Top Glove warns of weak demand as profit slumps

Malaysia's Top Glove said on Friday its profit for the first quarter was nearly wiped out and it expected the business environment in the near term to be challenging as competition intensified amid slowing demand for medical gloves.

The news sent its shares down 9.5 per cent. The world's largest medical glove maker was among the early beneficiaries of the pandemic as demand for its protective rubber gloves surged with rising infections.

The company bet that the momentum would help it in a planned $1.9 billion listing in Hong Kong, but it had to slash that amount as its Kuala Lumpur-based stock slumped as the pandemic waned and the United States imposed a year-long ban on the company's products over alleged forced labour. The ban was lifted in September.

"The group saw a decrease in sales volume in the current quarter, which was attributed to increased competition and supply, owing to expansion by existing players and entrance of new players," Top Glove said in a stock exchange filing on Friday. The company's rivals include Hartalega Holdings, Supermax Corp and Kossan Rubber.

Falling demand compared to last year, when the pandemic was much more intense, and the U.S. ban had already pushed Top Glove's shares down 60 per cent this year before Friday's results release. Top Glove said its net profit for the September-November quarter plunged 92 per cent from a year earlier to 185.7 million ringgit

($44.04 million).

Revenue tumbled 67 per cent to 1.58 billion ringgits.

The company said average selling prices fell and customers were replenishing stocks cautiously as they expected a further decline in glove prices.

Still, it said that it expected sales volumes to improve in the coming quarters as it gradually resumes exports to the United States.

"We have recovered very strongly (in the United States) due to our close follow up and our long-term relationships with many of our customers," Managing Director Lee Kim Meow said on a post-earnings conference call.