UG Healthcare's H1FY22 net profit slides 61% on lower selling price, production volumes
Glove maker UG Healthcare Corp's net profit for H1 FY22 tumbled about 61 per cent year-on-year to S$21.2 million as a lower average selling price (ASP) and softer production volumes affected its performance.
Revenue was down around 26 per cent at S$117.3 million due to the lower ASP of gloves, delays in shipments to key markets, customers holding less inventory amid declining the ASP and lower production volumes. The lower production volume came about as the pandemic resulted in the temporary closure of manufacturing facilities and a mandated 60 per cent workforce capacity at its manufacturing operations in Malaysia.
Earnings per share stood at 3.45 Singapore cents, shrinking from 9.05 cents a year ago.
Gross profit decreased by 55.1 per cent to S$44.6 million in 1H FY22 on the back of the lower ASP for products and higher fixed overheads linked to increased production capacity. As a result, gross profit margin fell from 62.2 per cent in 1H FY21 to 38 per cent in 1H FY22.
Share of losses from associates came to S$0.5 million, versus a profit of S$1.8 million previously, owing to losses reported by its German and the USA associates.
Production capacity at its manufacturing operations is currently 3.4 billion pairs of gloves per year. The temporary halt of construction activities in Malaysia between June and September last year led to a delay in additional production capacity coming onstream. A new manufacturing facility will start production in May 2022 and will lift total production capacity to 4.6 billion pairs of gloves per year.
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Lee Jun Yih, executive director of UG Healthcare, said: "Despite intense competition and lower ASP, the group remains confident to achieve better financial performance compared to pre-Covid times as heightened hygiene awareness is likely to continue to drive demand for disposable gloves."
He added that UG Healthcare will continue to seek diversification in non-glove business opportunities in the healthcare related sector, leveraging on its downstream distribution infrastructure and capabilities.
In October, it launched a new range of proprietary branded reusable gloves for users in the heavy industry, such as chemicals, railway and energy.
No dividend was declared or recommended for 1H FY22 as the group said it plans to conserve cash for expansion and growth. In the corresponding period a year ago, it declared a special dividend of S$0.00105 per share.
The counter closed at 28.5 Singapore cents, down half a cent or 1.72 per cent.
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