Hartalega : 4QFY24 Results Release

4th Quarter FY 2024 Financial Results

Hartalega Holdings Berhad Analyst Briefing

21 May 2024

Q4 FY2024 Financial Results Overview

	Q4 FY24	Q3 FY24	QoQ	Q4 FY23	YoY
	Change	Change
Sales Volume	5.6	4.5	24%	5.7	(2%)
('bil pieces)
Utilisation Rate	73%*	43%		54%
Revenue	530	416	27%	516	3%
(RM'mil)
Operating	(12)	(8)	(50%)	15	(180%)
Profit (RM'mil)
OP Margin	(2.3%)	(1.9%)		2.9%
PBT (RM'mil)	19	29	(34%)	(331)	106%
PBT Margin	3.6%	7.0%		(64.2%)
PAT (RM'mil)	20	23	(13%)	(310)	106%
PAT Margin	3.8%	5.5%		(60.1%)

• Post-decommissioningutilisation rate

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Q4 FY2024 Key Financial Highlights

12

3

4

Sales revenue improvement

• Sales volume ↑ 24%
  QoQ basis
• Marginal ASP increase c.2% (RM) in Q4'24

Operating margin

compression

• Higher operating costs with increase in raw material price and production ramping up costs
• Timing difference in ASP adjustment

Maintaining profitability

• Positive EBITDA of RM52 million - 10% EBITDA margin
• Profitable bottomline recorded for Q4'24

Prudent & healthy

balance sheet

• Maintaining strong net cash position of RM1.4 billion as at
  Q4'24

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distributed or reproduced in whole or in part, nor passed to any third party without the prior written consent of Hartalega.

FY2024 Financial Results Overview

Performance for the financial year:

Operating performance continued to slow YoY with decline in both sales volume (↓ 16%) and glove ASPs (↓ c.9%) amid intense global competition

Positive bottomline with EBITDA of RM178 million and PBT of RM39 million despite challenging operating environment during the year

Fundamental remained healthy with net cash

position of RM1.4 billion as at end-FY2024

Financial Performance	FY 2024	FY 2023
(RM'mil)
Sales volume ('bil pcs)	18.9	22.5
Revenue	1,838	2,410
Operating profit	(23)	157
EBITDA	178	303*
Profit before tax (PBT)	39	133*
EBITDA Margin	9.7%	12.6%*
PBT Margin	2.1%	5.5%*

* excluding one-off impairment loss for decommissioning exercise

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distributed or reproduced in whole or in part, nor passed to any third party without the prior written consent of Hartalega.

Post-pandemic global demand

Global Demand for Gloves (Billion pcs)

400	367	384	331
			65 bil
66 bil
300

200	251	275	284	269

100

0

2017

2018

2019

2020

2021

2022

2023

Source: International Trade Center (ITC), company estimates

Global demand for gloves fell post-pandemic amid supply chain stock adjustment and excess pandemic stockpiles

Demand continued to decrease throughout 2023

(YoY demand ↓ c.19%)

Noticeably, demand trend seen stabilising with initial recovery towards end-CY2023

Market demand is expected to continue normalise and recover moving into 2H'CY2024 / 1H'CY2025

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distributed or reproduced in whole or in part, nor passed to any third party without the prior written consent of Hartalega.

Sector outlook: Signs of improvement

Global overcapacity	Capacity rationalisation by domestic manufacturers reduced global capacity
Market oversupply	Most newer players have exited the market, alleviating oversupply pressure
Demand recovery	Gradual demand recovery expected to continue with depletion of pandemic stockpiles
Stabilising ASPs	Cost passthrough possible, customers are more receptive towards ASP adjustments
Pandemic peak	Capacity	2H'24F/
correction	rationalisation	1H'25F
		Market
		Equilibrium
	Supply chain stock	Demand
	adjustment	recovery

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distributed or reproduced in whole or in part, nor passed to any third party without the prior written consent of Hartalega.

Adapting to the new landscape

5-Year Strategic Direction

Strategies in place to ensure long term business sustainability & resilience

BJ decommissioning exercise (Update)

Streamlined operations & leveraged on newer technology to enhance overall business competitiveness

• • Initial capacity - 44 billion
  • Post-decommissioning- 32 billion*
• Installed capacity from existing NGC1.0 facility

Factory buildings, plant and machineries have been

fully impaired

Completed product transfer to NGC

Deployed approximately 1,600 employees to NGC

All production lines have been successfully decommissioned

since early 2024

No immediate decision on the land and buildings disposal

- stable financial position -

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distributed or reproduced in whole or in part, nor passed to any third party without the prior written consent of Hartalega.

NGC production ramping up

Plant-wide ramping up of production in anticipation of improving demand outlook

Production plants in NGC were optimized to run at c.40%-50% since post-pandemic amid weak market demand

Plant-wideproduction ramping up efforts to increase production capacity in anticipation of improving demand outlook

Production capacity has been gradually increased up to 90% level as of Mar'24: -

• Procurement of new parts and equipment
• Increased manpower
• Consolidated product lines from BJ
• Conducted testing and fine-tuning of ramped-up operations

Ongoing production ramping up will be attuned to the pace of market demand recovery

Production capacity

ramp-up in NGC

	90%
40-50%
Prior to Oct'23	Mar'24

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Growth & Expansion	NGC1.5
Preparing for future recovery