The glove maker’s revenue plunged 60.7% to RM632.53 million from RM1.61 billion in the quarter a year ago.
Sales volume (quantity sold) in the quarter eased by about 48% year-on-year as it continued to be impacted by persistent headwinds. No dividend was declared.
The worsening financial performance was attributed to ongoing glove supply/demand imbalance which saw customers holding off restocking activity as they depleted existing glove inventory, coupled with “a lack of urgency to place orders” in light of excess production capacity within the glove industry, the company said in a statement.
“In addition, average selling prices (ASPs) for gloves continue to adjust while the group contends with intensifying competition, particularly from regional glove manufacturers, compounding the prevailing softer glove demand,” it added.
However, there may be some respite for the industry. The group notes the decline in glove ASPs is slowing down, indicating the downtrend will not continue indefinitely.
It also expects to derive some benefits from the declining trend in raw material prices. Average natural latex concentrate prices have declined by 7% to RM4.73/kg and nitrile latex prices have decreased by 49% to US$0.91/kg year-on-year, it said.
In its filing with Bursa Malaysia today, Top Glove anticipates the challenging environment will persist into 2023 but maintains the long-term outlook for the glove industry “remains positive”.
Glove demand continues to grow by 10% yearly, spurred by heightened glove usage and hygiene awareness post-pandemic, it added.
“We are operating amidst several headwinds which have afflicted the industry for the past six months. This is expected as we go through the process of normalisation which will precede our eventual recovery,” said Top Glove managing director Lim Cheong Guan.
“To get through this challenging period, our immediate priority is to ensure we operate efficiently in view of lower capacity utilisation, maintain disciplined cost management and conserve as much cash as possible.
“We wish to commend the Top Glove team’s relentless commitment and efforts in the face of an unconducive environment, and are confident that with the support of our people, we will be able to ride out this difficult period together,” he said.
Lim said a period of adjustment is to be expected following a major global pandemic. “However, we are optimistic that glove supply/demand will eventually rebalance to be more representative of actual consumption levels and the glove industry’s true potential.”
The company’s share price was two sen lower at 76.5 sen at the mid-day break, giving it a market capitalisation of RM6.28 billion. The stock has fallen 68% from RM2.39 on Jan 3 this year.