SETIA ALAM (Oct 4): The world's largest rubber glove manufacturer, Top Glove Corp Bhd, has earmarked RM600 million as capital expenditure (capex) for the financial year ending Aug 31, 2020 (FY20).

The glove manufacturer spent RM461.77 million in capex in FY18 while for the just-ended FY19, it allocated RM632.17 million.

Speaking at Top Glove's fourth quarter results briefing today, its chairman Tan Sri Dr Lim Wee Chai said the capex will be used for automation, building new factories to expand production capacity, as well as merger and acquisition.

For the new capacity expansion, the bulk of which or up to 80% mainly is for nitrile gloves, while the remaining is for vinyl and latex gloves, according to Lim.

"Today we produce more than 30 billion pieces of nitrile gloves per year, which is about 50% of our total annual gloves production. We can almost say we are the largest nitrile gloves producer, in terms of capacity and also production," he added.

By Dec 2020, Top Glove is projected to have 38 factories with 876 production lines, and a production capacity of 84.1 billion pieces per annum.

This represents an increase of 31.61% or 20.2 billion compared from the current production capacity of 63.9 billion pieces per annum. The group currently had 33 glove factories with 682 production lines.

The nitrile gloves contributed the bulk or 46% of its total revenue in FY19, followed by latex powdered gloves at 21%, latex powder-free gloves 18%, surgical gloves 12%, vinyl gloves 2% and cast polyethylene (CPE) and thermoplastic elastomer (TPE) gloves at 1%.

On Top Glove's prospect, Lim is confident of a bright future and chalking up double-digit growth, despite a competitive environment.

"We expect 10% to 20% growth for sales and net profit growth for FY20, on the back of its capacity expansion plan," he added.

For FY19, Top Glove's net profit fell 12.7% year-on-year to RM370.6 million versus RM424.4 million, despite a 13.8% rise in revenue to RM4.8 billion from RM4.22 billion.

At the noon market break today, Top Glove shares were three sen or 0.67% higher at RM4.51 with 829,700 shares traded.