Petaling Jaya: Top Glove Corp Bhd expects to return to profitability within the next two quarters due to expected higher selling prices of gloves and lower raw material costs.
Executive chairman Tan Sri Dr Lim Wee Chai said management had observed an upward trend in the average selling price (ASP) of gloves since March.
“Players from China and Thailand will increase prices especially after April, May. It has increased by more than 10%. Therefore, the selling price will go up. Although it has gone up in terms of costs, until May I think it will rise temporarily. Then it will start to fall. It is seasonal due to rubber supply. Therefore, the supply of rubber in plantations has decreased. Therefore, from June onwards, the supply will increase. ”, he said during Top Glove’s second quarter fiscal 2024 earnings call.
Regarding production capacity, Top Glove managing director Lim Chongguan said the company is in the process of gradually restarting some factory blocks and production lines to accommodate more orders.
“And, with increased utilization, we improve production and cost efficiencies.Glove demand continues to be strong in March, the start of our third quarter.
“The immediate challenge is to capitalize on the demand for returned gloves and ensure we produce high quality gloves in a cost-effective manner, and all our efforts continue to be directed towards that.” he said.
Top Glove’s net loss for the second quarter ended February 29, 2024 was 164.67 million yen in the second quarter ended February 29, 2024, compared with the same period last year, due to strong volume growth driven by new customer orders as excess inventory was depleted. It shrunk from RM51.19 million to RM51.19 million.
Revenue for the quarter decreased to RM550.33 million compared to RM618.01 million in the same period last year.
Notably, the group’s earnings before interest, tax, depreciation and amortization (EBITDA) was positive at RM29 million, an improvement of 38% from Q1 2024 (Q1 2024). Sales volume increased 18% compared to the previous quarter.
The group said the increase in sales volumes is a good sign that demand for gloves is increasing significantly on the back of depletion of excess stocks.
Top Glove’s net loss for the cumulative six-month period narrowed to RM108.91 million from RM332.9 million in the same period last year, while sales declined from RM1.25 billion to RM1.04 billion.
Meanwhile, EBITDA turned positive in the first half of 2024, increasing 140% year-on-year to RM50 million.
The group said the upward trend in orders was driven by the gradual narrowing of price differentials and Top Glove’s achievement of an ASP on par with its overseas peers.
