Top glove eyes growth with new set-ups, M&As

Shah Alam, Malaysia – Top Glove Corp is considering new set-ups, including a nitrile latex factory, a condom factory, investment in packaging materials – glove inner boxes – as well as other closely related industries, as part of its bid to add shareholder value.

In a statement on 16 June, the Malaysian rubber gloves company said it acquired two glove factories located in Nilai and Muar, Malaysia, in May with a combined production capacity of 1.1 billion gloves per annum.

These acquisitions, which are to be completed by August, are part of the company’s bid to gain “greater access” to the Chinese market.

Top Glove also said that it is exploring synergistic mergers & acquisitions and joint ventures to increase shareholder value.

The company is currently implementing an extensive expansion plan, including the construction of three new manufacturing facilities in Klang, first one which will come on stream in July. The remaining two will be operational by the end of next year.

Upon completion, the factories will increase the group’s total number of production lines by an additional 106 lines and production capacity by 10.6 billion gloves per annum.

Top Glove Corp posted a sharp rise in its third quarter sales at RM869.6 million (€181 million), showing a 29.3% hike compared to the previous quarter.

In the three months to the end of May, the company posted a 23.5% year-on-year rise in profit after tax at RM77.5 million, despite a spike in both natural rubber latex and nitrile latex prices.

Quarter-on-quarter, however, profit eased 6.8% as a result of time lag in passing on the increase in raw material prices to the customers as well as lower volume sold.

“We have delivered growth in Profit year-on-year, despite sharp increases in manufacturing costs and reduced sales volume,” said Tan Sri Dr Lim Wee Chai, Top Glove executive chairman.

This, he added, is because of the company’s “consistent focus” on internal improvements, which he said had enabled it to manage costs.

As of 16 June Top Glove has 30 production factories - 25 in Malaysia, four in Thailand and one in China. It has 500 production lines with capacity to produce 48 billion pieces per annum. The company employs 11,000.