Top Glove’s 2Q20 earnings up 9.3% on strong sales volume

by SHAZNI ONG / pic by MUHD AMIN NAHARUL

TOP Glove Corp Bhd’s net profit rose 9.3% to RM115.68 million for the second quarter ended Feb 29, 2020 (2Q20), compared to RM105.79 million in the corresponding quarter of the previous year.

Revenue for the quarter was up 6.02% year-on-year (YoY) to RM1.23 billion from RM1.16 billion, attributed to steady sales volume (quantity sold) growth, with particularly strong growth in the nitrile glove segment, where there was a 14% increase in sales volume compared to 2Q19.

The world’s largest glove manufacturer also attributed the stronger performance to the tax incentives the group received from its ongoing expansion, as well as unutilised tax allowances from some of its subsidiaries.

“Sales volume for natural rubber gloves was softer by 6% against 2Q19, while margins were impacted by a 19% surge in natural rubber latex concentrate prices which the corresponding increase in average selling prices was not sufficient to offset.

“Meanwhile, quarter-on-quarter sales volume for natural rubber gloves improved by 11% as Top Glove recovered market share through aggressive marketing strategies and production utilisation also increased,” the group told in a Bursa Malaysia filing yesterday.

For the six cumulative months, Top Glove’s net profit rose 5.22% YoY to RM227.11 million from RM215.85 million, while revenue was marginally up to RM2.44 billion from RM2.42 billion.

The group also recorded significant progress in Aspion’s performance arising from enhancement initiatives implemented over the past two years, as sales volume for Aspion’s surgical gloves grew substantially by 29% YoY.

“Improvement efforts will continue to be intensified across Aspion’s operations from production to marketing, to ensure the group realises Aspion’s full potential and establishes a bigger presence in the surgical glove segment,” the group said.

Top Glove executive chairman Tan Sri Dr Lim Wee Chai said the group will continue to expand its operations in line with the growing glove demand globally to ensure it is well-positioned to help protect and save lives, particularly in view of the ongoing Covid-19 outbreak.

“At the initial stage of the outbreak, sales orders came mainly from China, Hong Kong, Singapore and South Korea.

“However, the group has in recent weeks also received strong sales orders from Europe, US and other countries as well, following its rapid spread to other continents across the globe, which has seen the group’s sales orderbook double,” he said in a separate statement.

Lim noted the group also anticipates that the declaration of the Covid-19 outbreak as a pandemic by the World Health Organisation on March 12, 2020, will eventually result in the healthcare and other sectors requiring more medical supplies such as gloves and other essential items.

“With current utilisation levels above 90%, Top Glove is able to further ramp up production close to 100%, to meet the surge in demand,” he said.

In tandem, Lim said the company is also embarking on more capacity expansion plans, whereby these will boost the group’s total number of production lines by an additional 150 lines and production capacity by 17.7 billion gloves per annum.

By December 2021, Top Glove is projected to have a total of 861 production lines and a production capacity of 91.1 billion gloves per annum.

Moving forward, Lim said the group envisions very solid quarters ahead, having already secured exceptionally large sales orders for the next few months on the back of the Covid-19 outbreak, which saw a surge in sales orders for gloves, an essential item in the medical sector.