Malaysia's Top Glove posts record profit after fresh infections boost demand

Malaysia's Top Glove Corp posted on Wednesday a more than 20-fold jump in first-quarter net profit to a record high, after new waves of coronavirus infections in recent months boosted demand for protective rubber gloves and selling prices.

Malaysia's Top Glove Corp posted on Wednesday a more than 20-fold jump in first-quarter net profit to a record high, after new waves of coronavirus infections in recent months boosted demand for protective rubber gloves and selling prices. Net profit at the world's largest rubber glove maker grew 2,030% to 2.38 billion ringgit ($585.49 million) for the September-November period from 111.4 million ringgit a year ago. Revenue rose 294% to 4.76 billion ringgit.

The performance, a second straight record quarterly profit, exceeded profits for the entire 2020 financial year. "New highs seem to be the new normal for Top Glove," Executive Director Lim Cheong Guan told reporters on an earnings call, adding that demand was expected to keep growing.

"We do foresee that there is still shortage of gloves in the next three years," he added. "The potential increase in demand is mainly because current stockpiles of gloves are at critically low levels at customers' warehouses." Malaysia produces two-thirds of the world's rubber gloves, with Top Glove producing one in five. The company's biggest markets are North America and Europe.

Top Glove estimates glove demand will grow by 20% this year, 25% next year and 15% after the pandemic. Delivery times have surged on the strong demand and now stand at 510 days for nitrile gloves, the company said.

Managing Director Lee Kim Meow said on the call that Top Glove was in the final leg of talks with U.S. customs authorities, which banned products from two units in July over accusations of the use of forced labour. "We foresee that we are closer to the tail end," he said.

The United States banned the Top Glove products after it found evidence of forced labour practices, including debt bondage. Top Glove had been working to resolve the issues, including agreeing to pay recruitment fees for its migrant workers and providing them better accommodation.

Top Glove shut some of its factories in Malaysia in phases last month after an outbreak in which more than 5,000 workers tested positive. The cluster became Malaysia's largest, prompting authorities to launch investigations. The labour department has said it would file charges against the company for poor accommodation facilities for its workers.

The company said the temporary closures would affect sales and production by 4% this financial year, but it expects to resume full operations within two to three weeks. Top Glove saw fewer than 3% of orders cancelled over the closures, which it attributed mainly to some customers declining to wait for the gloves, as well as higher pricing.

The company said it was still working on a plan to list in Hong Kong next year that was first announced in September. Shares of the firm fell 3.5% on Wednesday, but have climbed 337% since the start of the year.