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Nikkei Markets

World's largest glove-maker Top Glove expects 40% profit surge

Virus-led demand surge to boost second-half earnings

A worker inspects newly-made gloves at a Top Glove factory in Klang outside Kuala Lumpur.   © Reuters

KUALA LUMPUR (Nikkei Markets) -- Malaysia's Top Glove Corporation expects profits to rise  by as much as 40% in its fiscal second half.

Helped by higher average selling price and weak input costs, the world's largest glove-maker by volume will operate at full plant capacity to meet a surge in demand due to the coronavirus outbreak.

Average sale price is expected to rise between 3.5% and 5% in April-to-June period. While raw material prices remain low, Chairman Lim Wee Chai said at a post-earnings briefing.

The company expects to sell 15.80 billion gloves in the third quarter with sales of nitrile gloves likely to jump 20%, while latex or natural rubber gloves may surge 16%, Executive Director Lim Cheong Guan said at the same briefing.

"Sales orders in the latest week have surged 163% to 2.94 billion pieces as compared with 1.12 billion pieces during normal time," he 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 Middle East ordering 400 million pieces of gloves to be delivered within two weeks.

Demand for protective health gear such as gloves and masks have spiked following the highly contagious Covid-19 virus outbreak that has infected 472,393 people and claimed 21,304 lives.

Malaysia, reported its 19th death as of 5 p.m. Wednesday and more than 1,796 people have been contracted the infection.

"With the (Covid-19) pandemic, demand from hospital is now 20%-to-50% more. Therefore, we are increasing our production," Lim said, noting the company's plants are now running at full capacity. "There's a definite shortage as demand is more than supply."

Current secured orders are to be delivered until August, he said. "We will prioritize our delivery to front liners such as hospital and medical sector."

Despite a current restricted movement control order, expansion of Top Glove's capacity is on track, Lim added.

Last week, the company reported a 9.3% increase in its fiscal second quarter net profit as higher demand for nitrile gloves boosted sales volume.

The company will meet with International Trade and Industry Ministry to seek for approval to allow glove manufacturers to run with full workforce and exempt packaging industry from the restricted movement order, the chairman said.

Shares of Top Glove closed unchanged at 6.20 ringgit apiece, while the benchmark FBM KLCI ended 0.3% higher.

--Gho Chee Yuan

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