Top Glove Q2 net profit surges to RM2.87b on record sales; declares special dividend

MALAYSIA'S Top Glove Corporation saw its second-quarter net profit surge to RM2.87 billion (S$938.4 million), about 25 times that of RM115.7 million posted in the year-ago period.

This came as the mainboard-listed glove manufacturer recorded its highest-ever quarterly sales revenue of RM5.37 billion, quadrupling from RM1.23 billion the year before.

Sales volume was also on the uptrend, up 19 per cent year on year, Top Glove said in a statement on Tuesday.

The results translate to earnings per share (EPS) of 35.77 sen for the three months ended Feb 28, 2021, 21 times the adjusted EPS of 1.67 sen a year ago.

The board has declared a Q2 dividend of 25.2 sen per share, which comprises a special dividend payout of 20 per cent plus 50 per cent, totalling a 70 per cent dividend payout. The dividend will be paid on April 6, after the March 23 ex date. 

Top Glove’s board did not declare a dividend in Q2 2020. It said it will start paying special dividends in Q2 2021 for the second to fourth quarter period of 2021. 

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The latest Q2 dividend brings the total dividend declared for the first half of 2021 to 41.7 sen per share, 3.5 times that of the FY2020 dividend of 11.8 sen per share.

For the second quarter, Top Glove said natural latex concentrate registered a 35 per cent rise to an average of RM5.97 per kg, and nitrile latex went up 114 per cent to an average of US$2.14/kg on the year, following shortages in supply.

However, average prices for nitrile latex have been on the downtrend since the beginning of 2021, easing 5 per cent from January to March 2021 as supply normalises.

The group’s net cash position stood at RM4.06 million as at Feb 28. Operating expenses for the quarter widened to RM1.67 billion from RM1.09 billion a year ago. 

Meanwhile, for the six months ended Feb 28, net profit stood at RM5.23 billion, 23 times that of RM227.1 million recorded a year ago. Sales revenue quadrupled to RM10.12 billion from RM2.44 billion, while EPS surged to 64.77 sen from 3.06 sen previously.

Top Glove said the strong sales were due to the continued demand for gloves globally. Improved profit came on the back of higher sales output, high utilisation levels which amplified production efficiency, as well as higher average selling prices in line with market pricing.

While demand is likely to stabilise post-pandemic, the group expects it will not revert to pre-pandemic levels owing to increased hygiene awareness as well as uncertainties surrounding the resolution of the Covid-19 pandemic.

On its expansion plans, Top Glove - which is also listed on the Malaysia bourse - said it has earmarked RM10 billion for capital expenditure over the next five years, a move that will increase its production capacity by about 100 billion pieces of gloves to 200 billion pieces.

On the Singapore bourse, Top Glove shares closed up 1.81 per cent at S$1.69 on Tuesday.