KUALA LUMPUR, June 19 (Bernama) -- Top Glove Corporation Bhd expects to exceed its pre-pandemic profit margin of 15 per cent by 2026, owing to rising global glove demand and, in part, to the United States’ decision to increase import tariffs on made in China rubber gloves.
Top Glove managing director Lim Cheong Guan said the firm has reopened temporarily closed factories which were earlier halted due to a flood of rubber gloves, as well as reactivating additional production lines which had been put on hold.
“The market has come back and in a big way, glove demand is on the up and we are well positioned to supply it. We currently produce 95 billion pieces of gloves per annum, with 63 billion pieces being its current capacity.
“We are receiving an additional two billion orders monthly while observing a 20 per cent to 25 per cent increase in sales growth in the coming quarter and an additional 3 billion pieces capacity target by the end of 2024,” he said during Top Glove Results Briefing: Third Quarter Financial Year 2024 today.
Elaborating further, Lim said for facilities in Thailand and Malaysia, the facility utilisation ranged between 50 per cent and 55 per cent.
US president Joe Biden had previously announced a significant increase in tariffs on Chinese products, including medical and surgical rubber gloves.
The import tariff on Chinese-made rubber gloves is expected to rise to 25 per cent by 2026, up from the current 7.5 per cent.
Lim pointed out that sales to North America stood at 15 per cent and rose by 20 per cent in nine months of the financial year 2024.
Latin America contributed 10 per cent to the sales, while Western Europe contributed 18 per cent to the sales. However, for the nine months, it fell by 32 per cent.
Top Glove executive chairman and founder Tan Sri Dr Lim Wee Chai said the US are expected to start moving away from outsourcing orders to China ahead of the year 2026 when tariffs take effect, and Top Glove, as a major glove exporter to the US, is optimally positioned to capture more market share from the potential trade diversion.
“Unlike us, which have the opportunity to either sell to the US or Europe, the Chinese have to look into the Europe market or other markets. (US) buyers will start buying more from Malaysian glovemakers,” he said.
Lim also said that the higher tariff will have a substantial impact on Chinese glovemakers’ expansion plans, as the majority of them have reached full capacity.
“There are chances for them to set up glove factories in ASEAN countries, which one or two have done so, one in Vietnam and another on here.
“However, as compared with expansion within China, which I believe is more competitive, when they set up a plant outside China, it will take up at least two or three years to build the plant, which is not very competitive,” he added.
Top Glove returned to the black in the third quarter of the financial year 2024 (3Q FY2024) ended May 31, 2024, chalking up a net profit of RM50.67 million compared to a net loss of RM130.59 million in 3Q FY2023.
Revenue for the quarter also improved by 20 per cent to RM636.88 million versus RM530.62 million previously.
The group’s more robust performance was driven primarily by stronger glove demand as customers replenished their glove inventories having cleared excess stocks.
-- BERNAMA
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