usage of gloves across all industries - both medical and non-medical, the urgency to stockpile has reduced," said Lee Jun Yih, executive director of UG Healthcare.

"Consumers are taking the option to hold lower inventory in a bid to purchase at lower prices as an increasing supply of gloves comes into the market," he said.

This means the average selling price of gloves is now on a "downtrend" after peaking in March 2021 - a reverse of the situation a year ago, he said.

The group expanded its annual production capacity by 500 million pieces of gloves to 3.4 billion pieces in April this year.

It is planning to add 1.2 billion pieces by March 2022, bringing the total installed capacity to 4.6 billion pieces of gloves per annum, when the construction of its new factory is complete.

The new factory that will boost capacity is currently under construction, which was temporarily halted due to Covid-19 measures.

Meanwhile, a rise in Covid-19 cases and the enhanced movement control order in Seremban, Negeri Sembilan, Malaysia have affected productivity in July and August, it noted.

Its upstream manufacturing division has been operating with only 60 per cent of the workforce in attendance, it said.

Still, the company is planning to ramp up productivity to full capacity with almost all its employees fully vaccinated, which should allow it to operate at 100 per cent under the latest government guidelines.

UG Healthcare shares rose 1 Singapore cent, or 1.94 per cent to close at 52.5 Singapore cents on Friday.