Top Glove to reduce reliance on foreign workers, hire more locals as dormitory issues surface

Singapore

TOP Glove Corporation is looking to reduce its dependence on foreign workers and employ more locals, even as it battles concerns about the housing of its foreign workers.

Speaking to reporters at a press conference to discuss the company's earnings for the first fiscal quarter ended November, managing director Lee Kim Meow said Top Glove is focusing on getting more locals on board in the near term.

In FY2021, Top Glove is aiming to recruit 9,000 new employees comprising 7,000 new or experienced hires and 2,000 interns and trainees. Of the new or experienced hires, 4,500 or 64.3 per cent will be locals.

Top Glove hired 4,945 new or experienced workers in FY2020, with 3,080 or 62.3 per cent of them being locals.

Locals constituted less than half of new or experienced hires in FY2019.

Top Glove has recently come under the spotlight after a virus outbreak among more than 2,400 of its factory workers.

This led the Malaysian government to say it would temporarily close, in stages, 28 of Top Glove's manufacturing facilities in the Klang area to screen and quarantine workers.

As at Dec 8, Top Glove said it has seen a total of 5,147 positive Covid-19 cases among its workers. Malaysian media reported that the government has opened 19 investigation papers into six of its subsidiaries over offences involving workers' dormitories.

Top Glove is being investigated for violations of the Workers' Minimum Standards of Housing and Amenities Act 1990. If found guilty, the company could have to fork out a RM50,000 (S$16,437) fine for each offence.

Responding to a question from The Business Times on whether the company had made any provisions for any potential fines, the company said it has not received any updates yet and wishes to appeal to the government for help.

"We wish to let them know that we're a serious company that wishes to comply (with regulations)," it added.

The impact of these closures will not have hit Top Glove's reported figures, which were up on "strong global glove demand".

For Q1 FY21, Top Glove reported net profit of RM2.38 billion - up from RM111.4 million in the same period last year.

Revenue for the quarter hit a record RM4.76 billion, from RM1.21 billion in the year-ago period.

The company proposed a dividend of 16.5 sen for the quarter under review, exceeding its dividend for the whole of FY2020.

Looking ahead, Top Glove's executive chairman Lim Wee Chai said the group's order book for next year has been filled.

Despite concerns of an oversupply, demand still outweighs supply, he added.

Some 3 per cent of orders have been cancelled due to long waiting times and high prices, but he called this a "healthy trend" as it allows the company to supply gloves to customers who need them urgently.

Mr Lim also said the availability of vaccines is not likely to lead to a decline in glove usage as gloves are needed for vaccinations too.

The company is also expecting a solid Q2 due to higher capacity, higher average selling prices, as well as a shift in product mix to nitrile gloves away from latex gloves, which could boost margins.

Top Glove has set aside RM10 billion to expand capacity by 100 billion pieces over the next five years. Meanwhile, a plan to list in Hong Kong is still in the works.

The Singapore-listed shares of Top Glove closed Wednesday at S$2.27, down S$0.05 or 2.2 per cent. The stock had declined 1.7 per cent to S$2.28 before trading was halted during the lunch break for the release of the results. Trading resumed at S$2.31 and the counter declined 1.7 per cent in the afternoon session.