Top Glove’s 2021 net profit, revenue to top RM10bil and RM20bil?

KUALA LUMPUR: Top Glove Corp Bhd has indirectly suggested that its net profit will swell to more than RM10 billion, while group revenue could exceed RM20 billion for the year ending August 31, 2021 (FY21).

Managing director Datuk Lee Kim Meow said a better second half was expected after Top Glove’s net profit hit a massive RM5.23 billion in the first half ended February 28 2021, more than 22 times higher than the RM227.11 billion net profit posted in 1H 2019.

Lee said this would be driven by the higher average selling price (ASP) projection, the group’s additional new capacity from ongoing expansion, higher utilisation, strong demand despite shorter delivery time, as well as low material costs.

“In terms of nitrile gloves ASP, it has increased 30 per cent quarter-on-quarter (Q-o-Q) and 380 per cent year-on-year (Y-o-Y) in the second quarter (Q2) of the FY21.

“For April, May and June, we expect nitrile gloves prices to decrease three to five per cent monthly. It has now reached the level of US$115 per 1,000 pieces versus our peers of around US$90 per 1,000 pieces.

“So the gap in our nitrile gloves ASP with the rest of the peers is getting better as well,” he told reporters at a virtual briefing on Top Glove’s latest interim results yesterday.

For the second quarter, the company’s net profit surged nearly 24 fold in the second quarter to a whopping RM2.87 billion from RM115.68 million recorded in the same period a year ago.

Group revenue catapulted 335.8 per cent to RM5.36 billion during the quarter from RM1.23 billion a year ago.

For the first half, group revenue jumped 314.75 per cent to RM10.12 billion from RM2.44 billion recorded previously.

Lee said even with the rollout of Covid-19 vaccines, the group was confident that global glove demand would remain robust.

“While demand is likely to stabilise post-pandemic, the group expects it will not revert to pre-pandemic levels owing to increased hygiene awareness as well as uncertainties surrounding the resolution of the Covid-19 pandemic.

“Moreover, having gone through this pandemic, governments are expected to continue stockpiling on gloves and other personal protective equipment (PPE) in preparation for possible future pandemics,” he said.

Lee said global glove demand was estimated to grow from a pre-pandemic level of about 10 per cent per annum to about 15 per cent per annum post-pandemic, following an increase in usage coupled with heightened hygiene awareness.

He said to ensure it remained well-positioned to meet the continued strong global glove demand, the group would continue to pursue organic expansion, inorganic expansion and strategic investments.

To this end, the group has earmarked RM10 billion for capital expenditure over the next five years from FY21 to FY25.

This will increase its current production capacity by about 100 billion pieces of gloves to a total production capacity of over 200 billion pieces of gloves.

Meanwhile, Top Glove executive director Lim Cheong Guan said an independent consultant had concluded that there was no systemic forced labour at the company as of January.

“Based on the verifications conducted by the independent consultant on our progress in implementing the Corrective Actions Plans submitted to the CBP (US Customs and Border Protection) and in eliminating the presence of Forced Labour Indicators from our practices, the independent consultant’s opinion as of January 2021 was that there is no systemic forced labour within the group,” he said.

In July last year, the CBP placed an import ban on Top Glove’s subsidiaries over allegations of forced labour.

Source: NST