SHAH ALAM, Malaysia—Prompted by high demand and record sales and profit, Top Glove has increased its five-year investment plans for a second time this year.
The Malaysian glove maker has raised its capex for the next five years (financial years 2021-2025) to $2.47 billion, up from the previously budgeted $1.97 billion in September and $741 million in June.
The move will increase production capacity by an additional 100 billion gloves, from the current capacity of 85.5 billion gloves per year, the company said in a Dec. 7 statement.
The Malaysian group aims to invest in new capacity, upgrading existing facilities, the construction of a gamma sterilization plant, land bank for future expansion, Industry 4.0 digitalization and improvements to workers' facilities.
For the first quarter of fiscal 2021, which started Sept. 1, the glove manufacturer posted sales of $1.2 billion, up 294 percent compared with the same period last year, and 53 percent quarter-on-quarter, Top Glove said in its quarterly report.
Profit after tax attributable to owners of the parent (profit) surged by 20 times to $592 million versus the corresponding period in fiscal year 2020, and doubled against the previous quarter.
Sales volume improved 34 percent year-on-year, helped by strong demand for gloves in both developing and emerging markets due to the ongoing global pandemic.
Top Glove linked the improved profit to higher sales, high utilization levels as well as higher average selling prices (ASPs) in line with market pricing.
Moreover, the group said the bottom line improved due to ongoing technological upgrades, automation and digitalization initiatives, as well as quality and productivity enhancements.
During the period under review, the uptrend in raw material prices continued, as natural latex concentrate increased 13 percent to an average of $1.27 per kilogram and nitrile latex jumped 39 percent to an average of $1.31 per kilogram quarter-on-quarter.
The increase in raw materials prices mainly was driven by less favorable weather conditions and supply constraints, against a backdrop of increased glove demand.