Top Glove eyes expansion through both organic growth, M&A

by BERNAMA/ pic by TMR FILE

TOP Glove Corporation Bhd, the world’s largest glove maker, is set to build two factories every year to keep pace with the global demand for rubber gloves amid increased usage in the medical industry and heightened hygiene awareness among people due to the COVID-19 pandemic.

Chairman Tan Sri Lim Wee Chai (picture) said it currently has 45 factories, of which 34 are glove factories with 700 production lines that have the capacity to make a total of 78.7 billion pieces of gloves per annum.

The rest are two latex concentrate plants, three chemical factories, a glove former (mould) factory, two packaging material factories, a dental dam factory, a condom factory and a face mask factory.

Of the 45 factories, 40 are located in Malaysia, four in Thailand and one in China. A new factory is being set up in Vietnam, which is expected to come on stream in September, he said.

“We will continue to build about two factories every year to ensure we are well-positioned to cater to the growing global glove demand,” he told Bernama in an exclusive interview.

He said Top Glove also remains open to mergers and acquisitions, joint ventures and diversification opportunities.

“We expand during the good times and prepare for rainy days. The glove industry is an international business and there is competition. Survival in the business is like participating in the Olympics; you need to remain fit to compete or you will be phased out.”

As for demand, Lim said pre-COVID-19 global glove demand was growing between eight to 10 per cent per annum, driven by strong market fundamentals across geographies.

For 2020, Top Glove foresees a 25 per cent growth.

“Before COVID-19 we were running at about 85 per cent capacity. Now we are running at close to 100 per cent,” he said. Countries globally need more gloves now than before the pandemic; hence, proper planning and allocation is of utmost priority.

For instance, he said, regular customers are getting 10 per cent extra gloves to ensure a continuous supply of the requested rubber gloves so that gloves are available in every country. While the company also sells to new customers, they will be offered a spot price, which is usually higher than the regular price.

“In 2021 and post-COVID-19, the rubber glove industry is expected to post an annual growth of between 12 and 15 per cent on the back of increased usage in both the medical and non-medical sectors, as well as heightened hygiene awareness arising from the pandemic,” he said.

Currently, 20 per cent of the world’s population, namely from the United States, European Union and Japan, account for 70 per cent of glove usage, while the other 80 per cent only use 30 per cent the gloves produced globally, which means there is an abundance of opportunity, Lim said.

He noted that gloves are an essential item in the healthcare sector, serving as a protective barrier for medical staff, with increasing demand in developing markets on the back of growing hygiene awareness.

Hence, glove demand is expected to grow both in developing countries where glove usage is relatively low as well as in developed countries, where glove usage has expanded beyond healthcare to other sectors such as food and beverages.

Going forward, Lim said Top Glove remains on track to achieve its ambitious goal to become a Fortune Global 500 company by 2040 by pursuing a bigger share of the international glove market.

“We are proud to become the world’s largest manufacturer of nitrile gloves, in addition to natural rubber gloves and surgical gloves,” he said, adding that to be in the Fortune Global 500 list, it would have to grow by 30 times to achieve US$35 billion (RM150 billion) sales revenue.

He said Top Glove would be investing more in technology, research and development (R&D) as well as artificial and human intelligence in its effort to achieve the goal.

As at July 6, Top Glove was ranked the sixth-largest company on Bursa Malaysia and the 10th largest on Singapore Exchange (SGX) in terms of market capitalisation, placing it among the elite Top 10 companies on both bourses.

Its share price surged 421 per cent to close at RM21.92 on July 10 compared with RM4.20 on Jan 2, 2020.

In a filing with Bursa Malaysia on June 11, Top Glove said its net profit skyrocketed by 365.9 per cent to an all-time high of RM347.90 million for its third quarter ended May 31, 2020, versus RM74.67 million in the same period last year, with revenue jumping 42 per cent to RM1.69 billion from RM1.19 billion previously.

It attributed the extraordinary performance to unparalleled growth in sales volume on the back of the COVID-19 pandemic.

Following the meteoric rise in its monthly sales orders, it said the lead time has increased from 40 days to around 400 days, whereby orders placed now would only be delivered over a year later.

Top Glove had a humble beginning as a local business enterprise with a single factory and one glove production line in 1991.

Today, it has captured 26 per cent of the world market share and offers a comprehensive product range, fulfilling demand in both the healthcare and non-healthcare segments The company serves a network of over 2,000 customers in more than 190 countries, and growing.