KUALA LUMPUR: Top Glove Corp Bhd has today temporarily halted 20 production lines of its glove producing facilities in Meru, Klang, to curb the spread of the Covid-19 outbreak among its workers.
Executive chairman Tan Sri Dr. Lim Wee Chai said only eight lines in Meru facilities were allowed to run at reduced capacity of between 10 per cent and 20 per cent, amid the ongoing Enhanced Movement Control Order (EMCO).
Lim said Top Glove's revenue for the year ending Aug 31, 2021, (FY2021) was likely to shrink about 3.0 per cent due to the virus outbreak and temporary closure of its production lines.
This was based on a 50 per cent reduction on production for two weeks, amounting to about 2.0 per cent decline in sales revenue with an additional week of impaired capacity equivalent to another one per cent.
"We expect shipment delays for about two weeks from the affected factories. We have informed our customers there will be a slight delay in shipment.
"We try to deliver and catch up as soon as possible to meet customers' demand. We hope the closure only takes about two to three weeks during the EMCO," he said in a virtual press conference today.
Previously, Top Glove temporarily stopped production of 16 of its facilities in Meru from Nov 17. This has affected 5,700 workers or 27 per cent of its total employees of 21,000 due to the imposition of the EMCO at its foreign worker dormitories there.
Lim said gloves delivery would be affected during the period but Top Glove's factories namely in Thailand, Vietnam and China would ramp up its operations with the allocation sales orders to unaffected factories.
Top Glove has 41 factories in Malaysia and four in Thailand, as well as one each in China and Vietnam producing 90 billion rubber gloves annually.
The company will likely outsource its gloves if demand exceeded supply but it will be a small amount.
"We prioritise our customers for delivery to hospitals and other essential services. We do our best to catch up and work closely with authorities to lift up the EMCO so that we can proceed with our production," he said, adding that there was no order cancellation from customers.
Top Glove's Meru, which represents about 50 per cent of the company's total production capacity, has about 11,000 foreign workers.
To date, Top Glove has tested over 7,000 employees (foreign and local) at the premises.
Lim assured that there was no contamination in its glove products as the factories environment was quite warm with the temperature between 30 and 40 degrees Celcius.
"Inside the oven, it is around 110 degrees Celcius. The Covid-19 does not like hot area. Hence, it can't survive and hardly any virus will be there," he said.
On the packaging of its gloves, Top Glove said its workers were equipped with personal protective equipment and there was no direct contact with the glove as its production line was fully automated.
"When we ship through the container - the temperate inside the container is hot above 40 Celcius and it will take about one month to ship to Europe or other countries. Definitely, there is no contamination," he said.
Lim said the company might reassess the average selling price (ASP) for gloves due to rapid demand and supply shortage.
"We are in a big supply to the world. We are definitely affected. When there is a shortage of supply and more demand, the price will go up."
Lim said demand for examination gloves would be doubled by this year-end, spurred by the emergence of Covid-19 vaccine. "Vaccination needs to use an examination glove for the vaccine injection. We have seven billion vaccines to produce, and thus we also need seven billion pairs of gloves," he said.
On a long-term outlook, he said gloves would still a good and healthy business.
"Our share price depends on our earnings and performance. Our share price has been doing well in the past 11 months year-to-date," he said.
Lim said Top Glove had been growing about 23 per cent in terms of the compound annual growth rate and profit in the past 20 years of listing on Bursa Malaysia.
Top Glove's shares eased 2.21 per cent or 15 sen to RM6.65 per share on Bursa yesterday, given a market capitalisation of RM54.50 billion.