Top Glove Corporation Bhd’s earnings fell 3.1% to RM48.68mil in the first quarter ended Nov 30, 2014 from RM50.27mil a year ago due to an increase in natural gas and electricity prices, together with their knock-on inflationary effects.
The world’s largest glove maker said on Tuesday its revenue declined 1.1% to RM567.63mil from RM573.98mil a year ago. Its earnings per share were 7.85 sen compared with 8.11 sen.
“Intense competition in the nitrile glove segment also hampered cost past-through and resulted in weaker margins,” it said.
However, it performed better when compared with the fourth quarter ended Aug 31, 2014 with its pre-tax profit of RM59.05mil and profit after tax of RM49.01mil – an increase of 19.9% and 5.6%.
The better performance was due to lower raw materials prices and a stronger US dollar and quality initiatives which the group had implemented earlier.
Top Glove said raw material prices continued to trend down compared with a year ago, as natural latex fell by 24.5% to an average of RM3.90 a kg and nitrile latex price contracted slightly by 1.0% to an average of US$1.04 a kg in 1QFY2015.
However, it pointed out the positive impact from lower latex price was minimal due to the competitive environment.
On the outlook, Top Glove said it remained focussed on pursuing quality expansion and is proceeding with plans to increase the number of nitrile glove production lines.
It said an additional six nitrile glove production lines at Factory 27 in Lukut, Port Dickson came on-stream in September 2014.
Top Glove chairman Tan Sri Lim Wee Chai said despite the increasingly intense competition, the company would continue to steadily expand its capacity to tap the opportunities available to the expanding industry.
Its newest plant, Factory 29 in Klang will start operating in January 2015 and equipped with faster, more efficient, superior quality and technologically-advanced production lines.
Lim said the group envisions upcoming new factories to be built specifically for nitrile glove production, thereby positioning Top Glove to further increase its MNC customer base in developed markets.
“Meanwhile, selected existing factories will be dedicated to the production of natural rubber gloves, the demand for which is still rising rapidly in developing markets. This will enable Top Glove to produce a more balanced product mix in line with market trends,” he said.