Top Glove’s net profit jumps 20-fold in Q1 as COVID-19 sustains demand

In a report on Wednesday, Top Glove Corp (OTCMKTS: TPGVF) said that its net profit in the fiscal first quarter saw an unprecedented over 20-fold increase as the ongoing COVID-19 crisis sustained demand for gloves in recent months. The company also acknowledged production efficiency and higher selling price as contributing factors to its record quarterly profit.

Top Glove ended almost 4% down in the stock market on Wednesday. On a year-to-date basis, its shares (learn more: how to buy stocks for beginners) are now close to 350% up due to a boost to its business amidst the Coronavirus pandemic.

Such a massive jump in Top Glove’s profit in Q1 was even more surprising as supply constraints, and harsh weather conditions had fuelled prices for raw materials in recent months. In separate news from the United Kingdom, Allied Universal said it will buy the security group G4S for £3.8 billion.  

Top Glove reports a 294% growth in first-quarter revenue

Top Glove reported £440 million of net profit in the quarter that concluded in November. In comparison, its profit was capped at a significantly lower £20.41 million in the same quarter last year.

The world’s largest manufacturer of gloves said its revenue posted a 294% increase in the recent quarter to £870 million. The Shah Alam-headquartered company’s profit, however, was still slightly weaker than £450 million that experts had forecast for Q1, as per Refinitiv.

Top Glove had expressed plans of listing on the Hong Kong Stock Exchange in its fiscal fourth quarter in which it registered £240 million of net profit. As per the company, higher sales, productivity improvements, and capacity building will help sustain its performance in the upcoming months.

Top Glove workers tested positive for COVID-19 last month

The manufacturer was pushed into closing some of its Malaysian factories in November as the novel flu-like virus infiltrated its workforce, with over 5,000 workers testing positive. Consequently, the Malaysian company warned that deliveries could be delayed and annual sales could take a 3% hit due to the temporary closures.

As of the end of Q1, Top Glove values its net cash balance at £630 million. It forecasts a 20% growth in demand this year, 25% in the next financial year, and a 15% increase in demand after the pandemic has subsided.

At the time of writing, Top Glove is valued at £10.27 billion and has a price to earnings ratio of 31.28.