Top Glove quarterly profit soars 1,646% on pandemic demand, says 'best days still ahead'

Top Glove estimated demand to grow 25 per cent next year and 15 per cent post-pandemic.
Top Glove estimated demand to grow 25 per cent next year and 15 per cent post-pandemic.PHOTO: REUTERS

SINGAPORE - Top Glove Corporation Bhd, the world’s largest maker of rubber gloves, reported quarterly profit that soared 1,646 per cent amid the coronavirus pandemic, and said its “best days are still ahead of us” despite vaccines in the pipeline.

The Malaysian company, which is dual-listed in Kuala Lumpur and Singapore, on Thursday (Sept 17) posted record net profit of RM1.29 billion (S$423.7 million) for the fourth quarter ended Aug 31, compared with RM74.2 million a year ago, beating median analyst forecast of RM349.2 million from a poll by Refinitiv.

Executive chairman Lim Wee Chai on Thursday said the firm was in talks with bankers about a plan to list in Hong Kong within six to nine months, reported Reuters. 

“It’s only a plan and we are talking to... see which is the most suitable method to go for listing in Hong Kong,” he said in a virtual briefing. 

Fourth-quarter revenue jumped 161 per cent year on year to RM3.11 billion. Earnings per share for the quarter increased to 15.82 sen from 0.95 sen a year ago.

For the full financial year, Top Glove’s earnings swelled more than fivefold to RM1.87 billion from RM364.7 million previously. Revenue rose 51 per cent to RM7.24 billion from RM4.8 billion.

For its 57,000 public shareholders, Top Glove’s board recommended a final dividend of 8.5 sen per share. This makes for a full-year dividend payout of 11.8 sen per share - up 373 per cent from the previous year. The total payout of about RM961.2 million translates to a net profit payout ratio of 51 per cent.

With strong global demand, Top Glove said it was able to raise its average selling prices.

Its bottomline was also boosted by productivity enhancements such as utilisation levels close to 100 per cent, which amplified production efficiency and reaped economies of scale. High utilisation helped lower overheads significantly, notably the cost of labour and natural gas, said Top Glove.

Looking ahead, the company said its gloves would still be required even when a vaccine becomes available. It estimates glove demand to grow 25 per cent next year and 15 per cent post-pandemic.

Top Glove executive chairman Lim Wee Chai said: “Our unprecedented performance underlines the effectiveness of our ongoing technology-driven improvement initiatives, which focus on quality and cost efficiency, and which have enabled us to meet the increase in glove demand.


“With glove demand still on the uptrend, we believe our best days are still ahead of us.”

The company has earmarked RM8 billion for capital expenditure over the next six years. This will give it additional capacity of 100 billion gloves. The funds will be invested in new capacity and the enhancement of existing manufacturing facilities, among others.

Top Glove also said it “continues to actively engage with the US Customs Border and Protection towards the expeditious upliftment of the withhold release order (WRO), for which it is making good progress.” The US agency in July placed a detention order on imports from two of Top Glove’s subsidiaries. Such action is normally taken against companies suspected of using forced labour.

In the past year, Top Glove said it employed a total of 4,000 local employees to meet growing glove demand.

In term of market value, Top Glove jumped to the position of second largest company on Bursa Malaysia and the ninth largest company on the Singapore Exchange, with a market capitalisation of RM68.6 billion and $22.6 billion as at Sept 15. 

Top Glove shares on SGX, which were halted from trading from the midday break to about 2pm on Thursday for its results announcement, fell 37 cents or 12.3 per cent to $2.63. They are up about 69 per cent this year, after a two-for-one bonus issue completed on Sept 7.