Top Glove's 2QFY2022 Result ~ Steady Volume Growth?

Top Glove Corporation Bhd today announced its financial results for the Second Quarter ended 28 February 2022 (2QFY2022), delivering steady volume growth despite the challenging business landscape, as the industry transitions to an endemic stage.

Key Highlights of the Financial Performance

• For 2QFY2022, the Group achieved Sales Revenue of RM1.45 billion and Profit After Tax of RM102 million, and the Group is pleased to note that Sales Volume (Quantity Sold) registered strong growth compared with 1QFY2022
  
  Why? This was due to:
  

1. Resumption of regular glove restocking activity by customers
2. Cheaper price now (ASPs is approaching pre-pandemic levels)
3. Recovery of sales to the U.S.

• The softer financial performance came on the back of normalising average selling prices (ASPs) which are moving closer to pre-pandemic levels
  
  
• Raw material prices were generally on a downward trend, decreasing at a slower pace than ASPs, which resulted in margin compression
  
  
• Average natural latex concentrate prices drop by 6% to RM5.57/kg, whilst nitrile latex prices decreased by 50% to USD1.15/kg
  
  
• Stiff competition with the new glove supply causing pricing pressure in light of the successful Covid 19 vaccine rollout globally
  
  
• Sales volume has shown a marked improvement in comparison with 1QFY2022, following the resumption of regular glove restocking activity by customers, and as ASPs approach pre-pandemic levels.
  
• Production utilisation increased from 60% in September 2021 to 73% in February 2022
• As at 28 February 2022, the Group maintained a net cash position of RM656 million and net assets of RM6.95 billion
  
  

Transitioning to ‘New’ Normal from ‘Old’ Normal

What is the Outlook?

• The business environment is anticipated to be challenging and competitive in the immediate term, as the pandemic gradually comes under control
  
  
• The additional glove supply and ensuing pricing/margin pressure may, in turn, result in industry consolidation, as part of the business cycle
  
  
• Opportunity still abounds and maintains that the long term industry outlook is promising

“Glove demand will still continue to grow steadily, albeit not at the accelerated but unsustainable pace during the pandemic. This challenging period is temporary and we will continue to focus on maintaining our strong foundation by staying mentally, physically and financially healthy. This will position us to weather the tough times and capitalise on good opportunities which are sure to come again” 

Dato’ Lee Kim Meow, Managing Director of Top Glove concluded

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