Top Glove expects to reach profitability in near term
PETALING JAYA: Top Glove Corp Bhd remains bullish on its future outlook and expects to reach profitability by the next two quarters, backed by strong glove demand and growth in sales volume.

Managing director Lim Cheong Guan said the strong demand is evident as sales volume has continued to move in an upward direction, while customers return to replenish depleted stocks after the pandemic.

He said in the next quarter, the group can expect an increased sales volume of about 18%-20%, in line with the rising orders recorded for March and April onwards to be around 500 to 600 million orders per week.

He then added that to move towards breakeven, it is also important to look at raw material prices and average selling prices (ASPs) as well.

“We are looking at 2.5 billion to three billion sales volume per month, so we should breakeven to profitability by then,” he said during Top Glove’s results briefing for the second quarter of the financial year 2024 (2Q24).

Lim stated that ASPs have gone down by 5% quarter-on-quarter, while raw material prices have risen by 15% during the quarter, causing a mismatch.

On a brighter note, he said moving forward once the raw material prices soften, the mismatch will be to the group’s advantage in 4Q24.

He then went on to say that glove prices will continue to increase from March onwards and in contrast to prior quarters, Top Glove will be able to sustain the price hike as Chinese and Thai glove players have joined the trend with sales orders continuing to rise.

“For the past year, we have been trying to increase prices two or three times but have not been successful because China and Thailand have not increased their prices.

“But this time, it seems like it will increase so the Chinese and Thai players have increased their prices together,” he added.

The glove maker reported a drop in net loss by 68.91% to RM51.2mil in 2Q24 ended Feb 29, 2024, as compared to RM164.67mil in the previous corresponding quarter.

Additionally, the group’s basic loss per share shrank throughout the quarter, going from 2.06 sen to 0.64 sen.

Comparing this year’s revenue of RM550.33mil to RM618.01mil, Top Glove reported a reduced revenue.The group’s revenue for the six-month period was RM1.04bil, and its net loss narrowed to RM108.91mil from RM332.9mil.

On a separate note, in response to the Home Ministry’s decision to advance the deadline for foreign workers to enter the nation, Top Glove called out to the government to be more uniform in its enforcement of its laws.

In order to minimise any potential effects on industries, its chairman Tan Sri Lim Wee Chai suggested that the government speak with industry participants before implementing any regulatory changes.
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Top Glove Corp Bhd remains bullish on its future outlook and expects to reach profitability by the next two quarters, backed by strong glove demand and growth in sales volume.