KUALA LUMPUR, June 11 — Top Glove Corporation Bhd expects to see another record-high financial performance for the fourth quarter ending August 31, 2020 (Q4 2020) due to the continuous global demand for rubber gloves amidst the ongoing Covid-19 pandemic.
Executive chairman Tan Sri Lim Wee Chai said the average selling price (ASP) is expected to increase by about 30 per cent in Q4 2020, which would contribute to the company’s performance in the upcoming quarter.
He said in Q3 2020 ended May 31, 2020, the company’s sales order rose by 180 per cent and the ASP also increased by 30 per cent, which resulted in the company’s net profit surging to an all time high of RM347.90 million versus RM74.67 million in the same period last year.
“Based on this business logic, the profit can be doubled (in Q4 2020), and sales revenue would be more than 30 per cent,” he said during Top Glove’s virtual briefing on its Q3 2020 results today.
In a filing with Bursa Malaysia today, Top Glove said its net profit skyrocketed by 365.92 per cent to an all-time high of RM347.90 million for Q3 2020 versus RM74.67 million in the same period last year, with revenue jumping 42 per cent to RM1.69 billion from RM1.19 billion previously.
It attributed the extraordinary performance to unparalleled growth in sales volume on the back of the Covid-19 pandemic.
Following the meteoric rise in its monthly sales orders, the world’s largest glove manufacturer said its lead time had increased from 40 days to around 400 days, whereby orders placed now would only be delivered over a year later.
According to Lim, the ASP is expected to increase about 15 per cent per month starting from June 2020 onwards.
He said the company had kicked off its face mask production yesterday, adding that the production would be carried out round-the-clock.
“The profit margin (of the business) is very good due to lower raw material prices, although the price of face masks could go as low as 80 sen per piece from the previous RM1.50 per piece,” he said.
On dividend payout, Lim said the company is likely to pay more than 10 sen per share in December 2020 if it performs better in Q4 2020.
In its filing with the bourse today, Top Glove has declared an interim dividend of 10 sen per share in respect of FY2020, payable on July 9.
In terms of capital expenditure, Lim said the company spent about RM800 million annually, 25 per cent of which on automation and digitalisation.
Meanwhile, managing director Datuk Lee Kim Meow expected further demand for rubber gloves to come from the United States, Mexico, Brazil and other Latin American countries in Q4 2020, after seeing tremendous buying interest from countries like China, Japan, South Korea, Singapore and Taiwan since January 2020.
“We see that the Covid-19 fear factor drove the people to book for capacity as they have never encountered such situation before.
“They have booked the capacity for next year and even closer to the end of December 2021, resulting in the increase of lead time,” he said.
Moving forward, Lee was optimistic that demand would remain very strong in Q4 2020, and the upward momentum will continue to end-2020, or even beyond 2020.
At the closing bell, Top Glove’s share shed 38 sen to RM16.70 with 50.89 million shares changing hands. — Bernama
