TOPGLOVE registered a nine months financial year 2025 (9MFY25) reported net profit of RM71 mil versus a loss in 9MFY24.
Its 9MFY25 core profit after tax and minority interest (PATAMI) of RM37 mil missed expectations.
It registered a core net profit of RM37 mil or 37% and 45% of our and consensus full-year net profit forecasts, respectively.
“We highlight that quarter-on-quarter (QoQ), quarter three financial year 2025 (3QFY25) registered a volume sales increase of 4% against market expectation of a lower sales volume despite the challenging operating environment,” said Kenanga.
The negative variance from their forecast was due to lower-than-expected margins.
QoQ, 3QFY25 revenue fell 6% due to a lower average selling price (ASP) (-5%) but this was negated by a higher sales volume (+4%).
Correspondingly, earnings before interest, tax, depreciation and amortisation (EBITDA) fell 30%, due to lower revenue leading to lower-than-expected economies of scale.
The lower ASP was due to heightened competitive pressure in the European markets while customers in the US paused at the sidelines pending clarity from tariffs uncertainties and a lower input raw material latex (-9%) and nitrile (-4%) leading to cost savings pass through to customers.
As a result, core profit fell to RM5 mil in 2QFY25 compared to RM27 mil. Year-on-year (YoY), 9MFY25 revenue rose 55% largely due to a higher sales volume (+60%) and ASP (+1%).
At the net level, it returned to the black in 9MFY25 with a core net profit of RM37 mil compared to a loss of RM58 mil in 9MFY24 due to the absence of high-cost inventory.
No dividend was declared this quarter as expected. The key takeaways from the analysts briefing are as follows:
It guided utilisation to be higher in 4QFY25. In fact, June CY25 utilisation rate is presently 65% compared to 61% in 3QFY25.
The group is optimistic on demand trends, downplaying the impact of recent tariff-related disruptions, as there is only so long customers can hold off buying.
In fact the group has started seeing orders flowing back in May and June and expect momentum to continue in July.
It expects 4QFY25 volume sales to grow at 15-20% QoQ on the back of order replenishment and US orders picking up following the frontloading effects of US customers purchasing from Chinese glove makers in 4QCY24.
The group highlighted that its exports to the US continued to show improvement which rose 24% QoQ in 3QFY25. U.S. sales accounted for 26% of total group volume sales above the 15% mix for FY24, and heading towards the pre-pandemic average of 20%−30%.
In order to mitigate competitive pressure in non-U.S. markets such as Europe, where China manufacturers’ aggressive nitrile glove pricing strategies may pose challenges, it can switch between natural rubber and nitrile glove production lines. —June 30, 2025
Main image: The Sun
