KUALA LUMPUR (June 18): Top Glove Corp Bhd (KL:TOPGLOV) expects its total running capacity for the financial year ended Aug 31, 2027 (FY20275) to rise by 10% from an expected 72 billion pieces by end-FY2026, supported by automation and improved production efficiency.
Currently, the group has an installed capacity of 95 billion pieces. For the third quarter of FY2026 ended May 31, the group recorded a total running capacity of 68 billion pieces and the utilisation running capacity is only 86%.
Labour shortages have delayed the reactivation of some factories, but continuing investment in automation and production efficiency gains have enabled the group to gradually expand output.
"So this shows that there is a lot of automation and a lot of improvement in terms of productivity and efficiency. So we continue to improve, we continue to invest in automation and artificial intelligence (AI) in our production, our process, in all areas, Top Glove executive chairman Tan Sri Lim Wee Chai said at a post-results briefing on Thursday.
Lim also highlighted that the workforce has been significantly reduced from pre-pandemic levels. "Pre-pandemic, 3.5 to four workers were able to produce one million gloves. Now, less than two employees produce one million gloves," he said.
He added that the group had to write off property, plant and equipment (PPE) relating to older production lines which are no longer efficient or competitive.
Meanwhile, an impairment was made in relation to the group’s factory operations in Vietnam, which produce vinyl (PVC) gloves. Lim said that the PVC glove market has become highly competitive, with oversupply from Chinese players.
For 3QFY2026, the group recorded impairment loss on property, plant and equipment of RM29.69 million and the amount written off was RM10.54 million.
The group also expects a 40% increase in gas tariffs from October onwards, due to the six-month lag effect implemented by the government.
To mitigate the risk, joint managing director Ng Yong Lin said that the group will continue to improve the production efficiency capacity.
“We continue to improve the efficiency of our production lines," Ng said, adding that the energy costs per unit of output are already 30% to 35% lower than pre-Covid levels.
"But, this is also short term because it follows the crude oil price [trends] so when oil price come down so in another two quarters the gas tariff will go accordingly as just like before the Middle East crisis," he said.
As at market close on Thursday, Top Glove share were down 2.5 sen or 3.36% at 72 sen, valuing the group at RM5.92 billion.
Read also:
Top Glove sees ASPs easing from May peak as raw material costs fall
Top Glove eyes higher FY2026 dividends, moving closer to 50% payout target
Top Glove’s 3Q net profit more than doubles on higher sales, improved margins