SINGAPORE (June 11): Earnings of personal protective gear manufacturer Top Glove soared over three-fold to RM347.9 million ($113.7 million) for 3QFY2020 ended May, from the RM64.7 million logged a year ago.

On a fully diluted basis, this translates to earnings per share (EPS) of 13.15 sens, compared to 2.78 sens a year ago.

This marks the company’s best performance in its 29-year history and follows a surge in global demand for gloves and face masks amid the ongoing coronavirus pandemic.

"While this may be our most outstanding results to date, prepare to watch us break our own record in the upcoming quarters, because our best days are still ahead," Top Glove's executive director Lim Cheong Guan said in a virtual conference on Thursday.

The company has declared an interim dividend of 10 sens per share, up from the 3.5 sens given out in 3QFY2019.

Revenue for the quarter was up 42% y-o-y to RM1.7 billion, following an unprecedented 180% y-o-y increase in monthly sales orders. These orders came from governments, companies from the medical and non-medical sectors, as well as existing clients, the company elaborates.

Income was also boosted by a 9% yo-y increase in the average selling price (ASP) of gloves.

Additionally, Top Glove’s subsidiary, Aspion also contributed to the record earnings, as it’s sales revenue jumped 48% to RM202.3 million on the back of a heightened sales volume. Meanwhile its profit before tax grew four times compared with the previous quarter, on the back of improvement in its efficiency, quality and profitability.

“Gloves are an essential item in winning this war on Covid-19. It is a tremendous privilege to be in a position to help protect people in Malaysia and throughout the world from this dangerous virus,” Top Glove’s Executive Chairman, Lim Wee Chai stressed.

“We will continue to work safely and efficiently to produce as many gloves as possible at this critical time,” he asserted.

Top Glove has already taken steps to be more efficient and better avail itself to economies of scale. For one, it has increased its utilisation rate to 95%, from 85%, before the Covid-19 outbreak. This gives it a production capacity of 78.7 billion gloves per annum.

However, the company still faced a longer delivery lead time of 400 days in 3QFY20, from the 40-day time it previously adhered to.

It is now looking to further expand its capacity from 8% -10% to 12% - 15%, once the pandemic abates. For this, it has earmarked RM8 billion, to build 450 new production lines between calendar year 2020 (CY20) and CY2026. These facilities will allow the company to build 60 billion additional pieces of gloves.

Additionally, phase one of its Top Glove Innovation Complex at Factory 42 in Banting, Malaysia is on track for completion in 2QCY22. Here, the company will further its manufacturing and research capabilities.

With cash and cash equivalents of RM347.8 million, the company is in good stead to see through these expansions. In fact, Top Glove's 3QFY20's strong performance boosted its net cash position which had been negative since the company's acquisition of Aspion in 2018.

Wee Chai is now heartened that Top Glove has emerged among the top performers on both the Kuala Lumpur Composite Index (KLCI) and Straits Times Index (STI). Year-to-date, the counter surged 263% and 268% respectively.

“In spite of our strong orders and good performance, we are mindful that now is not the time to be complacent. In good times, we must prepare for bad times,” he says.

“The way we live may have changed, but we still have to continue working, even harder, smarter and faster now during these uncertain times”.

As at 2.45pm, shares of Top Glove was down 9 sens, or 1.57% to RM5.65.