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TOP Glove Corp Bhd (7113), the world’s largest rubber glove maker, plans to spend RM80 million until May next year to set up three new plants and increase production lines.

Chairman Tan Sri Dr Lim Wee-Chai said the expansion will bring the number of its factories and production lines to 20 and 459 respectively, producing 41.2 billion pieces of rubber gloves a year.

“The global rubber glove market is growing every year and we have to be consistent by increasing capacity, improving research and development and being more cost-efficient,” Lim told an analyst and media briefing in Kuala Lumpur yesterday.

Furthermore, the oil spill at the Gulf of Mexico in the US has seen a 40 per cent increase in rubber glove demand.

“Demand for cleanroom and safety gloves has surged as environmental groups and oil and gas workers require them for the clean-up,” said Lim.

He said the industry outlook was likely to be sustained, which would see the company register net profit growth of up to 10 per cent a year as in the past few years.

Top Glove currently has 17 factories, out of which 11 are in Malaysia, four in Thailand and two in China. They produce 33 billion pieces of rubber gloves a year, or some 33 per cent or more of the world rubber glove market.

The Klang-based company has 10,900 employees, more than 900 customers worldwide and exports to more than 180 countries.

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The world’s largest rubber glove maker, Top Glove Corp Bhd, more than doubled its fourth-quarter net profit, driven by strong demand for its products amid the ongoing flu scare and cost-saving measures.

The company also declared a final dividend of 15 sen a share, bringing the total payment for the full year to 22 sen, double what it paid in 2008.

Top Glove made a net profit of RM56.8 million for the quarter to August 31 2009. Revenue was up 17.2 per cent to RM427.

Its full-year net profit was RM169.2 million, a 54 per cent jump, while revenue was up 11 per cent to RM1.53 billion.

This is also its best yearly net profit since 2001 and its highest dividend payout in nine years.

“The continuing strong profit growth shows that Top Glove is efficient and had adapted well to the challenging business environment resulting from cost-saving measures implemented at all factories,” chairman Tan Sri Lim Wee-Chai said in a press release.

The group now had a net cash position of RM177 million and some RM197.2 million cash in the bank as at August 31 2009.

With strong profit growth, Lim said Top Glove is optimistic of its future despite ongoing global economic challenges.

“With a large customer base spread over more than 180 countries worldwide and with a diversified range of good quality products, coupled with a team of dedicated employees, we are confident in achieving continuous growth and good profitable performance in next financial year,” he said.

To meet rising demand, Top Glove is in the process of installing additional nine latex concentrate centrifuge machines in Thailand with targeted completion by December 2009.

The glove maker also said it will build its 21st factory in Klang with construction scheduled to be completed in July next year. It now produces 31.5 billion gloves a year and has more than 850 customers worldwide.

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In a recent press conferrence, Top Glove Corp Bhd, the world’s largest rubber glove manufacturer, says orders for its products have picked up since last month, and expects the momentum to continue.

Executive director Lim Cheong Guan projected revenue for the third quarter ending May 31 to be higher than the preceding quarter.

“The percentage of increase would be about the same as the second quarter over the first quarter,” he told a press briefing yesterday.

“Due to closure of some competitors (as a result of the global financial crisis), some big buyers have come to us,” he said, adding that increasing awareness of healthcare and government spending in the Middle East, China, India and Brazil had also helped boost demand.

Managing director Lee Kim Meow said that the reduction of electricity and natural gas prices, effective March 1, would cut production cost by 3%.

Top Glove will also appeal against the extra levy charges on foreign workers, which would cost the company an additional 0.5% in operation cost.

Recently, Top Glove obtained the Brazilian National Standards Organisation certificate, which is responsible for technical standards in Brazil.

The company planned to grow its market share in Brazil to 40% this year from 30% now. Currently, the company exports US$3mil to US$4mil worth of products, or about 50 containers per month, to Brazil.

Top Glove will maintain a 30% dividend payout ratio for the financial year ending Aug 31 (FY09). Total capital expenditure for FY09 is expected at RM60mil, where RM44mil had been spent during the first half.

The company has a very healthy balance sheet with a net cash of 5.3%, or RM39.6mil, compared with its peers, with some having up to 90.5% gearing ratio.

Over the last 10 years, Top Glove had been growing at an average of 30% compounded annual growth rate.

Asked whether the company would aggressively make acquisitions amid its healthy cash flow, chairman Tan Sri Dr Lim Wee Chai said the company would be cautious.

“Although we have pressure to grow, stability is more important. It is easy to acquire a company using cash but to maintain profitability is not easy,” he said.

He also ruled out diversification into the condom business, saying: “Condom needs a different set of skills although the technology is quite similar. Bottom line (net profit) is more important than top line (revenue).”

Top Glove has 17 glove factories and two latex concentrate plants, operating 339 production lines with a production capacity of 30 billion pieces of gloves per annum.

Its two latex concentrate plants in Thailand supply 50% of its latex concentrate materials. – The Star

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