Tax­ing busi­ness cli­mate hits Top Glove Q4 re­sults

> Tail­winds in first half turn into head­winds in last six months of fi­nan­cial year

The Sun (Malaysia) - - SUNBIZ -

SHAH ALAM: Top Glove Corp Bhd’s net profit for the fourth quar­ter ended Aug 31, 2016 fell 36% to RM65.64 mil­lion from RM102.76 mil­lion a year ago on the back of a chal­leng­ing en­vi­ron­ment in the sec­ond half of the fi­nan­cial year (2H16), as tail­winds in 1H16 grad­u­ally turned to head­winds.

It said in­creased com­pe­ti­tion in the sec­ond half of the fi­nan­cial year led to a down­ward re­vi­sion of the av­er­age sell­ing price, while volatil­ity in raw ma­te­rial prices and forex cre­ated a mis­match in the cost pass-through sys­tem.

Rev­enue for quar­ter grew marginally by 1.8% to RM722.11 mil­lion com­pared with RM709.44 mil­lion in the pre­vi­ous year’s cor­re­spond­ing pe­riod.

For the full year, its net profit rose 29% to RM361.05 mil­lion from RM279.78 mil­lion a year ago, while rev­enue at RM2.89 bil­lion was an in­crease of 15.1% over RM2.51 bil­lion in FY15.

The group said FY16 was an­other record year, with his­tor­i­cal highs in both rev­enue and profit. The ro­bust set of num­bers was at­trib­uted to sev­eral im­prove­ment ini­tia­tives, which have en­hanced qual­ity and cost ef­fi­ciency. A stronger US dol­lar, as well as lower raw ma­te­rial prices ear­lier in the fi­nan­cial year, boosted the group’s per­for­mance.

Top Glove ex­ec­u­tive chair­man Tan Sri Lim Wee Chai said amid a chal­leng­ing busi­ness en­vi­ron­ment with sub­stan­tial cost in­creases and in­tense com­pe­ti­tion, it has achieved an­other record per­for­mance. “This is a credit to the in­ter­nal qual­ity and ef­fi­ciency en­hance­ments we have been im­ple­ment­ing con­tin­u­ally, as well as our man­age­ment team and staff, who have worked hard.”

Top Glove, which cel­e­brates its 25th an­niver­sary this year, re­mains in ex­pan­sion mode. Top Glove will con­tinue to pur­sue merger and ac­qui­si­tion op­por­tu­ni­ties that syn­er­gise with its cur­rent busi­ness, both in sim­i­lar or re­lated in­dus­tries.

It has pro­posed a fi­nal div­i­dend of 8.5 sen, bring­ing the to­tal FY16 div­i­dend pay­out to 14.5 sen, sub­ject to share­hold­ers’ ap­proval at the up­com­ing AGM in Jan­uary 2017. This rep­re­sents a 26% in­crease in div­i­dend per share com­pared with the pre­vi­ous fi­nan­cial year and a div­i­dend pay­out ra­tio of 50.3%.

Top Glove fore­sees a com­pet­i­tive busi­ness land­scape ahead, with the like­li­hood of over­sup­ply and, even­tu­ally, in­dus­try con­sol­i­da­tion. How­ever, the group is con­fi­dent of over­com­ing any chal­lenges by en­hanc­ing its cost man­age­ment and op­ti­mis­ing the ef­fi­ciency of its pro­duc­tion lines.

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