KUALA LUMPUR: Top Glove Corp Bhd expects strong growth in sales volume in the coming quarters, with U.S customers' demand making a comeback ahead of new tariffs on Chinese glove companies.
Its managing director Lim Cheong Guan said the tariff on Chinese glove makers is set to increase from the current 7.5 per cent to 25 per cent in 2026, whereas Malaysia currently faces no tariffs.
"This is positive news for Malaysian manufacturers. U.S. customers, which is the largest market (for gloves), are unlikely to continue sourcing gloves from China due to the substantial tariff difference.
"Therefore, we anticipate that this demand will shift to Malaysia, which is great news for us, unless it only begins in 2026," he told a media briefing today.
Chairman Tan Sri Dr Lim Wee Chai said while Chinese glove makers may opt to establish factories in Asean countries to avoid tariffs, it is not a matter of concern.
"Currently, only one or two Chinese glove factories exist in the region, one in Malaysia and one in Vietnam, predating the pandemic, and they are not highly competitive.
"This development is positive for us as it levels the playing field, and that China may not expand its glove production capacity within its borders," said Lim.
On mitigating the worker shortage, he said the group will be hiring domestically, but remain hopeful that the government will reconsider an extension on the deadline for foreign worker entry, which will expedite recovery both for the company and the sector.
Commenting on expansion plans, executive chairman Ng Yong Lin said that the current capacity is sufficient to handle sales volume growth.
"Many factories that were temporarily closed earlier have now resumed operations and are running at full capacity.
"Three to four factories are already operational, with plans to bring another five to six online soon. Every month, we expect to double our production capacity by adding 8 to 10 factories," added Ng.
The group's net profit rose to RM50.67 million in the third quarter ended May 31, 2024 (3QFY2024), compared to a net loss of RM130.59 million in the corresponding quarter of the previous year.
This improvement was driven by stronger glove demand as customers replenished their inventories after clearing excess stock.
In a filing with Bursa Malaysia, it said revenue rose 20 per cent to RM636.88 million from RM530.62 million previously, as the group managed to pass on some of its cost increases to customers with an increase in average selling prices (ASPs).
Its operational losses reduced to RM34 million in 3QFY2024 from a loss of RM59 million in 2QFY2024, representing a 42 per cent improvement.
"We are pleased to have seen a return to black this quarter as the glove industry turns a corner. This is largely attributed to improving glove demand as customers' orders resume, alongside intensive efforts to level up our quality and cost efficiency, as well as gains from the sale of excess land," Top Glove managing director Lim Cheong Guan said in a separate statement.
For the first nine months of financial year 2024 (9MFY2024), Top Glove was still in the red with a net loss of RM58.24 million, albeit an improvement of 87.4 per cent compared with a net loss of RM463.49 million recorded in the previous year's corresponding period.
However, revenue slipped 5.6 per cent to RM1.68 billion from RM1.78 billion previously.