KUALA LUMPUR: Top Glove Corp Bhd expects the current oversupply of rubber gloves in the global market to be absorbed over the next one to three years and is pushing ahead with its expansion plans.
“There is a 10% to 20% oversupply right now. This is due to the high demand over the past one to two years,” chairman Tan Sri Lim Wee Chai said.
“But this is a long-term business and we will continue to invest as demand for gloves is still growing at 8% to 10% every year,” he said.
He said at a media and analysts and fund managers' briefing here that Top Glove had set aside RM100mil for capital expenditure next year, mainly for research and development and marketing expenses. Top Glove is the world's largest glove manufacturer.
Top Glove intended to focus more on “market-driven” products rather than being “product-driven”, he said, noting that the company's plants were running at full capacity for high-demand products like nitrile gloves, while for the less-in-demand vinyl gloves, production was running at between 30% and 40% capacity.
Top Glove had targeted to grow its capacity to 463 production lines producing 41.55 billion gloves a year by May 2012 from the current 395 lines that could produce some 35.25 billion pieces per year, Lim said.
Top Glove made a net profit of RM26.1mil for its fourth quarter ended Aug 31, 42% lower than the RM45mil it posted a year earlier, largely due to volatile latex prices, a weaker greenback and oversupply in the industry.
The situation is looking better now with lower latex prices at RM8 to RM8.20 per kg from about RM11 per kg a few months ago coupled with a recovering greenback against the ringgit, according to Lim.
“I think it is a matter of time before latex, which made up 64% of costs in the last financial year, falls to RM7 per kg, hopefully within the next three to six months,” he said.
On the floods in Thailand, where the company sourced most of its latex needs, Lim said the floods were in the north of Bangkok and not south where most of the supply came. “It may have some effect but it will not be critical,” he said.
Lim said Top Glove hoped to grow its sales by 20% in its current financial year ending Aug 31, 2012.
Net profit margin should come in between 8% and 10% for the current financial year and beyond, he added.
For the full year ended Aug 31, Top Glove's net profit stood at RM113.1mil against RM245.2mil a year earlier on revenue of RM2.05bil compared with RM2.08bil previously.
“There is a 10% to 20% oversupply right now. This is due to the high demand over the past one to two years,” chairman Tan Sri Lim Wee Chai said.
“But this is a long-term business and we will continue to invest as demand for gloves is still growing at 8% to 10% every year,” he said.
He said at a media and analysts and fund managers' briefing here that Top Glove had set aside RM100mil for capital expenditure next year, mainly for research and development and marketing expenses. Top Glove is the world's largest glove manufacturer.
Top Glove intended to focus more on “market-driven” products rather than being “product-driven”, he said, noting that the company's plants were running at full capacity for high-demand products like nitrile gloves, while for the less-in-demand vinyl gloves, production was running at between 30% and 40% capacity.
Top Glove had targeted to grow its capacity to 463 production lines producing 41.55 billion gloves a year by May 2012 from the current 395 lines that could produce some 35.25 billion pieces per year, Lim said.
Top Glove made a net profit of RM26.1mil for its fourth quarter ended Aug 31, 42% lower than the RM45mil it posted a year earlier, largely due to volatile latex prices, a weaker greenback and oversupply in the industry.
The situation is looking better now with lower latex prices at RM8 to RM8.20 per kg from about RM11 per kg a few months ago coupled with a recovering greenback against the ringgit, according to Lim.
“I think it is a matter of time before latex, which made up 64% of costs in the last financial year, falls to RM7 per kg, hopefully within the next three to six months,” he said.
On the floods in Thailand, where the company sourced most of its latex needs, Lim said the floods were in the north of Bangkok and not south where most of the supply came. “It may have some effect but it will not be critical,” he said.
Lim said Top Glove hoped to grow its sales by 20% in its current financial year ending Aug 31, 2012.
Net profit margin should come in between 8% and 10% for the current financial year and beyond, he added.
For the full year ended Aug 31, Top Glove's net profit stood at RM113.1mil against RM245.2mil a year earlier on revenue of RM2.05bil compared with RM2.08bil previously.
