Top Glove expects global demand recovery

Top Glove chairman Tan Sri Lim Wee Chai.

KUALA LUMPUR: Top Glove Corp Bhd is anticipating a recovery in the global demand for gloves.

The biggest rubber glove maker in the world, which is currently running at about 50% of its total capacity, said demand for its gloves could rise and the price war has likely ended.

Operationally, the company was running at a loss in its third quarter ended May 31 of RM34mil, although it reported a net profit of RM51mil in the quarter on land disposal gains.

Top Glove’s revenue was at RM637mil, which is an increase of 16% quarter-on-quarter and 20% year-on-year.

The company is looking to restart some of the factories it had retired before due to oversupply issues.

They were built two to three years ago.

As average selling prices for its products have climbed slightly, its earnings before interest, taxes, depreciation and amortisation (ebitda) margins had recovered to 8% in the reported quarter.

“The price gap between China producers and those in Malaysia has become smaller. Previously it was about US$3 difference (per thousand pieces), now it is about 50 US cents to a US dollar,” Top Glove chairman Tan Sri Lim Wee Chai told a press briefing pursuant to announcing its results yesterday.

Lim said glove prices are still lower than before the Covid-19 pandemic, although he said this would recover as players in China have lesser room to manoeuvre due to the import tariff increase by the United States on China-made gloves.

“We don’t think the Chinese companies will expand further there, since they can’t sell to the United States. But we think they might move on to operate in other countries. Two listed companies from China in this space have reported losses also.

“Demand has recently picked up in the United States, Europe and other countries. We would like to absorb this through our additional supplies,” said executive director Ng Yong Lin.

Meanwhile, managing director Lim Cheong Guan said Top Glove would like to recover its ebitda margins to pre-pandemic levels of 15% over the next two years.

“The outlook is poised to improve. The market has come back in a big way with recovery in demand,” he said.

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