KUALA LUMPUR (Dec 14): Top Glove Corp Bhd posted its second straight quarterly loss in the first quarter ended Nov 30, 2022 (1QFY2023), dragged by lower sales and ongoing normalisation of average selling prices (ASPs).
The group’s net loss widened quarter-on-quarter (q-o-q) to RM168.24 million from RM52.59 million, as revenue dropped 36.11% q-o-q to RM632.53 million from RM990.1 million.
The group posted a net profit of RM185.72 million on revenue of RM1.61 billion for the corresponding period of the previous year (1QFY2022). Sales volume (quantity sold) eased by about 48% year-on-year.
No dividend was declared for the quarter under review.
In a separate statement, Top Glove said the softer financial performance was attributed to the ongoing glove supply/demand imbalance which saw customers holding off restocking activity as they continued to deplete existing glove inventory, coupled with a lack of urgency to place orders in light of excess production capacity within the glove industry.
In addition, ASPs for gloves continue to adjust while the group contends with intensifying competition, particularly from regional glove manufacturers, compounding the prevailing softer glove demand.
Going forward, Top Glove expects to derive some benefits from the declining trend in raw material prices where average natural latex concentrate prices have declined by 7% to RM4.73 per kg and nitrile latex prices have decreased by 49% to US$0.91 (RM4.02) per kg year-on-year.
While long-term prospects for the glove industry are positive, Top Glove anticipates the challenging environment will persist into 2023.
“We are mindful that a period of adjustment is to be expected following a major global pandemic. However, we are optimistic that glove supply/demand will eventually rebalance to be more representative of actual consumption levels and the glove industry’s true potential,” said Top Glove managing director Lim Cheong Guan.
He observed that the group has been operating amidst several headwinds which have afflicted the industry for the past six months.
“This is expected as we go through the process of normalisation which will precede our eventual recovery,” he noted.
“In order to get through this challenging period, our immediate priority is to ensure we operate efficiently in view of lower capacity utilisation, maintain disciplined cost management and conserve as much cash as possible. In tandem, we continue to adopt a longer term perspective and focus on the sustainability of our people, customers and financial performance,” he added.
At the midday break, Top Glove's share price was two sen or 2.55% lower at 76.5 sen, giving the group a market capitalisation of RM6.28 billion. Year-to-date, the stock has depreciated 68% from RM2.39 on Jan 3 this year.