Top Glove Bhd achieved a turnover of RM1.584 billion and a Net Profit of RM185 .7million for the first quarter ended November 30, 2021, compared to a turnover of RM4.758 billion and Net Profit of RM2.357 billion previously.
In releasing its results, it said that the softer performance was mainly attributed to normalising average selling prices (ASPs) and glove demand following mass vaccine rollout on a global scale, while customers remained cautious on replenishing orders. In addition, raw material costs are reduced at a much slower pace in comparison to glove ASPs, thereby impacting Profit.
However, the surplus in glove supply will likely be offset in part, by the steady and consistent growth in global glove demand. Glove demand which continues to be driven by strong market fundamentals was already growing at a rate of 10% yearly pre COVID and is expected to increase further even after the pandemic recedes, on the back of heightened glove usage and hygiene awareness.
In addition, the Group is gradually regaining its exports from Malaysia to the U.S., which is expected to improve Sales Volume in the quarters to come.
It said that further mitigating the situation, raw material prices are on a downtrend quarter on quarter, with average natural latex concentrate prices weakening by 8% to RM5.09/kg. Meanwhile, nitrile latex prices decreased by 19% to USD1.79/kg and are expected to continue declining at a much higher percentage going forward.
Top Glove anticipates the business environment will be challenging in the immediate term, as competition continues to intensify amidst moderating glove demand. Nonetheless, the company remains cautiously optimistic on its industry outlook, given that global demand for gloves as an essential item will continue to grow steadily at a rate of more than 10% per annum even after the pandemic recedes.
As the world learns to live with COVID while managing the emergence of new strains, and glove usage in the medical sector in developing countries continues to increase, glove demand is expected to be stronger, which will help offset the growth in supply.