The world’s largest glove manufacturer, Malaysia-based Top Glove Corp Bhd’s net profit for the second quarter ended Feb 28, 2022 dropped by almost 53% to RM87 million from RM185 million in the previous quarter, while its revenue declined by 8% to RM1.45 billion from RM1.58 billion as average selling prices (ASPs) normalised closer to pre-pandemic levels.
In light of the current supply situation, Top Glove said it will scale back on its expansion plans. It also said the business environment is anticipated to be challenging and competitive in the immediate term, as the pandemic gradually comes under control.
On a yearly basis, the glove maker’s net profit slumped 96% from RM3 billion a year prior. Its revenue also tumbled 73% from RM5 billion in 2QFY21, the group’s filing with Bursa Malaysia showed.
The group did not declare any dividend for the latest quarter.
Top Glove noted that besides normalising ASPs, raw material prices were also generally on a downward trend, albeit at a slower pace than ASPs, which resulted in margin compression.
It said the group also had to contend with increases in other operating costs including utilities, manpower and chemical costs, as well as intensifying competition, with the new glove supply causing pricing pressure in light of the successful Covid-19 vaccine rollout globally.
However, it said the group has anticipated this adjustment and is well prepared for a more challenging period ahead as it transitions towards a pre-pandemic scenario.
Moreover, it said the group’s sales to the US are well on its path to recovery since September 2021, with sales volume to the US market growing sharply by 220% to date.
“For the past two years, we have been accustomed to delivering exceptional results. While our 2QFY22 results are not as robust as we would like them to be, this is to be expected as the pandemic recedes and it is part of the business cycle. Having been in the glove business for 31 years, we have seen many such cycles and our experience has prepared us well to go through this one,” its managing director Datuk Lee Kim Meow said in a separate statement.