Top Glove Corp Bhd executive director Lim Cheong Guan
PETALING JAYA: Rubber glove titan Top Glove Corp Bhd
is cautiously optimistic about its business recovery in 2023, amid a challenging global environment with persisting oversupply situation as demand normalises post-pandemic.
The group said its strategies to weather this testing period include aligning its immediate priorities to ensure operation efficiency in view of lower capacity utilisation, maintaining disciplined cost management and improving cash conservation.
In line with these goals, Top Glove said it would continue to adopt a long-term perspective and focus on the sustainability of its people, customers and financial performance.
The group released its results for the first quarter ended Nov 30 (1Q23) yesterday, posting a net loss of RM168.2mil or 2.1 sen loss per share.
This represents a 177% year-on-year (y-o-y) decline from the net profit of RM185.7mil or earnings per share of 2.32 sen registered in the corresponding quarter of 2021.
Turnover for the quarter slid 60.7% y-o-y to RM632.5mil on weaker sales and lower prices.
Managing director Lim Cheong Guan said the soft performance was due to the ongoing supply-demand imbalance, which saw customers holding off restocking activity as they continued to deplete inventory, coupled with a lack of urgency to place orders in light of excess production capacity in the industry.
“Aside from focusing on operational and cost efficiencies, we would also be prioritising on aggressive sales and ensuring we would achieve a positive earnings before interest, tax, depreciation and amortisation,” Cheong Guan said at a briefing yesterday.
He said increasing prices has not worked well for the group in the previous quarter, and therefore it is crucial for Top Glove to refocus on growing its sales volumes.
In addition to the oversupply situation, average selling prices (ASPs) continue to adjust, said Top Glove, while it continues to contend with intensifying competition, particularly from regional manufacturers, compounding the prevailing softer demand.
However, the group said the decline in ASPs is subsiding, indicating the downtrend will not continue indefinitely, with executive chairman and founder Tan Sri Dr Lim Wee Chai expecting ASPs to be bottoming out in the next three to six months, if they have not already.
Quarter-on-quarter (q-o-q) numbers were not much rosier as the group extended further into the red, or 167% to be exact, from the net loss of RM63mil posted for the quarter ended Aug 31 this year.
Revenue also saw a 36% q-o-q decrease for the three months ended Nov 30, down from the RM990mil turnover recorded in the preceding quarter.
Seeing light at the end of the tunnel, Wee Chai revealed that orders have begun to improve this month and in January 2023, compared to the last quarter.
Hence Top Glove has ramped up its plant utilisation rate from 30% for the three months ended Nov 30 to 40% at present and will remain at this rate for the next three months.
He is targeting for Top Glove to break even within the next six months and return to the black in nine to 12 months, saying that the group would need to work “harder and smarter” and that the road back to profitability would take time.
