Top Glove (TOPGLOV) Q3 2024 earnings summary

Executive summary

• Achieved significant quarter-on-quarter improvements in sales volume, revenue, and profitability for 3QFY24, driven by strong glove replenishment activity, higher utilisation rates, and cost optimisation.

• Returned to net profit position in 3QFY24, with profit after tax surging 255% sequentially to RM62 million, including non-core contributions from land sales and forex gains.

• 3QFY24 sales revenue rose 16% quarter-on-quarter and 20% year-on-year to RM637 million, with sales volume up 13% sequentially and 32% year-on-year.

• 9MFY24 revenue was RM1.68 billion, slightly below 9MFY23, but net loss narrowed to RM26 million from RM433 million YoY.

• Sustainability milestones reached, with top ESG ratings from Sustainalytics and ISS ESG.

Financial highlights

• 3QFY24 EBITDA increased to RM130 million (+348% QoQ), a turnaround from negative RM50 million in 3QFY23; core EBITDA up 108% to RM62 million.

• Net profit of RM62 million in 3QFY24, reversing a net loss of RM40 million in 2QFY24.

• Basic and diluted EPS for 3QFY24 was 0.63 sen, compared to a loss per share of 1.63 sen in 3QFY23.

• Net assets per share stood at RM0.58 as of 31 May 2024.

• Cash and bank balances increased to RM367 million, with net cash flows from operations at RM51 million for 9MFY24.

Outlook and guidance

• Strong glove demand expected to continue, supported by stock replenishment and U.S. tariffs on Chinese gloves; upward momentum anticipated for Malaysian glove makers as more foreign manufacturers face U.S. FDA import alerts.

• ASPs adjusted upward to reflect higher raw material costs; further price increases possible.

• Raw material and natural gas prices expected to soften in coming quarters, improving margins.

• Compliance with EU Deforestation Regulation is on track, with first EUDR-compliant shipments targeted for July 2024.

• Hopes for clearer foreign worker policy to support industry and economic recovery.