Against the highly challenging backdrop and turbulent environment, Top Glove today reported its Sales Revenue of RM5.57 billion and Profit After Tax of RM292 million for FY2022, ended 31 August 2022.
For 4QFY2022, it recorded Sales Revenue amounting to RM990 million, while posting a quarterly Loss After Tax of RM42 million, as the glove industry experiences the effects of normalisation. Concurrently, Sales Volume for the quarter contracted by 27% year-on-year.
Despite the reported drop in sales volume, the major markets registered impressive growth of more than 100% in sales volume are United States, China and Western Europe.
The glove producer’s softer financial performance came as the industry weathers an adjustment period, contending with the twin factors of oversupply coupled with excess stockpiling by customers during the pandemic. This has led to a slowdown in orders, setting average selling prices (ASPs) on a downward trend, which has been aggravated as customers adopt a “wait and see” approach in anticipation of a further decline in ASPs. Following the decline in ASPs, the Group has also written down its inventory value to net realisable value by RM56 million in 4QFY2022 and by RM229 million for FY2022.
The largest glove maker in the nation also faces an escalation in cost structure attributed to global supply chain disruptions. On the domestic front, it was impacted by approximately a 60% hike in natural gas tariff over the course of FY2022, as well as a 25% increase in the Malaysian minimum wage from RM1,200 to RM1,500 which took effect in May 2022. The escalating costs, which the Group is unable to pass on to customers amidst the ongoing oversupply situation, have impacted its bottom line.
“The glove industry has been facing strong headwinds over the last year. The temporary oversupply situation and weaker demand has distorted the demand/supply mechanism and the Group’s 4QFY2022 performance is not reflective of our business or the sector’s true potential, both of which remain very promising in the longer term”, remarked Mr Lim Cheong Guan, Managing Director of Top Glove.
“We welcome competition. As competition will make us to be better. Malaysia takes up the lion’s share of 65% world market share for nitrile and natural rubber gloves. While Thailand takes up 10%. Yes the competition is stiff. The Malaysian glove producers have to work harder, smarter and keep on improving the quality of our products. We also need support from the government so that we can compete better for instance to keep cost bearable for producers,” Tan Sri Dr. Lim Wee Chai, Executive Chairman elaborated on the question of whether the Malaysian glove producers may win the competition war with China-made gloves.
