Top Glove remains upbeat despite €33m loss in first quarter

Kuala Lumpur – Top Glove Corp. Bhd has reported a net loss in the first quarter of its 2023 financial year but remains optimistic about longer term prospects for its markets.

The Malaysian gloves maker recorded a loss of RM158 million (€33 million) in the quarter ending 30 Nov, down from a net profit of RM202.4 million reported for the same period of 2021.

Group sales fell 61% year-on-year to RM632.5 million during the three-month period, due mainly to a 48% decline in sales volumes.

In a 14 Dec release, the Kuala Lumpur group linked the softer financial performance to “the ongoing glove supply/demand imbalance”.

The oversupply situation, it said, saw customers holding off restocking activity as they continued to deplete existing glove inventories.

Furthermore, demand was hit by “a lack of urgency” to place orders in light of excess production capacity within the glove industry.

On a positive note, Top Glove noted that the decline in average selling prices (ASPs) “is slowing down”.

This was an indication that “the downtrend will not continue indefinitely,” said the group, which also expects to benefit from a declining trend in raw materials prices.

Top Glove noted year-on-year declines in average prices for natural latex concentrate of 7%, to RM4.73/kg, and nitrile latex of 49%, to $0.91/kg.

“Top Glove maintains the long-term outlook for the glove industry remains positive, as glove demand continues to grow by 10% yearly,” the company stated.

Commenting on headwinds faced over the past six months, managing director Lim Cheong Guan, said Top Glove was focusing on operating efficiently in view of lower capacity utilisation and maintaining disciplined cost-management.

However, while long-term prospects for the gloves industry are positive, Top Glove said it anticipated the challenging environment to persist into 2023.

“We are mindful that a period of adjustment is to be expected following a major global pandemic.” Lim said.

“However, we are optimistic that glove supply/demand will eventually rebalance to be more representative of actual consumption levels."