KUALA LUMPUR (Oct 6): Top Glove Corp Bhd posted its largest quarterly net loss of RM463.15 million for the fourth quarter ended Aug 31, 2023 (4QFY2023) mainly due to goodwill impairment of RM138 million and impairment and write-off of property, plant and equipment of RM251 million.
A year ago, the world’s largest glove manufacturer recorded a net loss amounting to RM62.99 million in 4QFY2022, its filing on Friday showed.
“The impairment [for 4QFY2023] was recognised following the operational rationalisation exercise and a review of the group’s income generating assets to strengthen its cost competitiveness,” it said.
Excluding impairment, the group’s loss after tax would narrow to RM65 million, Top Glove told Bursa Malaysia.
Top Glove has been in the red for five straight quarters and in the earlier quarter, it saw a net loss of RM130.59 million.
Meanwhile, revenue for 4QFY2023 dropped 51.93% to RM475.87 million from RM989.94 million in the previous year’s corresponding quarter.
As a result of the higher quarterly loss in 4QFY2023, the group recorded a net loss of RM926.64 million, marking the first annual loss for the glove maker, against revenue of RM2.26 billion.
In FY2022, Top Glove recorded net profit of RM225.56 million while revenue came in at RM5.57 billion.
In a statement, Top Glove managing director Lim Cheong Guan acknowledged the challenges posed by inventory build-up during the Covid-19 pandemic but also highlighted the positive factors, such as increased awareness of hygiene and health, driving future demand for gloves.
“We believe that glove demand will pick up gradually going forward,” he said.
“We [also] believe the mid- to long-term prospects for the glove sector remain promising. We are already seeing an uptick in sales volume month-on-month which indicates our customers’ glove inventory is close to being depleted.
As the oversupply situation also continues to ease, we look forward to seeing global glove demand resuming its projected 8% to 10% growth per annum eventually and better times ahead,” he added.
On the other hand, Top Glove highlighted challenges faced in relation to the high cost of heat energy from natural gas, rendering Malaysian rubber glove manufacturers less competitive than other rubber glove producing countries which have lower energy costs.
In view of this, Top Glove said, rather than exporting this natural resource, it would be more beneficial to make natural gas available at a competitive price to Malaysian manufacturers.
This will serve to encourage the growth of downstream activities, creating employment opportunities and business growth for supporting industries, while enhancing export value and increasing the inflow of foreign income.
At Friday’s noon break, Top Glove was the fourth most active stock on Bursa, with trading volume at 53.2 million, more than double the 14.52 million recorded on Thursday. The stock slipped 1.5 sen or 1.91% to 77 sen, giving it a market capitalisation of RM6.28 billion.