THE ongoing glove oversupply situation, a softer order book and rising production costs have led Top Glove : BVA 0% to turn in a net loss of RM164.7 million (S$49.4 million) for the second quarter of FY2023.

This translates to a loss per share (LPS) of 2.06 sen, as opposed to the 1.09 sen earnings per share (EPS) recorded the previous year.

For the quarter ended Feb 28, 2023, the glove manufacturer reported revenue of RM618 million, representing a 58 per cent decline from RM1.5 billion in revenue for Q2 FY2022.

For the half year ended Feb 28, the group reported a loss of RM332.9 million, as opposed to a profit of RM272.3 million for H1 FY2022. Its LPS for H1 was 4.16 sen, against the previous year’s H1 EPS of 3.41 sen.

Revenue for H1 stood at RM1.3 billion, down 60 per cent year on year from RM3.1 billion.

In its results filing on Thursday (Mar 16), Top Glove said its financial performance in the year to date was “weighed heavily” by headwinds in the glove industry, as its order book softened amid persistent destocking activity due to excess customer inventory.

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This was aggravated by the ongoing glove oversupply situation combined with a lack of customer urgency to place orders, added Top Glove, as shorter delivery times resulted from lower manufacturer utilisation.

Rising production costs, which the group was unable to pass down to customers due to moderating average selling prices (ASPs), also contributed to the muted financial results.

While Top Glove said that sales have started to pick up as customers’ glove inventory levels move closer to normality, not all orders received will prove feasible due to lower price points.

“As the glove industry faces losses coupled with escalating costs, the industry has started to revise selling prices upwards from February 2023, which is a necessary step towards the industry’s eventual recovery and sustainability,” noted the company.

It maintained that its recent financial performance “will not be representative of the group’s or industry’s actual potential” due to a convergence of headwinds such as rebalancing demand and supply, coupled with softer ASPs and cost increases.

In its opinion, the long-term industry prospects are “still promising”.

“We are under no illusion and remain mindful that the market will continue to equilibrate in the near term. Nonetheless, we believe that the glove industry will recover in due course as its fundamentals remain robust and unchanged,” said managing director Lim Cheong Guan.

Shares of Top Glove on the Singapore Exchange were trading S$0.005 or 2.4 per cent higher at S$0.21 as at the midday break on Thursday, before the company requested a trading halt pending the release of its financial results.