Top Glove expects more orders after tariffs clarity
PETALING JAYA: Top Glove Corp Bhd is banking on clearer US tariff policies and improving plant utilisation rates to support its earnings recovery, even as average selling prices (ASPs) remain under pressure amid stiff market competition and volatility in raw material cost.
Top Glove managing director Lim Cheong Guan said market uncertainties and increased competition led to a downward adjustment in ASPs for nitrile and natural rubber gloves by 5% and 3%, respectively, in the third quarter of financial year ended May 31, 2025 (3Q25).
The price adjustments were made in response to declining raw material costs to enable cost past-through and maintain price competitiveness.
'The third quarter was marked by uncertainty and competition stemming from the tariff developments. On April 1 when the tariff was announced, it resulted in temporary order deferrals and cancellations by some US customers who had not anticipated the added cost. This negatively impacted sales volume in the month of April.
'However, following the tariff revision to 10%, strong order inflows from the United States resumed, driving a strong 24% quarter-on-quarter sales volume growth to the United States market.
'On the other hand, competition intensified in Europe as Chinese manufacturers facing restricted access to the United States market shifted their focus there,' he said in a virtual result briefing for 3Q25 yesterday.
For 3Q25, Top Glove saw a 31% drop in net profit year-on-year (y-o-y) to RM34.7mil or earnings per share of 0.43 sen.
Revenue on the other hand rose by 30% y-o-y to RM830.3mil.
For the nine month period of financial year ended May 31, 2025 (9M25), the group's net profit was up y-o-y to RM70.5mil from a loss of RM58.2mil previously.
The company recorded a 55% increase y-o-y in revenue for 9M25 to RM2.6bil.
On a quarter-on-quarter basis, sales volume increased by 4% despite a 6% decline in revenue due to lower ASPs and a weaker US dollar.
Cheong Guan added the slight decline in ASPs also reflects falling raw material costs where nitrile and natural rubber prices are expected to decline by close to 14%.
He also anticipates more orders to flow in once there is more clarity of the tariff policy.
'During this period, we do share some of these cost savings with our customers as well.
'However, we also believe that once the tariff policies are finalised, our customers will be able to place orders with more certainty, without worrying that the tariff rate might go up to say 20%, which would result in higher import costs compared with 10% right now,' he said.
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