KUALA LUMPUR: Top Glove Corporation Bhd, which regained profitability in the first quarter ended Nov 30, 2024 (1Q25), expects stronger performance and further improvements in the coming quarters.
Its managing director Lim Cheong Guan said this would first be driven by strong demand for gloves, which is expected to persist due to the replenishment of high inventory levels across all regions.
He added that the company also expects more orders from customers in the United States (US) following the implementation of a new regulation imposing a 50 per cent tariff on glove imports from China starting Jan 1, 2025.
As for the average selling price (ASP), he noted that the group expect better pricing as demand increases, supported by supply constraints due to a shortage of foreign workers in Malaysia.
However, he said the effects of these price adjustments came in only towards the end of 1Q25, with the full impact expected to be reflected in 2Q25.
Top Glove had in August and Sept 2024 revised its ASPs upward, following higher raw material costs and a weaker US dollar in 4Q24.
"We also do not foresee any new expansions in China due to the US tariff issue. "While there may be some expansion outside China over the next two years, it is unlikely to be on a large scale given the uncertainty surrounding potential US actions against such expansions," he said in a virtual briefing on the group's financial results for 1QFY25 today.
Commenting further, Cheong Guan said that in terms of costs, sustained high capacity utilisation would improve production cost efficiency and enhance profit margins.
He added that raw material prices and exchange rates are expected to fluctuate unpredictably.
However, he said the cost-passing mechanism is viable due to supply constraints and strong demand.
"Looking at the stronger demand, we will gradually reopen temporarily closed factories. "Since the beginning of this financial year, we have added an operational capacity of four billion pieces out of the target of 10 billion pieces for this financial year," he noted.
Overall, Top Glove is optimistic about its prospects, citing steady recovery in the glove industry and consistent order inflows.
The company also expects demand to grow further due to increased health and hygiene awareness following the pandemic and a focus on improving operational efficiency.
Furthermore, Top Glove will proactively diversify risks across its countries of operations in Malaysia, Thailand and Vietnam to mitigate the geopolitical situation which continues to escalate and remain unpredictable.
Aligning with its drive for long term growth and success, the group will also continue to integrate sustainable practices into every aspect of its operations.
Top Glove has also announced the proposed issuance of 5-year Senior Sukuk Wakalah with a nominal value of RM800 million, which has been rated by Malaysian Rating Corporation Bhd (MARC).
On sustainability, Top Glove secured its 6th consecutive year on the Dow Jones Sustainability Indices (DJSI) 2024, under the emerging markets category.
It scored among the top three per cent out of 274 companies assessed in the Health Care Equipment & Supplies Industry in the S&P Global Corporate Sustainability Assessment, as at Dec 18, 2024.
For the first quarter ended Nov 30, 2024 (1Q25), Top Glove returned to the black with a net profit of RM5.47 million from a net loss of RM57.71 million a year ago, driven by higher sales volumes and increased foreign exchange gains.
Revenue for the quarter jumped 79.5 per cent to RM885.89 million from RM493.46 million a year ago.
The group also managed to turn around after posting a net loss of RM3.57 million in 4Q24.