Affected By The Continuous Outbreak Of The New Crown Epidemic, The Top Glove Company Decided To Expand Its 5-year Investment Plan Again

- Jan 03, 2021-

It is understood that as the global new crown epidemic continues and the recent mutation of the new crown virus in the UK has led to a rapid increase in demand for rubber gloves, top rubber glove companies have once again expanded their production capacity.

On December 21, 2020, according to the US “Rubber Plastics News” media report, driven by high demand for gloves and record sales and profits, Malaysia’s top glove company decided to expand its 5-year investment plan for the second time this year. The company has increased its capital expenditures for the next five years (2021-2025 fiscal year) to US$2.47 billion, up from US$1.97 billion in September last year and US$741 million in June this year. It is said that this move will increase the glove production capacity by 100 billion more than the current annual output of 85.5 billion.

At present, Malaysia's top glove company aims to invest in new production capacity, upgrade existing facilities, build gamma ray disinfection plants, reserve land for future expansion, digitize Industry 4.0, and improve workers’ living facilities. According to the quarterly report data of Top Gloves, in the first quarter of fiscal 2021 beginning on September 1, the company's sales were US$1.2 billion, a surge of 294% from the same period last year and a 53% increase from the previous quarter.

Compared with the same period in fiscal year 2020, the after-tax profit attributable to the parent company soared 20 times to 592 million U.S. dollars, which was double the previous quarter. Sales increased by 34% year-on-year, thanks to the continued spread of global new crown pneumonia and strong growth in demand for gloves in developing and emerging markets. Top Gloves associate profit growth with increased sales, increased capacity utilization, and higher average selling prices that are in line with market pricing.

In addition, Malaysia's top glove company also stated that the soaring profits are attributable to continuous technological upgrades, automation and digital initiatives, as well as quality and productivity improvements. During the quarterly reporting period, the prices of raw materials continued to rise. Among them, concentrated natural latex rose by 13%, with an average price of US$1.27 per kilogram, and nitrile latex rose by 39%, with an average price of US$1.31 per kilogram.

In the context of increasing demand for gloves, the increase in raw material prices is mainly driven by less favorable weather conditions and supply constraints.