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April 06, 2017 02:00 AM

Top Glove to open three new production plants

Shahrzad Pourriahi
European Rubber Journal
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    Top Glove Corp.
    Top Glove said it expects global demand for its products to continue growing by between 6 percent and 8 percent per year.

    SHAH ALAM, Malaysia—Top Glove Corp. expects to begin production at three new Malaysian facilities by the end of 2018, helping to meet the growing demand for gloves.

    In a quarterly report release on March 16, the Malaysian glove manufacturer said it expects global demand for its products to continue growing by between 6 percent and 8 percent per year.

    To help meet new demand the company plans to bring additional manufacturing sites online. In a quarterly statement issued March 16, Top Glove said it had nearly completed the construction of Factory 30 in Klang and expected to start production by May.

    The plant will have a capacity of 4.4 billion gloves per year.

    Two other new facilities also located in Klang—Factory 31 and Factory 32—will start operations by November 2017 and December 2018, respectively, the company said. They will have production capacities of 2.8 billion and 4.8 billion gloves per year.

    By December 2018, Top Glove projects it will operate 632 production lines with production capacity of 60 billion gloves per year.

    Additionally, the company has launched operational efficiency improvement measures at its plants including automation projects.

    Top Glove said has been working with government agencies and domain experts to develop Industry 4.0 applications, which it is "in the process of implementing throughout its factories."

    Manufacturing process improvement and price hikes have helped Top Glove gain an 8 percent increase in revenue in the second quarter of 2017, which ended Feb. 28.

    The corporation announced that the group achieved $18.4 million in the second quarter despite a "challenging environment" with profit before tax and profit after tax also on the rise, at $23.1 million and $18.8 million, respectively. This represented an increase of 14 percent and 13 percent against the first quarter.

    Sales volume eased 1 percent quarter-on-quarter, owing to shorter working months during the quarter in review, but was up 9 percent compared with the same quarter in 2016.

    According to Top Glove, the strong performance was due to "improvements adopted across the manufacturing process," which maintained good quality while managing costs efficiently.

    "Upward price revisions implemented, the effects of which were felt in 2QFY17, were also instrumental in normalizing sales revenue figures vis-a-vis the previous quarter," the group added.

    Year-on-year, sales grew by 23 percent but profit after tax was softer by 21 percent versus the same quarter last year on the back of sharp increases in raw material prices.

    "We have delivered a healthy set of numbers for our 2QFY17, despite a challenging business environment with sharp increases in manufacturing cost," said Tan Sri Dr Lim Wee Chai, Top Glove executive chairman. "This shows that our approach of focusing on internal factors within our control, such as quality and cost efficiency, and not external factors, is the correct way forward for our business."

    Top Glove said it is exploring mergers and acquisitions and joint ventures with good valuations in similar or related industries, as part of its operational strategy.

    In terms of higher costs for raw materials, the glove maker said it was of the view that raw materials prices will stabilize at current levels or possibly will be on the downtrend, going forward.

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