KUALA LUMPUR: Top Glove Corp Bhd narrowed its losses to RM51.2 million in the second quarter ended Feb 29, 2024 (Q2FY24) on stronger sales volume growth.
The company said customers placed new orders following the depletion of excess inventory.
For the same quarter in financial year 2023, Top Glove reported a net loss of RM164.66 million.
The company said the uptrend in sales orders was spurred by the progressively narrowing price gap, which has seen top glove achieve parity in average selling prices (ASPs) with its overseas peers.
Top Glove said in its filing with Bursa Malaysia the uptick in orders which boosted production utilisation, resulted in enhanced production and cost efficiency, impacting the bottom line positively.
Ongoing quality and cost optimisation initiatives, coupled with operational enhancements outlined in the Top Glove Turnaround Plan (T6), also underpinned the group's improved set of results.
Revenue for the quarter under review dipped 11 per cent to RM550.33 million from RM618 million, a year prior.
During the quarter, the company said natural rubber latex concentrate prices rose at a much faster rate, from an average of RM4.91 per kilogram (kg) at end November 2023 to RM5.66/kg at end February 2024, a spike of 15 per cent.
This sharp increase caused a mismatch with ASPs, thereby affecting margins. "However, the strong growth in sales volume helped increase utilisation, thereby improving production and cost efficiency, which mitigated the mismatch.
The significant increase in sales volume also provides a good indication that glove demand is picking up strongly on the back of excess inventory depletion," it said.
For the cumulative period, the company's net loss narrowed to RM108.91 million from RM332.9 million.
The company logged a revenue of RM1.04 billion, down 17 per cent from RM1.25 billion in the corresponding period the previous year.
Top Glove managing director Lim Cheong Guan said the improved performance demonstrated the effectiveness of the company's strategic initiatives in recapturing sales, enhancing quality, cost and efficiency, as well as Top Glove's resilience amidst persistent challenges.
"It is also a testament to the good efforts of our employees, who have been instrumental in driving our recovery"."The group views the 18 per cent quarter on quarter growth in sales volume for Q2FY24 as an encouraging sign of Top Glove's continual and significant strides towards recovery.
"With this, the group maintains a positive mid to long term outlook on the glove industry, as gloves remain an essential, single use item in the healthcare, industrial and food and beverage sectors with no viable replacement," he said.
Lim added that the group is also optimistic that the strong growth momentum will sustain, as customers continue replenishing their depleting glove stockpiles.
"Moreover, with increased health and hygiene awareness post pandemic, the global glove demand growth of approximately eight per cent per annum is expected to resume, thereby absorbing excess capacity within the industry, while manufacturers continue to halt expansion towards restoring the demand supply balance.
"We continue to see signs of the market rebounding and believe our business will normalise in due course as glove industry fundamentals remain robust and unchanged," he said.
