KUALA LUMPUR, July 13 – Top Glove Corporation Berhad's plunging profits, by more than 99 per cent, could affect Malaysia’s position as the dominant global rubber glove supplier as manufacturers in China are ramping up production and selling at cheaper prices, according to a report by Bloomberg.

The international financial newswire reported that the Malaysian listed company, said to be the world’s largest glovemaker, had announced a 99 per cent drop in profits last month, and is putting its expansion plans on hold.

Bloomberg quoted Top Glove founder and executive chairman Tan Sri Lim Wee Chai as saying that the financial results are "almost close to the bottom".

According to the Bloomberg article published yesterday, "Top Glove’s rapid fall could deal a blow to Malaysia, which produces 65 per cent of the world’s supply of gloves".

Bloomberg noted that Malaysia's exports of rubber items had last year spiked by 50 per cent to nearly US$14 billion, but said rivals in China have been upping their production.

"What surprises us is the faster-than-expected decline in average selling price and the aggressiveness of Chinese glovemakers in terms of their willingness to cut the price in order to grab market share,” Maybank Investment Bank Bhd's analyst Wong Wei Sum was quoted saying.

On July 6, Bernama reported Maybank Investment Bank as saying in a research note that Chinese glove makers were said to be currently selling below US$20 (about RM88.49) per thousand pieces of gloves, as compared to Malaysian glove makers' average selling price of around US$22 to US$24 per thousand pieces.

On June 9, Top Glove announced that the results included its sales revenue of RM1.47 billion for the third quarter of the 2022 financial year ending May 31.

Based on Malay Mail's checks of the numbers available on Top Glove's website, the company recorded net profits of RM29.3 million for the third quarter of its 2022 financial year ending May 31, which is down from RM102.3 million and RM202.4 million for the second and first quarter of this financial year.

This is down from quarterly results in Top Glove's best-performing year in 2021, where the fourth quarter recorded net profits of RM470.6 million, RM2.064 billion (third quarter), RM2.901 billion (second quarter), RM2.405 billion (first quarter), and also down from the quarterly results in 2020 of RM1.211 billion (fourth quarter), RM350 million (third quarter), RM116 million (second quarter), and RM111.8 million (first quarter).

Based on Malay Mail's calculations, Top Glove's latest net profit of RM29.3 million for Q3 2022 is a 96.47 per cent decline from its historic peak of RM2.901 billion in the second quarter of 2021.

Malay Mail also calculated that the Top Glove's latest quarterly net profit of RM29.3 million marks a 99.63 per cent drop from the net profit of RM7.824 billion for the entire year of 2021.

JF Apex Securities Bhd analyst Lim Su Hua told Bloomberg that Top Glove's 2021 financial year was an "extraordinary year as it was at the peak of Covid-19 pandemic, where gloves were essential items" and saying that the company's outlook in the near term is "in the doldrums".

Besides the plunge in Top Glove's profits, Bloomberg also noted that the value of the Lim family's 36 per cent stake in the company has dropped from a peak of US$6 billion in October 2020, to US$1.6 billion this January and now to US$1 billion.

Despite the company's share values having dropped by 89 per cent, the Lim patriach who received US$26 million in 2019, benefited from windfall dividends of US$75 million in 2020 and US$400 million in 2021, Bloomberg reported.

In early August 2020, Top Glove's shares on Bursa Malaysia hit a peak of RM28.40, and Malay Mail's check showed its share price opened at RM1.02 today.

Top Glove, established in 1991, states on its website that it is the world's largest glove maker which holds 26 per cent of global market share for rubber gloves, with 100 billion pieces of gloves produced every year from 49 factories and with over 2,000 customers in 195 countries.