KUALA LUMPUR, Sept 17 — Top Glove Corporation Bhd’s net profit for the fourth quarter and full-year soared to a record high of RM1.29 billion and RM1.87 billion respectively as demand for rubber gloves surges globally on the back of the Covid-19 pandemic.
For full-year financial performance ended Aug 31, 2020 (FY2020), Top Glove’s net profit surged to RM1.87 billion against RM364.68 million in the same period a year earlier, while revenue jumped to RM7.24 billion from RM4.8 billion.
For the fourth quarter, Top Glove’s net profit soared to RM1.29 billion from RM74.17 million year-on-year while revenue increased to RM3.11 billion from RM1.89 billion previously.
In a filing with Bursa Malaysia today, it said demand for the fourth quarter was strong in Asia, Western Europe and Eastern Europe, rising by 110 per cent, 73 per cent and 64 per cent, respectively, compared with the fourth quarter of 2019.
Most robust, it said, was the demand for nitrile gloves which grew by 31 per cent year-on-year, while natural rubber examination gloves also saw a growth of seven per cent versus the corresponding period in the financial year 2019.
“Reflecting market demand, average selling prices (ASPs) were also adjusted upwards,” it said.
Raw material prices for FY2020 remained mixed in comparison with the previous financial year with average natural latex concentrate price rising 2.3 per cent from RM4.33 per kg to RM4.43 per kg while nitrile latex price decreased 13.3 per cent from US$1.13 per kg to US$0.98 per kg.
“The company’s monthly order book has seen a significant rise of about 150 per cent from pre-Covid days while lead time (delivery) has gone up from about 40 days to as much as about 400 days presently,” Top Glove said.
It said the healthy cash flow generated by the excellent performance enabled the group to lower borrowings, which led to a 33 per cent savings in terms of interest cost.
“Over the course of FY2020, the net cash flow generated from operating activities was RM3.17 billion compared with RM0.53 billion in FY2019, an impressive increase of 500 per cent,” it said.
It said the group has earmarked a capital expenditure (Capex) of RM8 billion over the next six years from FY2021 to FY2026, which would provide the company with an additional capacity of 100 billion pieces of gloves.
“The RM8 billion Capex will be invested in new capacity, enhancement of existing manufacturing facilities, a gamma sterilisation plant, land bank for future expansion, Industry 4.0 digitalisation and improvements to our workers’ facilities,” it said.
Top Glove will continue to expand its capacity and fulfil global glove demand, which is expected to grow from a pre-Covid level of about 10 per cent per annum to about 15 per cent per annum, post-Covid.
“This is on the back of increased usage in both the medical and non-medical sectors, as well as heightened hygiene awareness,” it said.
The company’s first factory in Vietnam, Factory F41, is expected to come onstream in October 2020 with an initial production capacity of approximately 2.4 billion pieces of gloves from its 10 production lines.
Top Glove said it is actively engaged with the US Customs Border and Protection and making good progress to expedite the lifting of the Withhold Release Order (WRO) imposed by the latter.
“The outlook for the company and glove industry remains very promising. With Covid-19, Top Glove estimates that glove demand will grow by 20 per cent per annum in 2020, 25 per cent in 2021 and 15 per cent post-Covid,” it said.
It expects sales orders from 195 developed and developing countries across the world to increase, which, coupled with rapid growth in capacity and significant improvements in productivity through technology will augur well for the company going forward.
“The strong global glove demand has bolstered the Malaysian economy during this difficult period, with Top Glove intensifying its hiring and providing business to supporting industries,” it said.
In the past year, the company has employed a total of 4,000 individuals comprising 1,500 local staff and 2,500 local workers.
Executive chairman Tan Sri Lim Wee Chai said the company’s unprecedented performance underlined the effectiveness of its ongoing technology-driven improvement initiatives which focus on quality and cost-efficiency, and which have enabled it to meet the increase in glove demand.
“With glove demand still on the uptrend, we believe our best days are still ahead of us. We will continue to work hard to produce more gloves, so we can keep doing well by doing good,” he added.
— Bernama
