Glove maker UG Healthcare is clearly a winner in the Covid-19 pandemic. In its latest FY2021 ended June, the group saw recorded earnings of $118.8 million, a significant increase from just $13.4 million in FY2020.
Similarly, revenue surged to $338.4 million from $144.2 million, due to the increase in the volume of products produced and sold following the commencement of new production lines, which increased capacity by 500 million gloves per annum, as well as increase in glove selling prices resulting from outbreak of Covid-19.
As a result of the above, revenue for latex examination gloves, nitrile gloves and other ancillary products have increased by 97.2%, 193.2% and 57.1% respectively in FY2021 as compared to FY2020.
As cost of sales only saw a 39.9% y-o-y increase to $142.2 million, gross profit came in at $196.2 million, a significant increase from $42.5 million a year ago.
Overall, the gross profit margin has increased to 58.0% in FY2021 from 29.5% in FY2020, due to an increase in gross profit margins for all the group’s products as well as ancillary products, which were sold together with the group’s latex and nitrile products.
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With the continued expansion of its upstream manufacturing capacity and downstream distribution network, sales in key regions have also increased significantly including South America, Europe, Africa and China, as it continues to sell and develop its own brand in these key regions.
As at end-June, cash and cash equivalents stood at $68.4 million.
The board has declared a final dividend of 0.406 cent per share, along with a special dividend of 0.1 cent per share. Together, this is more than double of 0.238 cent per share paid out in dividends last year.
On the outlook, the group's new factory is underway, which will increase production capacity by an additional 1.2 billion gloves per annum, bringing the group's total capacity to 4.6 billion gloves per annum. Construction has temporarily halted in Malaysia due to pandemic-related measures imposed, but the group expects the new factory to commercialise in February or March 2022.
Meanwhile, production was affected in the first two months of FY2022 due to the EMCO in Malaysia. Since end-July, the upstream manufacturing division has been operating with only 60% of the total workforce. Nevertheless, the group will be productivity progressively to its full capacity with almost all of its employees fully vaccinated by end-August and will then be allowed to operate at 100%.
Lee Jun Yih, executive director of UG Healthcare says, "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. 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. This resulted in the ASP of gloves reaching a peak in March 2021 and it has started on a downtrend. The current situation was the reverse a year ago."
"The fluctuations in the ASP of gloves over the last 12 months created uncertainties and challenges across the supply chain. Our integrated OBM business model, however, balances such impact on the upstream manufacturing and downstream distribution businesses. Amid the challenging market dynamics, our customers and employees remain our highest priority to ensure they continue to be part of the group’s sustainable and steadfast growth in the long term," adds Lee.
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Shares in UG Healthcare closed 1.9% higher on Aug 27 at 52 cents.
Photo: UG Healthcare