Top Glove Corporation — the world’s largest producer of gloves by volume — is expecting profits to jump by up to 40 percent in its fiscal second half of 2020 due to a surge in demand amid the COVID-19 global pandemic.
In its fiscal second quarter earnings report March 19, Top Glove said is being helped by higher than average selling price and weak input costs and that the company will operate at full plant capacity to meet demand. Company chairman Lim Wee Chai said in a post-earnings briefing that average selling price is expected to rise between 3.5 to 5 percent in the April-to-June period.
In that same briefing, Top Glove executive director Lim Cheong Guan said the company expects to sell nearly 16 billion gloves in its 2020 fiscal third quarter, with sales of nitrile gloves likely to jump 20 percent and latex or natural rubber gloves may increase 16 percent.
"Sales orders in the latest week have surged 163 percent to 2.94 billion pieces as compared with 1.12 billion pieces during normal time," the director said, adding weekly sales from Feb. 3 to Mar. 23 averaged 2.44 billion pieces.
Chairman Lim said the company has received direct inquiries from Spain, Germany, Italy and the Middle East, with the Middle East ordering 400 million pieces of gloves to be delivered within two weeks.
The company said March 19 that it’s production levels were operating at above 90 percent capacity, and that the company is able to further ramp up closer to 100 percent to meet demand. Top Glove has new capacity coming online in the form of 24 new production lines that will capacity of 3.2 billion pieces of gloves per year when fully operational. Other production expansions set for later 2020 and 2021 will eventually add 150 more lines and 17.7 billion gloves capacity. By December 2021, Top Glove is projected to have a total of 861 production lines and a capacity of 91 billion gloves per year.
“Top Glove will continue to expand its operations in line with the growing glove demand globally to ensure it is well-positioned to help protect and save lives, particularly in view of the ongoing outbreak of COVID-19,” the company stated March 19. “At the initial stage of the outbreak, sales orders came mainly from China, Hong Kong, Singapore and South Korea. However, the group has in recent weeks also received strong sales orders from Europe, US and other countries as well, following its rapid spread to other continents across the globe, which has seen the group’s sales order book double.”
"With the (Covid-19) pandemic, demand from hospital is now 20 percent-to-50 percent more. Therefore, we are increasing our production," Chairman Lim said, noting the company's plants are now running at full capacity. "There's a definite shortage as demand is more than supply."
Lim said current secured orders are to be delivered until August and that Top Glove will prioritize its delivery to front-line personnel in the medical sector.
Top Glove reported a 9.3 percent year-over-year profit increase in Q2, boosted by higher demand for nitrile gloves.
On March 23, Top Glove announced its charity arm has committed to donating 2.5 million pieces of medical gloves to aid in the pandemic response.