Hartalega expects to keep its dividend policy

Hartalega Holdings Bhd, the country's largest producer of nitrile gloves, expects to maintain its dividend policy of paying out 45% of net profit amid falling nitrile latex prices and while it builds additional capacity, said its managing director Kuan Kam Hon.
He foresees the current downward trend in nitrile latex prices to continue as prices of natural rubber and synthetic rubber usually move in tandem as they are inter-dependent substitutes.
"Recently, the price of natural rubber pulled back sharply," he told reporters after the company's AGM here today.
In June, nitrile latex prices fell to as low as US$1,300 per tonne, after peaking at US$2,200 last year. It is currently trading at US$1,400 per tonne.
To maintain its leadership in the market, Kuan said Hartalega will build additional capacity so that it continues to be cost competitive and its earnings per share continue to grow.
He said once its sixth plant in Bestari Jaya, Selangor is fully operational by June 2013, the production capacity will jump by 30% to 3.5 billion pieces of gloves a year. The first production line is expected to commence operations in September.
Kuan said the RM1.5 billion Next Generation Integrated Glove Manufacturing Complex (NGC) in Sepang, Selangor, construction of which is expected to begin in December, is also expected to boost its production capacity to 38 billion pieces of gloves per year from the current 10 billion pieces. The facility is expected to be completed by 2021.
"We are well positioned to ride the swelling wave of demand for our top-of-the-line nitrile gloves with the innovative technological advances in NGC. It will see 69% improvement in productivity," he said.