Top Glove’s profit for 2Q19 dips 3%

By FARA AISYAH / Pic By TMR

Top Glove Corp Bhd’s net profit for the second quarter ended Feb 28, 2019 (2Q19), fell 2.95% year-on-year (YoY) to RM105.79 million from RM109.01 million registered a year ago due to higher income tax expense.

In an exchange filing last week, the glove manufacturer said income tax expense was higher during the three-month period as a result of a reduction in tax allowance, following the expiry of the three-year special reinvestment allowance in 2018 and the provision of deferred tax liabilities.

The group reported a lower earnings per share for the quarter at 4.14 sen, compared to 4.31 sen in 2Q18.

However, Top Glove’s quarterly revenue rose 20.83% YoY to RM1.16 billion, from RM958.44 million last year.

Its sales revenue for the quarter increased 21% to RM1.16 billion, attributed to a strong sales volume growth of 16% — which is higher than the projected global demand of about 10% a year — and a higher average selling price.

Raw material prices for 2Q19 remained mixed YoY, with the average price for natural rubber latex lower by 17.7% at RM3.62 per kg, while the average nitrile latex price increased 1.9% to US$1.08 (RM4.37) per kg.

Top Glove executive chairman Tan Sri Dr Lim Wee Chai said the group is pleased to have delivered strong results with a robust sales volume growth, despite a challenging operating environment.

“We have done well in 2Q19 despite the challenging business environment and aim to do even better over the course of the financial year,” he said in a statement.

For the cumulative six-month period, Top Glove’s earnings remained flat at RM215.85 million, against RM214.46 million in the same period last year.

Its first-half revenue rose 27.37% to RM2.42 billion, from RM1.9 billion a year ago.

On March 1, 2019, the group successfully completed an issuance of exchangeable bonds in the amount of US$200 million.

The purpose of the bonds was to retire existing borrowings and will benefit the company in terms of lower interest cost, as well as improve cashflow.

As a result of this exercise, the group expects to gain about RM16 million per annum in cash savings and RM2 million in interest expenses.

Meanwhile, Top Glove will continue to embark on initiatives to improve the operations of Aspion Sdn Bhd, particularly in terms of production efficiency.

The group is also leveraging Aspion’s existing capabilities and well-established name in surgical gloves to further grow its market share in this segment.