Top Glove reports lower profits in third quarter

Kuala Lumpur, Malaysia – Top Glove Corporation Bhd expects the average selling price (ASP) for rubber gloves would drop below the 2019 pre-pandemic
level, depending on the supply and demand conditions, executive chairman Tan Sri Dr Lim Wee Chai said to reporters during their third quarter report.
He said ASP, especially for nitrile gloves, has dropped significantly and affected the company’s margin, which is almost bottoming down.
He said in the last six months, the supply of rubber gloves had reduced mainly due to a halt in production by industry players by more than 50 per cent while demand remained elevated especially for medical usage as well as non-medical industry.
Meanwhile, he said Top Glove has budgeted about RM500,000 for capital expenditure for the financial year ending Aug 31, 2023 (FY23), mainly for its in-house raw
material supply and gamma sterilization plant.
Top Glove’s net profit for the third quarter ended May 31, 2022 (Q3FY22) fell to RM15.29 million from RM2.04 billion in the same period a year earlier on the back of
lower revenue due to the effects of normalization in demand and average selling prices (ASPs) which affected the industry.
Revenue for the quarter declined to RM1.46 billion compared with RM4.16 billion previously amidst a convergence of headwinds with production costs moving
upward due to global inflation and higher crude oil prices driven by the Russia-Ukraine conflict.
The escalating costs resulted in margin compression as the group was unable to fully pass costs through amidst the ongoing oversupply situation but the slower
pace of ASP decline is expected to help cushion the cost impact going forward.