Top Glove swings back to black with RM5.5 million Q1 net profit

GLOVE manufacturer Top Glove posted a net profit of RM5.5 million (S$1.7 million) for the first fiscal quarter ended November, reversing its net loss of RM57.7 million in the previous corresponding period.

This translates to an earnings per share of 0.07 sen compared with the previous year’s loss of 0.72 sen per share.

On Friday (Dec 20), Top Glove said that the improvement in its bottom line came amid higher sales volume and healthier margins from continual glove-replenishment activity.

The increased inflows of US orders ahead of the 50 per cent tariff on glove imports from China contributed to sales volume, added the company.

“US orders have started to increase since November, after the announcement of the tariff in October,” said Lim Jin Feng, the group’s head of marketing, at a briefing accompanying the release of its results.

“We see a lot of US enquiries coming back,” he added. “Many of these are past customers that in the past one or two years may have moved many of their orders to China suppliers.”

The group’s ongoing quality-enhancement and cost-optimisation initiatives, as well as the strengthening of the US dollar against the ringgit, also contributed to its improved financials.

Top Glove revised its average selling prices upwards in August and September this year, following higher costs of raw materials and a weaker US dollar in the fourth quarter of FY2024.

The effects arising from the price adjustments came in only towards the end of Q1 FY2025, and the full impact is expected to be reflected in the next quarter, noted the company.

No dividend was declared for the period under review – unchanged from a year earlier.

More demand

Revenue for Q1 FY2025 rose 79.5 per cent to RM885.9 million, from RM493.5 million in the year-ago period.

Operating expenses rose 59.8 per cent on the year to RM883.6 million, from RM553 million.

Top Glove is optimistic about the recovery of the glove industry, and expects orders to continue flowing in. Demand will also be spurred by the increased health and hygiene awareness following the Covid-19 pandemic, it noted.

The company added that it is well-positioned to benefit from trade diversions resulting from US tariffs on China-produced gloves. It expects the effects of those tariffs to be “felt more substantially from Q2 FY2025 onwards”.

It said: “The group will proactively diversify risks across its countries of operations in Malaysia, Thailand and Vietnam to mitigate the geopolitical situation, which continues to escalate and remain unpredictable.”

Top Glove managing director Lim Cheong Guan guided for the group to be in a “much better position” for the full year in FY2025.

“The best is yet to come,” he said at the earnings call. “We have started off our financial year in Q1 in a profitable position; and for the second quarter, from our current indications... performance is much better.”

Shares of Top Glove closed down 4.8 per cent or S$0.02 at S$0.40 on the Singapore bourse on Friday, after the results announcement.