Top Glove Corp Bhd's share price fell 10.2% or 19 sen to RM1.68 at yesterday's close (March 9), the lowest since January 2020 after the company announced a quarterly net profit of RM87.55 million for the 2nd financial quarter ended Feb 28. 2022 (2QFY22).
The fall in Top Glove's share price was the 3rd largest in a day since March 2020, where its biggest daily decline was on December 10, 2021 which recorded 10.37% at RM2.16.
For the year to date, its shares have fallen 35% or 91 cents.
Meanwhile, Top Glove’s quarterly profit was below market expectations, with consensus observers expecting the company to achieve a quarterly net profit of RM150 million at 2QFY22.
Top Glove's market capitalization amounted to RM13.45 billion based on a closing of RM1.68.
Meanwhile, Top Glove cited the issue of the average selling price (ASP) of rubber gloves as the main contributor to the decline in revenue, besides describing it as 'normalization'.
According to filings to Bursa, Top Glove's quarterly revenue declined 8.51% to RM1.45 billion for 2QFY22 from RM1.58 billion in the previous year, due to the normalization of ASP to pre-pandemic levels which offset the increase in sales volume.
For the first six months ended 28 Feb 2022 (1QFY22), the company's net profit fell sharply to RM273.27 million, almost 5% from RM5.23 billion earned in the previous year.
Apart from ASP, Top Glove also stated that the company was experiencing margin problems due to the slower decline in raw material prices than the decline in ASP.
According to the company, higher operating costs for utilities, labor and chemicals as well as increased competition from the supply of new gloves were also factors in the price pressure.
In a separate news item, Top Glove expects the majority of its customers in the United States (US) to start re -ordering from the company after the import ban was lifted by the US government.
U.S. Customs and Border Protection (GST) imposed a ban on goods made by Top Glove in July 2020 on charges of labor practices, but the ban was lifted 14 months later on Sept. 10, 2021.
For the record, the US is the main export market for Top Glove which accounts for 25% of its sales volume.
