Top Glove posts 2.9% lower 2Q earnings of $35.3 mil despite strong revenue growth
SINGAPORE (Mar 22): Top Glove has reported RM105.8 million ($35.16 million) in earnings for the 2Q ended Feb, representing a 2.9% y-o-y decline from its 2Q18 earnings of RM109 million due to higher finance costs and taxes, as well as lower associate contributions.
This brings the group’s earnings for 1H19 to a total of RM215.8 million, up 0.6% on-year from RM214.5 million in 1H18.
Revenue for the quarter grew 21% to RM1.16 billion from RM958.4 million on the back of strong sales volume growth, which exceeded projected global demand by 6 percentage points at 16%, as well as higher average selling price.
This led to a 14.2% improvement in earnings before interest and tax (EBIT) to RM143.2 million compared to RM125.4 million a year ago.
Finance costs however grew to RM19.9 million from RM2.7 million in 2Q18, while share of results of associate fell to RM30,000 from RM2.1 million a year ago.
Top Glove also registered higher income tax expenses over the quarter due to a reduction in tax allowance, following the expiry of a three-year special reinvestment allowance in 2018 – as well as due to the provision of deferred tax liabilities in the in the current quarter as compared to the previous financial year, where deferred tax liabilities were only provided for in 4Q18.
Total tax payable as at end-Feb stood at RM24.08 million, nearly trebling from RM8.7 million in the previous year.
Over the period under review, Top Glove also notes that raw material prices were mixed as the average price for natural rubber latex fell 17.7% to RM3.62/kg compared to that of 2Q18, while the average nitrile latex price surged 1.9% y-o-y to US$1.08/kg.
Looking ahead, the group says it will continue to expand its operations to meet global demand, with its expanded and new facilities by end-2020 to boost its total number of production lines by 200 additional lines to 848, and production capacity by 20.4 billion gloves per annum to 80.9 billion gloves per annum.
Despite envisaging a “highly challenging business environment both on the domestic front and macroeconomic level”, Top Glove says it remains positive on the industry outlook going forward.
The group adds that it will continue to embark on initiatives to improve the operations of its subsidiary Aspion, particularly in terms of production efficiency.
As at 3.20pm, shares in Top Glove are trading flat at $1.47.
