PETALING JAYA: Top Glove Corporation Bhd anticipates an improving trend in average selling prices (ASP) of its gloves and to turn profitable by financial year 2025 (FY25).
Executive chairman Tan Sri Dr Lim Wee Chai said that since ASP have hit an “all-time low”, he expects demand for gloves to gradually improve.
“Now we can see the light at the end of the tunnel because the glove selling price is already at an all-time low, especially for nitrile gloves ... we have never seen nitrile gloves at this low (selling price) for the past 30 years. As an investor or businessman, when the price is at an all-time low, the only direction next is for it to go up. This is the business cycle,“ he added.
Lim said the improving sales volume indicated that there is still demand for gloves and he expects sales volume to improve on the back of restock orders as customers’ inventories near depletion.
He added that the glove market is improving and the group’s total “utilisation rate currently stands at 30% for the past six months, based on the 95 billion total capacity”.
“At current 30%, we already see improvement in our earnings before interest, taxes, depreciation and amortisation. So, give us another 10-20% to reach 50% (utilisation rate) then we will be profitable. Maybe that would take another six to 12 months ... by FY25, we will be making profit,” Lim said during the group's results briefing for the fourth quarter of FY23 (Q4’23).
Touching on raw material prices, managing director Lim Cheong Guan said he expects them to be in line with the ASP trend.
“I think the raw material price will fluctuate. I would not say that ASP have bottomed out but they will be more in line with raw material prices in the coming quarters.
“ASP will come down if raw material prices come down, and the same goes if raw material prices increase. ASP will track closely the prices of raw materials,“ he added.
According to him, there is a 90% probability that ASP will increase in the following quarters.
“Prices of raw materials, especially nitrile latex, have increased, so there is a very high chance that they will increase the selling price. We can see this in next three months,“ said Cheong Guan.
The group registered a net loss of RM463.15 million for Q4’23 ended Aug 31, from a net loss of RM63 million in the corresponding period in the previous year. Revenue decreased to RM475.87 million from RM989.94 million in the same quarter last year.
For FY23, Top Glove registered a net loss of RM926.64 million, from a net profit of RM225.56 million previously. Its revenue declined to RM2.26 billion from RM5.57 billion.
In a statement, the group said a loss after tax of RM454 million was recorded after incorporating a one-off impairment on goodwill, property, plant and equipment amounting to RM389 million which has no impact on cashflow.
Source: The Sun Daily
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