Top Glove expects ASPs for gloves to decline further
KUALA LUMPUR - Top Glove Corporation Bhd expects the average selling prices (ASPs) for both nitrile and natural rubber gloves to decline further as the market dynamics remain weak, said managing director Lim Cheong Guan.
He said the ASP for nitrile gloves, particularly, has dropped due to the oversupply situation, resulting in market pressure on both prices and sales volume, both of which saw a downtrend.
The factors that affected sales volume, both ASPs, and other volumes were mainly due to the ongoing globalisation trend and mismatch of glove demand and supply, and slower orders from customers as there was no urgency for them to place sizeable orders.
"Hence, we are expecting a further decline in ASPs, and also the delivery time for manufacturers is short due to the low (capacity) utilisation among manufacturers," he told reporters after announcing the company's financial performance for the first quarter (Q1) ended Nov 30, 2022, today.
Due to the persistent headwinds, Top Glove recorded a net loss of RM168.24 million in Q1 of its financial year ending Aug 31, 2023 (FY2023) against a net profit of RM185.72 million in Q1 2022, as sales volume eased by about 48 per cent year-on-year (y-o-y).
However, Lim noted that the decline in glove ASPs is slowing down, indicating that the downtrend will not continue indefinitely.
"The ASPs for gloves should be back to normal within three to six months," he said.
The group also expects to derive some benefits from the declining trend in raw material prices; whereby the average natural latex concentrate prices have declined by seven per cent to RM4.73 per kg while nitrile latex prices have decreased by 49 per cent y-o-y to US$0.91 per kg (US$1=RM4.40).
"Top Glove is maintaining the positive long-term outlook for the glove industry as demand continues to grow by 10 per cent yearly, spurred by heightened glove usage and hygiene awareness post-pandemic.
"We are operating amid several headwinds which have afflicted the industry for the past six months. This is expected as we go through the process of normalisation which will precede our eventual recovery," he said.
While long-term prospects for the glove industry are positive, Top Glove anticipates the challenging environment to persist going into 2023.
Lim said the group is mindful that a period of adjustment is to be expected following a major global pandemic.
"However, we are optimistic that the glove supply and demand will eventually rebalance to be more representative of actual consumption levels and the industry's true potential," he added.-- BERNAMA
