Top Glove third quarter earnings rise to RM77.7mil
Better results achieved despite sharp increase in raw material prices
KUALA LUMPUR: Top Glove Corp Bhd’s net profit jumped 24.4% to RM77.7mil in the third quarter ended May 31 from RM62.45mil a year ago.
The glove manufacturer saw its revenue rose 29.3% to RM869.6mil year-on-year while pre-tax profit came in at RM91.5mil, a year-on-year improvement of 24.2% despite a challenging business environment characterised by sharp increases in raw material prices, which affected sales orders.
Top Glove said sales volume was 1% lower against 3QFY16 following an increase in average selling price as a result of a surge in raw material prices.
In third quarter of 2017, the average natural rubber latex price increased sharply by 79.2% to RM7.06 per kg, while the average nitrile price also rose 41.1% to US$1.34 per kg, compared with 3QFY16.
As on June 16, the natural rubber latex price has decreased to RM5.56 per kg.
“However, the group is optimistic of better sales volume growth in 4QFY17 as raw material prices start to trend downward,” Top Glove said in a statement.
The group declared an interim dividend of 6 sen, payable on July 17, 2017.
For the nine months ended May 31, sales revenue rose 15.7% to RM2.51bil, compared with the corresponding period in the previous year.
However, net profit came in at RM234.4mil, softer by 21.1% against ninemonth financial year 2016, attributed to relatively stronger numbers during the first half of 2016 (owing to a stronger US dollar and lower raw material prices then).
Nonetheless, Top Glove said its sales volume grew 5% year-on-year.
As at May 31, the group maintained a posi- tive net cash position of RM95.3mil and a healthy financial position.
“We have delivered growth in profit yearon-year, despite sharp increases in manufacturing costs and reduced sales volume. This is attributed to our consistent focus on internal improvements, that have enabled us to manage our costs well and continue producing quality gloves,” executive chairman Tan Sri Lim Wee Chai said in the statement.
Top Glove said in order to ensure it was well-positioned to leverage the growing global demand for rubber gloves, the group’s expansion plans include the construction of three new manufacturing facilities in Klang, namely Factory 30 which is operational by July 2017, Factory 31 (operational: January 2018) and Factory 32 (operational: December 2018). On completion, these factories will boost the group’s total production lines by an additional 106 and production capacity by 10.6 billion gloves per annum.
In May 2017, the Group also acquired two glove factories located in Nilai and Muar with a combined production capacity of 1.1 billion gloves per annum.
Top Glove said these acquisitions are targeted to be completed by August 2017 and are expected to pave the way for greater access to the China market.
By December 2018, Top Glove is projected to have 31 glove factories, 628 production lines and a production capacity of 59.7 billion gloves per annum.