According to a report by the US Rubber & Plastics News on December 21, driven by high demand and record sales and profits, the top glove company expanded its five-year investment plan for the second time this year.
The Malaysian glove manufacturer has increased its capital expenditure for the next five years (2021-2025) 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.
The company’s goal is 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.
Top Glove’s quarterly report pointed out that in the first quarter of fiscal 2021, which began on September 1, the company’s sales were US$1.2 billion, a surge of 294% over 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 skyrocketed 20 times to 592 million U.S. dollars, doubling 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 link profit growth with increased sales, increased capacity utilization, and higher average selling prices that are in line with market pricing.
In addition, the company also stated that the skyrocketing profits is due to continuous technological upgrades, automation and digitalization initiatives, as well as improved quality and productivity. During the quarterly reporting period, the prices of raw materials continued to rise. Among them, concentrated natural rubber 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.