KUALA LUMPUR: Top Glove Corp Bhd expects a better year ahead with a bigger profit margin amid expectations of lower raw material costs and stronger US dollar, said chairman Tan Sri Lim Wee-Chai.
Lim said latex prices had dropped from as high as RM11 per kg to RM7 and the floods in Thailand would not affect rubber plantations in the southern region. He does not expect the massive floods to have a significant impact on latex production there.
“We expect our profit margin on sales to be back to normal, about 8%, next year,” he told the media after the luncheon talk hosted by the Federation of Malaysian Manufacturers (FMM) yesterday.
In terms of profit margins, Lim said Top Glove’s best year was in FY10 ended Aug 31, which was 12% to 13%, and its worst year in FY11 at 5% to 6%.
For FY11, the group posted a net profit of RM113.1 million, down 54% from RM245.2 million, despite the marginal fall in revenue to RM2.05 billion from RM2.08 billion.
Top Glove’s net profit more than halved to RM26 million for 4QFY11 ended Aug 31, against RM45 million previously, due mainly to volatile latex prices, strong ringgit against the greenback and oversupply of rubber gloves.
Despite the oversupply in the industry, Top Glove, however, will continue to expand its capacity. The company intends to spend RM100 million to build 24 or 25 factories, raising its production by about 10%, according to Lim, and also to expand its upstream activities in rubber plantation.
He said the company is in the process of acquiring rubber plantations in Malaysia, Indonesia and Cambodia, adding that RM150 million has been allocated for land acquisition and development over the next seven years.
Lim said Top Glove will focus on organic instead of external growth because of cost efficiency and the lower risk involved.
During the luncheon talk, Lim shared some practices he adopted in running Top Glove, the world’s largest rubber glove manufacturer in terms of capacity.
One of them is promoting honesty, integrity and transparency. He prevents corruption by having his employees around the world wear a badge with the words “to prevent and against corruption, be honest, no cheating”.
Visitors to the factory wear the badge, too, and a notice with the similar message is also found at the entrance of some of its factories, Lim said.
Another practice is promoting good health. On a quarterly basis, Top Glove monitors the body weight of its employees, be it over or under weight. “Prevention is the best doctor,” he said.
The company provides free toothbrushes and toothpastes to its employees. Lim said company statistics showed that the most common sickness is related to throat infection, which gets worse in the country’s hot climate.
Top Glove promotes a continuous learning culture by advising its employees to read books ranging from management to health, Lim said. They are required to give at least one suggestion a month to the company.
By doing so, he said this cultivates them to be “thinkers”, adding that the suggestions can sometimes be useful and valuable.
This article appeared in The Edge Financial Daily, November 10, 2011.
Lim said latex prices had dropped from as high as RM11 per kg to RM7 and the floods in Thailand would not affect rubber plantations in the southern region. He does not expect the massive floods to have a significant impact on latex production there.
“We expect our profit margin on sales to be back to normal, about 8%, next year,” he told the media after the luncheon talk hosted by the Federation of Malaysian Manufacturers (FMM) yesterday.
In terms of profit margins, Lim said Top Glove’s best year was in FY10 ended Aug 31, which was 12% to 13%, and its worst year in FY11 at 5% to 6%.
For FY11, the group posted a net profit of RM113.1 million, down 54% from RM245.2 million, despite the marginal fall in revenue to RM2.05 billion from RM2.08 billion.
Top Glove’s net profit more than halved to RM26 million for 4QFY11 ended Aug 31, against RM45 million previously, due mainly to volatile latex prices, strong ringgit against the greenback and oversupply of rubber gloves.
(From left) MOX-Linde Gases Sdn Bhd managing director Wong Siew Yap,
FMM vice-president Datuk Andy Seo and Lim after the luncheon talk yesterday.
FMM vice-president Datuk Andy Seo and Lim after the luncheon talk yesterday.
Despite the oversupply in the industry, Top Glove, however, will continue to expand its capacity. The company intends to spend RM100 million to build 24 or 25 factories, raising its production by about 10%, according to Lim, and also to expand its upstream activities in rubber plantation.
He said the company is in the process of acquiring rubber plantations in Malaysia, Indonesia and Cambodia, adding that RM150 million has been allocated for land acquisition and development over the next seven years.
Lim said Top Glove will focus on organic instead of external growth because of cost efficiency and the lower risk involved.
During the luncheon talk, Lim shared some practices he adopted in running Top Glove, the world’s largest rubber glove manufacturer in terms of capacity.
One of them is promoting honesty, integrity and transparency. He prevents corruption by having his employees around the world wear a badge with the words “to prevent and against corruption, be honest, no cheating”.
Visitors to the factory wear the badge, too, and a notice with the similar message is also found at the entrance of some of its factories, Lim said.
Another practice is promoting good health. On a quarterly basis, Top Glove monitors the body weight of its employees, be it over or under weight. “Prevention is the best doctor,” he said.
The company provides free toothbrushes and toothpastes to its employees. Lim said company statistics showed that the most common sickness is related to throat infection, which gets worse in the country’s hot climate.
Top Glove promotes a continuous learning culture by advising its employees to read books ranging from management to health, Lim said. They are required to give at least one suggestion a month to the company.
By doing so, he said this cultivates them to be “thinkers”, adding that the suggestions can sometimes be useful and valuable.
This article appeared in The Edge Financial Daily, November 10, 2011.
