KUALA LUMPUR (June 9): Top Glove Corp Bhd expects average selling prices (ASPs) of gloves to drop further in the coming month due to weaker demand from the US and lower raw material costs.
Its executive director Lim Cheong Guan noted that the ASP of nitrile gloves fell 20% in Top Glove's third financial quarter ended May 31, 2021 (3QFY21).
"The ASP adjustment was in line with market pricing trends and lesser sales volume to the US," he told a virtual press conference held in conjunction with the announcement of the group's latest quarterly results.
Lim expects lower nitrile latex prices as costs of the raw materials, namely butadiene and acrylonitrile, are expected to decline by 10% and 6% respectively between May and August.
"A lower natural rubber latex concentrate price is expected in the coming months as the wintering season ended in May 2021, and yields are expected to improve," he added.
The world's largest glove manufacturer posted a softer quarter-on-quarter (q-o-q) performance for 3QFY21.
Its net profit fell 29.03% to RM2.03 billion from RM2.87 billion for 2QFY21, while revenue shrank 22.42% to RM4.16 billion from RM5.37 billion, as the group was barred from exporting to the US.
The group said the weaker q-o-q performance was owing to a decline in ASPs by 16%, a lower sales quantity following a temporary halt in shipments to the US from Malaysia and higher latex as well as natural rubber latex concentrate prices.
On a year-on-year (y-o-y) basis, the group’s quarterly net profit jumped almost five times to RM2.04 billion from RM347.9 million a year earlier on a higher revenue.
Revenue climbed to RM4.16 billion for 3QFY21 from RM1.69 billion previously.
Despite the weaker earnings performance, Top Glove declared a dividend of 18 sen a share, including a special dividend of 5.3 sen.
Top Glove gained six sen to close at RM4.84 today, with a market capitalisation of RM39.72 billion. It saw 34.54 million shares traded.