by SULHI KHALID/ pic by TMR FILE
HIGHER natural rubber prices and increased competition had dragged Top Glove Corp Bhd’s net profit for the fourth quarter financial year ending 2019 (4Q19).
The world’s leading glove manufacturer net earnings fell by 13% year-on-year (YoY) to RM80 million in 4Q19 ended Aug 31, 2019 compared to RM92.3 million recorded in the previous corresponding quarter (4Q18).
The group said its revenue decline by 2.8% YoY to RM1.19 billion from June to August this year, against RM1.22 billion registered in 4Q18 on the back of lower demand recorded in the emerging markets.
“While the average natural rubber latex price fell 8.6% from RM4.51/kg in the financial year ending 2018 (FY18) to RM4.12/kg in FY19, it had increased exponentially over the course of several months within the financial year, peaking at RM5.11/kg on April 9 this year,” it said.
Top Glove added that losses from its vinyl glove segment and an increase in interest expense also contributed to the decline in profit for the quarter.
Its nitrile glove segment has delivered better performance with strong sales volume growth of about 30%, fuelled by improved product quality and higher efficiency levels from newer and more technologically advanced nitrile glove factories with increased automation.
“Towards strengthening our focus on the nitrile glove segment, the group has increased its nitrile capacity by 54% over the past two years with plans to grow further,” it said in a filing to Bursa Malaysia yesterday.
Top Glove executive chairman Tan Sri Dr Lim Wee Chai said the group will continue to expand organically in order to meet the increase in global glove demand which is set to grow by 10% annually.
“The demand for gloves is still strong as demonstrated by the sales and volume growth we are seeing.
“With our ongoing quality, automation and process improvement initiatives we have in place, we are optimistic of a better showing in the financial year ahead.” he said.
On the company’s outlook, the group has established a Board Sustainability Committee comprising five of its non-executive directors to enhance its commitment to sustainability, particularly in the area of labour practices.
“We also launched our flagship green product, BioGreenTM Biodegradable Nitrile Gloves (Powder-Free), which are proven to biodegrade at least 10 times faster compared to conventional nitrile examination gloves,” it said.
Top Glove also declared its final dividend for four sen per share, to be paid on Dec 23, 2019.
Top Glove share price closed yesterday’s trading one sen lower at RM4.72, valuing the company at RM12.09 billion.
Top Glove manufactures and sells gloves through several product lines to a diverse group of global customers. Some of the different glove options include latex, nitrile, vinyl and surgical.