KUALA LUMPUR: Top Glove Corp Bhd expects to return to profitability over the next nine to 12 months as average selling prices (ASPs) for gloves stabilise.
Executive chairman Tan Sri Dr Lim Wee Chai said the company would require some time to see a turning point in its earnings especially as there was still an oversupply in the industry.
He said the mismatch between supply and demand was expected to balance out in the next six months.
"My estimate is that we would be able to reduce our losses in the next three months, in six months we should be able to break even and nine months from now we should be able to make profit.
"We have been in the industry for many years and have witnessed various ups and downs.
"It would take some time for the company to become profitable so I think between nine and 12 months we would be able to make profit," said Lim during a virtual briefing on the group's first quarter results.
Top Glove posted a net loss of RM168.24 million in the first quarter (Q1) ended November 30, 2022 from a net profit of RM185.72 million a year ago.
Its revenue stood at RM633 million, down from RM1.61 billion a year ago while sales volume (quantity sold) eased about 48 per cent year-on-year as it continued to be affected by persistent headwinds.
Top Glove said the softer financial performance was attributed to the ongoing glove supply-demand imbalance.
Lim noted that the ASPs for nitrile gloves were currently at its lowest with Malaysia's manufacturers selling at US$17 per 1,000 pieces while China seeing lower ASPs to the range of US$14-US$15.
"The price of nitrile gloves is at its lowest and there is not much room for reduction anymore.
"Most players are now in a loss position given the low selling price of nitrile gloves at the moment. Prices should be able to move up in another three to six months," he said.
Commenting on competition from the Chinese players, managing director Lim Cheong Guan said China had become very competitive in terms of nitrile gloves production.
He said China was able to catch up with Malaysia's technology, which was at least five years ahead before the former tapped into the market.
"However in terms of quality, Malaysia players are still the best and we also have wider market reach.
"The Chinese players are very dynamic and they work extremely hard.
"We have to catch up with them and this means we would need support from the Malaysian government just like how China's government supports their local glove makers," he said.