Friday, December 16, 2011

#Update* Higher raw materials, forex loss weigh on Top Glove

KUALA LUMPUR (Dec 16): TOP GLOVE CORPORATION BHD []'s earnings fell 12.81% to RM31.43 million in the first quarter ended Nov 30, 2011 from the RM6.05 million a year ago as it was impacted by higher raw material prices and the oversupply in the industry but it performed better when compared to the preceding quarter.

'The current quarter's net profit was also impacted by the recognition of net loss in foreign exchange amounting to RM13.3 million compared with a net gain of RM4.7 million in the corresponding quarter last financial year,' it said in a statement to Bursa Malaysia on Friday.

The world's largest glove maker said its revenue rose 12.9% to RM554.84 million from RM491.51 million. Earnings per share declined to 5.08 sen from with 5.83 sen.

Top Glove, however performed better when compared with the preceding quarter in terms of revenue and earnings. It revenue rose 2.4% to RM554.84 million from RM541.84 million in the preceding quarter, while net profit increased 21.0% to RM32.46 million from RM26.82 million.

'The improved performance in the current quarter was largely attributed to a decline in latex prices which fell by 9.3% from the preceding quarter (from RM9.19 per kg in the quarter ended Sept 30, 2010 to RM8.34 a kg in the quarter ended Nov 30, 2011), and a stronger average US dollar against the ringgit which improved by 4.0% (from RM3 to RM3.12).

Elaborating on the raw materials, it said average latex price rose by 16% from RM7.19 per kg in the first quarter ended Nov 30, 2010 to RM8.34 a kg in Nov 30, 2011.

The average nitrile price has also increased by 46.4% from US$1.40 a kg to US$2.05 a kg during the period.

Top Glove group chairman, Tan Sri Lim Wee Chai expected the retracement in latex prices and the stronger greenback to deliver a generous boost to the group's earnings.

'With the improved performance, our cash flow continues to strengthen, allowing us to expand capacity and invest in efficiency improvement,' he added.

Lim said the group's net cash position increased 24.9%, rising to RM317.55 million as at Nov 30, 2011.

Top Glove's total group capacity expanded to 37 billion pieces of gloves per annum in the just ended quarter after the completion of new facilities.

On the outlook for latex prices, Lim expected the downtrend in prices to likely be sustained given the uncertainty in the European debt crisis and the expectation of a slowdown in the global economy going into 2012.

'Nevertheless, we are still continuing with our strategy of achieving a more balanced product mix by increasing our production of nitrile gloves,' he said.

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