PETALING JAYA: Top Glove Corp Bhd expects to return to profitability within the next two quarters, driven by increasing glove selling prices and anticipated reductions in raw material costs.
Executive chairman Tan Sri Dr Lim Wee Chai said the management observes an upward trend in glove average selling prices (ASP) starting from March.
“The players in China, Thailand, they increase prices especially April, May, onwards. They increase more than 10%. So our selling price will increase. Cost-wise, although it has increased, I think they will temporarily increase until May. Then it will start to come down. It’s seasonal because of the rubber supply. So the supply of rubber in the plantations has reduced. So by June onwards they will have more supply,” he said during Top Glove second quarter financial year 2024 results briefing yesterday.
Regarding production capacity, Top Glove managing director Lim Cheong Guan said it is in the process of gradually reopening some factory blocks and production lines to cater for higher orders.
“And with increased utilisation, comes better production and cost efficiencies. For the current month of March, which marks the start of our 3rd financial quarter, we continues to see strong glove demand momentum.
“The task at hand is to leverage the returning glove demand, and ensure the production of quality gloves in a cost efficient manner, which our every effort continues to be directed towards,” he said.
Top Glove’s net loss for the second quarter ended Feb 29, 2024 narrowed to RM51.19 million from RM164.67 million a year earlier on the back of stronger sales volume growth as customers placed new orders following the depletion of excess inventory.
Revenue for the quarter came in lower at RM550.33 million versus RM618.01 million the year prior.
Notably, the group’s earnings before interest, taxation, depreciation and amortisation (Ebitda) was positive at RM29 million, a 38% improvement from first-quarter 2024 (Q1’24). Sales volume strengthened by 18% compared with the preceding quarter.
The group said the increase in sales volume provides a good indication that glove demand is picking up strongly on the back of excess inventory depletion.
For the cumulative six months, Top Glove’s net loss narrowed to RM108.91 million from RM332.90 million a year ago, while revenue declined to RM1.04 billion from RM1.25 billion.
Meanwhile, its H1’24 Ebitda turned positive, improving 140% to RM50 million year-on-year.
The group said the uptrend in sales orders was spurred by the progressively narrowing price gap which has seen Top Glove achieve parity in ASP with its overseas peers.
