Top Glove maintains optimism despite $36 million loss

KUALA LUMPUR, Malaysia—Despite suffering a recorded loss of more than $36 million in the first quarter of its 2023 financial year, Top Glove Corp. Bhd. Remains optimistic about long-term prospects for its markets.

The Malaysian gloves maker's net loss in the quarter ending Nov. 30 is down from a net profit of $47 million reported for the same period of 2021.

Group sales fell 61 percent year-on-year to $146 million during the three-month period, due mainly to a 48-percent decline in sales volumes, the company reported.

In a Dec. 14 news release, the group linked the softer financial performance to "the ongoing glove supply/demand imbalance."

The company said customers have held off on restocking activity as they continued to deplete existing glove inventories, hitting demand with a "lack of urgency" to place orders due to excess production capacity within the gloves industry.

Top Glove noted, however, that the decline in average selling prices "is slowing down."

This was an indication that "the downtrend will not continue indefinitely," said the group, which also expects to benefit from a declining trend in raw materials prices.

Top Glove noted year-on-year declines in average prices for natural latex concentrate of 7 percent to $1.09 per kilogram, and nitrile latex of 49 percent to $0.91 per kilogram.

"Top Glove maintains the long-term outlook for the glove industry remains positive, as glove demand continues to grow by 10 percent yearly," the company said.

Commenting on headwinds faced over the past six months, Managing Director Lim Cheong Guan said Top Glove was focusing on operating efficiently in view of lower capacity utilization and maintaining disciplined cost-management.

However, while long-term prospects for the gloves industry are positive, Top Glove said it anticipated the challenging environment to persist into 2023.

"We are mindful that a period of adjustment is to be expected following a major global pandemic," Lim said.

"However, we are optimistic that glove supply/demand will eventually rebalance to be more representative of actual consumption levels."