KUALA LUMPUR, Sept. 20 (Xinhua) -- Top Glove, the world's largest rubber glove maker based in Malaysia, announced Tuesday that the firm slipped into the red in the fourth quarter ending Aug. 31, 2022 (4QFY22), dragged by lower glove average selling prices (ASPs) and escalating costs.
The group posted a net loss of 52.59 million ringgit (11.5 million U.S. dollars) in 4QFY22 as compared to a net profit of 447.4 million ringgit (98.2 million U.S. dollars) a year ago, its filing to the Malaysian stock exchange showed.
Its revenue for the quarter also plunged 52.2 percent to 990.1 million ringgit (217.27 million U.S. dollars) from 2.07 billion ringgit (454.25 million U.S. dollars) a year ago.
For the full year ending Aug. 31, 2022 (FY22), the group's net profit plummeted 96.94 percent to 235.97 million ringgit (51.78 million U.S. dollars) from 7.71 billion ringgit (1.69 billion U.S. dollars) in FY21.
Its full year revenue also tumbled 65.94 percent to 5.57 billion ringgit (1.22 billion U.S. dollars) from 16.36 billion ringgit (3.59 billion U.S. dollars) a year ago.
The group said in a statement that its softer financial performance came as the industry weathers an adjustment period, contending with the twin factors of oversupply coupled with excess stockpiling by customers during the pandemic.
This has led to a slowdown in orders, setting average selling prices (ASPs) on a downward trend, which has been aggravated as customers adopt a "wait and see" approach in anticipation of a further decline in ASPs.
Additionally, the group saw an escalation in cost structure attributed to global supply chain disruptions.
On the domestic front, it was impacted by approximately a 60 percent hike in natural gas tariff over the course of FY22, as well as a 25 percent increase in the Malaysian minimum wage which took effect in May 2022.
The escalating costs, which the group is unable to pass on to customers amidst the ongoing oversupply situation, have impacted its bottom line.
To ensure the group is well positioned to navigate this challenging period, Top Glove said its primary focus is on operational efficiency and cost rationalization.
Toward this, the firm has swiftly responded, establishing mitigating measures which include deferring all capital expenditure for new capacity in 2023, in view of lower utilization levels.
It has also embarked on streamlining facilities, focusing on enhancing those producing its in-house supply of materials.
In addition, the firm continues to collaborate with its suppliers toward ensuring more cost effective procurement for a win-win outcome.
In the near term, the group expects the business environment to remain challenging into 2023, as customers continue to deplete pipeline inventories and glove demand/supply gradually equilibrates.
However, the group believes that recovery is on the horizon.