By MARK RAO
Top Glove Corp Bhd ended the financial year strongly on spike in sales volume, and will continue its expansion plans to achieve a 59.7 billion gloves production per annum by the end of next year.
Earnings for the full financial year were lower for the period due to the higher raw material prices incurred by the rubber glove maker.
For its fourth quarter ended Aug 31, 2017 (4Q17), Top Glove’s net profit rose by 51% year-on-year (YoY) to RM98.62 million, in tandem with revenue rising 25% YoY to RM902.41 million.
The improved showing was largely due to the spike in sales volume in the quarter, growing 13% YoY due to higher contributions from countries of operations, higher orders from customers and additional capacity coming on-stream.
The higher average prices were partly due to the surge in raw material costs and strengthening of the US dollar.
Its executive chairman Tan Sri Dr Lim Wee Chai said the company managed to deliver good results for the quarter despite the difficult business landscape.
“We attribute our robust performance to internal improvements centred on research and development, product quality, and technology and re-engineering initiatives,” Lim said in a statement last Friday.
“We believe that continuing to pursue these intensively is the way forward,” he added.
Top Glove is presently constructing two manufacturing facilities — namely Factory 31 and 32 — which are scheduled to be operational by March and December respectively next year, which will add an additional 78 lines and 7.8 billion gloves per annum to production and thus take the group’s total production lines and capacity to 628 billion and 59.7 billion gloves per year respectively, spreading across 31 factories.
Top Glove has also commenced preparations for its condom manufacturing facility which is slated for commercial operations sometime next year.
Turnover for the full fiscal year 2017 (FY17) was at a record RM3.41 billion, or 18%, YoY increase from the RM2.89 billion figure in FY16, on higher sales volume and average selling prices (ASPs).
Net profit however slipped by 7.8% YoY to RM332.7 million in FY17, due to higher raw material prices recorded over the year, which led to higher ASPs but at the expense of lower margins.
For FY17, average natural rubber latex and nitrile latex prices were higher by 46.4% and 11.9% respectively at RM5.76 per kg and US$1.10 (RM4.64) per kg.
Top Glove noted raw material prices are on a downtrend since 3Q17.
Going forward, Lim said the company is aiming to grow its market share to 30% by 2020 and become a Fortune Global 500 company by 2040.
In line with this aim, Top Glove signed a letter of intent to acquire the entire stake in Eastern Press Sdn Bhd — a printing and packaging material manufacturer — for RM47.25 million, with the aim of improving supply chain coordination and achieving better cost and quality control.
The company also intends to leverage on emerging technologies, move towards digitalisation, establish smart technology-operated factories, explore merger and acquisitions opportunities and diversify into other revenue streams to help grow the group’s business.
As of 4Q17, it retained a net cash position of RM70.6 million with an allocated RM447.1 million in capital expenditure.
The company declared a 8.5 sen dividend for the quarter, which brings the total dividend for FY17 to 14.5 sen or for a payout ratio of 54.6%.