Top Glove struggles to make profit due to oversupply and destocking
The Malaysian glove manufacturer sees the headwinds to persist in 2023.
SGX-listed glove manufacturer, Top Glove, reported $164.6m net loss in the second quarter that ended 28 February 2023 compared to the same period last year.
In a financial statement, the company said they struggled to be back in black following the challenges such as excess customer inventory, ongoing oversupply, lack of customer urgency to place orders amidst shorter delivery times.
The subdued financial performance can also be traced to rising production costs.
Sales revenue went down $618,006 in Q2 that ended 23 February from $1.4m in the same period in 2021.
Looking ahead, the group said their glove inventory levels are normalising but orders continue to receive lower price points even though sales volume increased.
“As the glove industry faces losses coupled with escalating costs, the industry has started to revise selling prices upward from February 2023, which is a necessary step towards the industry’s eventual recovery and sustainability,” read the statement.
It sees that the industry will face these challenges in 2023 but crafted plans to offset the headwinds.
“To mitigate effects of the headwinds encountered, we continue to implement efficiency enhancement and cash conservation initiatives aimed at driving recovery and improving our bottom line, while increasing ASPs to offset rising costs,” said Lim Cheong Guan, managing director of Top Glove.