Top Glove sinks into the red with RM130.5 mln net loss in 3Q

KUALA LUMPUR - Top Glove Corp Bhd has reported a net loss of RM130.59 million in the third quarter (3Q) ended March 31, 2023, compared with net profit of RM15.29 million registered in the corresponding period a year ago.

Revenue for the quarter declined to RM530.62 million from RM1.49 billion previously, it said in a filing with Bursa Malaysia.

Top Glove said, amid a challenging business landscape, the group’s overall operating performance improved as loss after tax reduced by 23 per cent from the previous financial quarter, attributed to an increase in glove average selling prices (ASPs) of six per cent, coupled with quality and cost optimisation initiatives to streamline operations.

"The measures employed included decommissioning obsolete production lines and temporarily stopping production at 17 out of its 49 factories, in light of the softer global glove demand which the glove industry continues to contend with.

"The decommissioning of production lines eased the group’s production capacity by five billion pieces of gloves, bringing its total production capacity to 95 billion pieces of gloves. The group also implemented a manpower restructuring exercise.

Top Glove is mindful that being at the forefront of a glove price increase will have an impact on its sales volume.

"However, as glove manufacturers are unable to fully absorb rising costs indefinitely, this is a necessary step for the long-term sustainability of the glove industry, which industry players have followed suit,” it added.

The company said raw material prices were lower compared with 3Q in financial year 2022, with the average natural latex concentrate price on a downtrend, easing 27 per cent to RM4.78 per kilogramme (kg), while the average nitrile latex price also fell by 17 per cent to US$0.92/kg (US$1=RM4.61).

Managing director Lim Cheong Guan said, while the company may be in a loss position, it is encouraging that the quantum of operational losses had reduced from the previous quarter, arising from ASP increases and quality and cost rationalisation initiatives.

"Although a difficult decision, the recent workforce rationalisation exercise, undertaken following the temporary stopping of production at some factories to reduce the glove oversupply situation, was an important step towards the group’s continual endurance and competitiveness in the long term,” he said in a separate statement filed with the exchange.

He added that, while the business environment is expected to remain challenging and competitive throughout the second half of calendar year 2023, the group is optimistic on the long-term prospects as gloves continue to be an essential item for single usage in the healthcare and food industries, he added. - BERNAMA