AS anticipated by many market analysts, Top Glove Corp Bhd’s quarter-on-quarter (qoq) net profit for its 2Q FY8/2022 ended Feb 28, 2022 shrunk 53% to RM87.55 mil (1Q FY8/2022: RM185.72 mil) although the gap swelled exponentially on a year-on-year (yoy) basis (2Q FY8/2021: RM2.87 bil).
Revenue during the period under review of RM1.45 bil was flat qoq (1Q FY8/2022: RM1.58 bil) but edged down 73% on a yoy basis (FY8/2021: RM5.36 bil).
For the entire six-month period, Top Glove’s revenue of RM3.03 bil plummeted 70% if compared to RM10.12 bil in FY8/2021 while net earnings nosedived to RM273.27 mil from RM5.23 bil a year ago.
The softer financial performance came on the back of normalising average selling prices (ASPs) which are moving closer to pre-pandemic levels. Raw material prices were generally on a downward trend – decreasing at a slower pace than ASPs – which resulted in margin compression.
The group also had to contend with increases in other operating costs including utilities, manpower and chemical costs as well as intensifying competition with the new glove supply causing pricing pressure in light of the successful COVID-19 vaccine roll-out globally.
Moreover, the group’s sales to US are well on the path to recovery since September 2021 (following withdrawal of the US Customs Border Protection’s Withhold Release Order) with sales volume to the US market growing sharply by 220% to date.
In that same month, sales to the US comprised 4% of the group’s total global sales while by February 2022, sales to the US had grown to contribute 13% towards total group global sales.
“For the past two years, we have been accustomed to delivering exceptional results. While our 2Q FY8/2022 results are not as robust as we would like them to be, this is to be expected as the pandemic recedes and it is part of the business cycle,” commented Top Glove’s managing director Datuk Lee Kim Meow.
“Having been in the glove business for 31 years, we have seen many such cycles and our experience has prepared us well to go through this one.”
What is important for Top Glove moving forward is to continue to focus on quality and efficiency, improve, innovate, invest in research and development (R&D), leverage advanced technology/digitalisation and recruit more good talents while deepening its commitment to sustainability, according to Lee.
“With all these in place and our good balance sheet position, I believe we are well able to navigate this challenging period and emerge stronger,” he added.
As of end-February 2022, the group maintained a net cash position of RM656 mil and net assets of RM6.95 bil.
At 3.30pm, Top Glove was down 21 sen or 11.23% to RM1.66 with 35.48 million shares traded, thus valuing the company at RM13.62 bil. – March 9, 2022
