KUALA LUMPUR (June 9): Unlike a year ago, Top Glove Corp Bhd no longer receives many spot orders from clients, said its managing director Datuk Lee Kim Meow.
“It is not like last year, where a lot of customers came and asked for spot orders. We do not see this [trend] any longer,” Lee told the media at the virtual briefing in conjunction with the release of the company’s quarterly earnings.
Lee shared that Top Glove's production lead time has reduced significantly to between 90 and 120 days, depending on the type of glove.
Top Glove had reported an average lead time of 300 days in early January, before it dropped to 170 days in March. This compares with 20 to 30 days before the pandemic days.
Top Glove's annual glove production capacity has been expanded to 100 billion pieces this month and is expected to increase to 111 billion by year-end.
Still, Lee believes that the demand for gloves will grow in the long term, given the new norms for Covid-19 are expected to stay.
Although the pandemic situation, particularly in the US, has improved significantly compared with three to five months ago, Lee said given that gloves are an essential item, governments will be mindful of the need to stockpile.
He said that at the onset of the Covid-19 pandemic, developed economies in the Western world were caught unawares by the glove shortage.
"Since their cases have stabilised, I believe it is a good time for them to look into stockpiling gloves and the system that needs to be in place, whether it is three or six months' inventory, to get themselves ready before the next situation," he added.
Hence, Lee expects the group's glove sales volume to increase by 10% to 20% in the fourth quarter ending Aug 31, 2021 (4QFY21), compared with the preceding quarter.
“Especially if we can get the US Customs and Border Protection (CBP) to lift the import ban earlier, then the sales volume growth can be bigger as well,” he added.
The US CBP’s import ban resulted in a 68% plunge in sales to North America in the March to May quarter.
The North American market accounted for 8% of Top Glove’s total sales volume in the 3QFY21 — when its revenue came in at RM4.16 billion — compared with 23% in 2QFY21, according to the group's latest accounts.
Top Glove's total sales quantity shrank 4% quarter-on-quarter and 9% year-on-year, totaling 15.6 billion pieces in 3QFY21.
In March, CBP directed personnel at all US ports of entry to begin seizing disposable gloves produced in Malaysia by Top Glove.
The CBP’s action has also stalled Top Glove's planned RM4.17 billion listing in Hong Kong.
“Listing in Hong Kong is for the longer term. The CBP caused us a delay in Hong Kong, (but it) is only temporary,” said Top Gloves executive chairman Tan Sri Lim Wee Chai.
The planned Hong Kong listing was initially aimed at raising RM7.77 billion with a potential target listing date in May or June.