Monday 22 Apr 2024
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KUALA LUMPUR (Dec 10): Top Glove Corp Bhd expects sales volume to increase 10% quarter-on-quarter in the second quarter ending Feb 28, 2022 (2QFY22) on anticipation of sales recovery from the US, following the import ban lift in September and stocking-up activities by clients with low inventory.

“The latest trend shows that we are getting back a lot of our US customers’ orders. (Meanwhile,) Areas like Eastern Europe, Asia, which previously were not so active in sourcing gloves because of the higher glove prices, are making a strong comeback,” Top Glove Corp Bhd managing director Datuk Lee Kim Meow told a virtual press briefing in conjunction with the release of the company’s quarterly earnings.  

The spread of the newly discovered Omicron variant has also prompted some countries to stock up their glove inventories, Lee said.

“A lot of our customers are on the lookout (for the Omicron variant), meaning they are cautious. I believe some of them could be replenishing their stock, meaning they could be now trying to order a little bit more because they know gloves are always in demand," he said.

Top Glove expects stocking-up activities to pick up further going forward, as the average selling price of gloves falls further, closer to its pre-Covid-19 level.

The glovemaker's executive director Lim Cheong Guan shared that the ASP for nitrile gloves is now between US$25 to US$30 per 1,000 pieces, while natural rubber gloves’ ASP is around US$24 to US$26.

In 1QFY22, Top Glove’s ASP for nitrile gloves fell 37% quarter-on-quarter (q-o-q) and 57% year-on-year (y-o-y) to US$36 to US$38, while the ASP for natural rubber gloves contracted 28% q-o-q and 41% y-o-y to US$28 to US$30; surgical gloves dropped 11% q-o-q and 40% y-o-y to US$75, while vinyl gloves declined 7% q-o-q and 49% y-o-y to US$20.  

Notwithstanding that, Cheong Guan guided that gloves' ASPs will ease at a slower pace, going forward.

Aims to improve plants’ average utilisation rates to 80% by end-FY22, from 55%

Cheong Guan is hopeful that stronger sales from the US and an increase in stocking activities will bring its plant utilisation rates back to 80%, from 55% in 1QFY22.

“At the same time, we also deferred some of our expansion plans, so that they will not drive the utilisation (rates) to a lower level,” he added.

Top Glove partly blamed its softer quarter-on-quarter (q-o-q) results for 1QFY22 on the lower utilisation rates, which in turn caused its operating costs to be higher.

The group's 1QFY22 net profit dropped 69.45% q-o-q to RM185.72 million from RM607.95 million in 4QFY21, which the group mostly attributed to lower ASP for gloves. Revenue fell 25.15% q-o-q to RM1.58 billion, from RM2.12 billion. Earnings per share (EPS) fell to 2.32 sen per share, from 7.59 sen.  

Both earnings and revenue contracted more significantly on a yearly basis. Net profit was down 92.12% year-on-year (y-o-y) from RM2.36 billion in 1QFY21, while revenue dropped 66.71% y-o-y, from RM4.76 billion. EPS dived from 29.02 sen.

In line with the softer results recorded for 1QFY22, the group announced a lower dividend of 1.2 sen per share, 93% lower than the 16.5 sen dividend it paid a year ago. The dividend is to be paid on Jan 10, 2022.

The group’s management also said it would only pay dividends twice in FY22, as compared to dividend payments seen in every quarter in FY21.

Top Glove’s shares price closed at RM2.16 on Friday (Dec 10) — its lowest since May 2020 — after falling 25 sen or 10.37%, giving the group a market capitalisation of RM17.73 billion.

Edited ByTan Choe Choe
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