Top Glove Q1 profit soars 20 times to RM2.38b on strong global glove demand

TOP Glove Corporation posted net profit of RM2.38 billion (S$781.5 million) for the first quarter of fiscal year 2021 ended November, some 20 times higher than RM111.4 million for the corresponding quarter last year.

As a result, the group's earnings per share increased to 29.64 sen from 1.5 sen last year, the group reported in a regulatory filing on Wednesday.

Revenue for the quarter more than trebled to a record RM4.76 billion from RM1.21 billion in the year ago period. Sales volume also increased by 34 per cent from the previous year.

In light of its strong financials, Top Glove is looking to reward some 100,000 public shareholders with quarterly dividend payments for FY2021, with higher payments incorporating a special dividend of 6 per cent.

For this quarter, the group has proposed a dividend of 16.5 sen, which exceeds its payment for the whole of FY2020 of 11.83 sen. The dividend ex-date is Dec 24, and will be paid out to shareholders on Jan 11, 2021.

The group attributed its robust sales figures to strong demand for gloves in both developed and emerging markets on the back of the Covid-19 pandemic.

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Its improved net profit figures were due to a combination of factors such as higher sales output, high utilisation levels which amplified production efficiency, as well as higher average selling prices in line with market pricing.

In addition, ongoing technological advancements towards automation and digitalisation initiatives, effective talent development, innovation and quality and productivity enhancements also contributed to the improved bottom line.

Operating expenses for the quarter increased to RM1.69 billion from RM1.08 billion for the corresponding quarter last year, while operating income increased to RM23.2 million from RM9.3 million.

Consequently, Top Glove's profit from operations increased to RM3.1 billion from RM141.6 million last year.

As at end-November, the group was in a net cash position of RM3.45 billion.

The group said the uptrend in raw material prices continued in the first quarter. Natural latex concentrate increased 13 per cent from the previous quarter, while nitrile latex prices jumped 39 per cent due to less favourable weather conditions and supply constraints.

Top Glove estimates that with the pandemic, glove demand will grow by 25 per cent per annum in 2021 and 15 per cent per annum post-pandemic.

The company said it will continue to pursue organic expansion, inorganic expansion and strategic investments in line with an increase in usage of gloves as well as heightened hygiene awareness caused by the pandemic.

The group has also earmarked some RM10 billion for capital expenditure over the next five years through FY2025, which will increase its capacity by an additional 100 billion pieces of gloves.

Top Glove said it is continuing to actively engage with the US customs and border protection regarding the uplifting of the Withhold Release Order that was imposed on the company back in July, and added that it is making "good progress".

Top Glove's managing director Lee Kim Meow said: "Having a good set of numbers is important but we also want to positively impact the well-being of the employees and community around us.

"Challenges and making improvements are part of doing business. We are confident that as long as we continue to work together as a team and stay healthy, we will be able to learn from these challenges, do better and emerge stronger."

Top Glove shares were trading at S$2.28 as at 2.15pm on Wednesday, down S$0.04 or 1.7 per cent.