Top Glove eyes €2bn expansion as Q1 profit soars 20-fold

Shah Alam, Malaysia – Prompted by high demand and record sales and profit, Top Glove has increased its five-year investment plans for a second time this year. 

The Malaysian gloves maker has raised its capex for the next five years (financial year 2021-2025) to RM10 billion (€2 billion), up from the previously announced Rm8 billion in September and RM3 billion in June.

The move, said Top Glove in a 7 Dec statement, will increase production capacity by an additional 100 billion pieces of gloves, from the current capacity of 85.5 billion pieces per annum. 

The Malaysian group aims to invest in new capacity, upgrading existing facilities, the construction of a gamma sterilisation plant, land bank for future expansion, Industry 4.0 digitalisation and improvements to workers’ facilities.

For the first quarter of fiscal 2021, started 1 Sept, the gloves manufacturer posted sales of RM4.8 billion, up 294% compared with the same period last year, and 53% quarter-on-quarter, Top Glove said in its quarterly report.

Profit after tax attributable to owners of the parent (profit) surged by 20 times to RM2.4 billion versus the corresponding period in FY2020, and doubled against the previous quarter. 

Sales volume improved 34% year-on-year, helped by strong demand for gloves in both developing and emerging markets due to the ongoing global pandemic. 

Top Glove linked the improved profit to higher sales, high utilisation levels as well as higher average selling prices (ASPs) in line with market pricing. 

Moreover, the group said the bottom line improved due to ongoing technological upgrades, automation and digitalisation initiatives, as well as quality and productivity enhancements.

During the period under review, the uptrend in raw material prices continued, as natural latex concentrate increased 13% to an average of RM5.14/kg and nitrile latex jumped 39% to an average of $1.31/kg quarter-on-quarter.

The increase in raw materials prices was mainly driven by less favourable weather conditions and supply constraints, against a backdrop of increased glove demand.