Top Glove to resume US shipment by end-September, remains upbeat on growth

by S BIRRUNTHA / pic by TMR FILE 

TOP Glove Corp Bhd will resume glove exports to the US as early as end-September this year, following the lifting of the US Customs and Border Protection (CBP) ban for alleged forced labour.

Its MD Datuk Lee Kim Meow said the group has been maintaining good relationships with its US customers and confident of attracting new customers moving forward.

He added that the positive development is expected to boost sales to the US market which accounts for 15% of the group’s total sales.

“We have goods that are ready. It is just a matter of printing the packaging materials and sending them out to the customers.

“We believe that a lot more shipments will happen in the month of October and going fully back to where we were previously will be sometime in December,” he said in a virtual press conference held in conjunction with the announcement of the group’s latest quarterly results.

Meanwhile, Lee noted that the ban by the US customs authorities on its exports was a “wake-up call” and a learning experience for the group to improve its environment, social and corporate governance (ESG) markers in addressing claims of forced labour.

He said the group would do its best to ensure it did not happen again and will remain proactive by paying more attention in the area of ESG.

“We are happy to be back in business in the US market with the CBP verifying and clearing it of forced labour claims. Through this episode, we have become a better organisation and we are humbled by our experience.

“We are on a better path to do better, to do over and above what the industry is doing,” he added.

In July 2020, Top Glove said two of its subsidiaries, namely Top Glove Sdn Bhd and TG Medical Sdn Bhd, were placed under detention order by the CBP over allegations of forced labour.

In March this year, CBP decided to ban all products from the group’s subsidiaries after finding “conclusive evidence” that certain products by Top Glove had been manufactured with the use of convict, forced or indentured labour.

Later, Top Glove said in April it had resolved all indicators of forced labour found at its factories, and the ban remained in place.

In May, a total shipment of 3.97 million nitrile disposable gloves made by a subsidiary of Top Glove worth US$518,000 (RM2.16 million) was seized by the CBP.

On Sept 10, Top Glove announced that the ban was lifted and the group was allowed to resume exporting gloves to the US following modification of the finding by the CBP.

The world’s largest glovemaker’s net profit for the financial year ended Aug 31, 2021 (FY21), jumped more than four-fold year-on-year (YoY) to RM7.87 billion from RM1.75 billion.

Revenue for the year surged by 127% YoY to RM16.4 billion as the glovemaker benefited from higher demand and average selling prices (ASP) for its products amid the Covid-19 pandemic.

However, Top Glove’s earnings for the fourth quarter ended Aug 31, 2021 (4Q21), plunged 48% to RM607.95 million from RM1.18 billion a year ago as revenue fell to RM2.12 billion from RM3.11 billion previously amid the very challenging operating environment.

The 4Q21 results were softer on the back of normalising demand, following mass vaccine rollout on a global scale, leading to lower sales volume and ASPs, which were not matched by a corresponding reduction in raw material prices, the group noted in a filing with Bursa Malaysia.

Top Glove’s net cash position remained healthy at RM2.05 billion as of Aug 31. The group has declared a quarterly dividend of 5.4 sen.

The ex-date for the dividend is Oct 1, 2021, while the payment date is Oct 15, 2021.

The total dividend declared for FY21 amounts to RM5.21 billion or 65.1 sen per share, which represents a 452% increase from the full year dividend of 11.8 sen for FY20.

Lee said the group is pleased to deliver such strong results in spite of several challenges throughout the year.

He noted that the good performance has allowed the group to continue delivering value to its many stakeholders.

On the group’s outlook, he said Top Glove remains upbeat about industry prospects, as the global glove demand is estimated to grow steadily even with the availability of vaccines, from a pre-pandemic 10% per annum to 15% per annum post-pandemic.

He added that the group will continue to expand via a combination of organic expansion, inorganic expansion and strategic investments.

By Dec 31, 2025, Top Glove is projected to have a total of 59 factories comprising 46 glove factories and 13 other factories, 1,486 glove production lines and a glove production capacity of 201 billion gloves per annum.