Good health and good afternoon to all fund managers, analysts, members of the media, ladies and gentlemen. My name is Michelle Voon, and I'm pleased to welcome you to Top Glove Corporation Berhad's Third Quarter Financial Year Results briefing webinar. We're delighted to host you. Today we are privileged to be in the company of four distinguished spokespersons whom I have the pleasure of introducing: Top Glove Executive Chairman, Tan Sri Dr Lim Wee Chai.
Hello, good health, good day.
Top Glove Managing Director, Mr. Lim Cheong Guan.
Hi.
Top Glove Executive Director, Mr. Ng Yong Lin, and Top Glove Director of Marketing, Mr. Lim Jin Feng.
Hello everyone.
Today's event will comprise a presentation on Top Glove's third quarter financial year 2025 results, followed by a Q&A session. Guidelines on how to direct questions to our spokespersons will be provided later during this event. First, to ensure we start the event on a positive note, we will perform our signature Business Ethics Clap, as well as our five Healthy Wealth Clap. This underscores the importance of good health, both mental and physical, at Top Glove. We'll start with the Top Glove Business Ethics Clap. If we're ready, let's put our thumbs up. Ready, one, two, three.
Top Glove, top honesty, top equity, top transparency.
Quality, quality, quality.
Next, the five Healthy Wealth Clap. Thumbs up, ready, one, two, three.
Top Glove, clean well, eat well, work well, exercise well, sleep well.
Healthy, healthy, healthy. Thank you very much, ladies and gentlemen. Now to start the session, I would like to invite our Managing Director, Mr. Lim Cheong Guan, to deliver his opening remarks, followed by the third quarter results presentation. Thank you, Mr. Lim, the floor is yours.
Thanks, Michelle. Good health and good day, fund managers, analysts, members of the media, ladies and gentlemen. Thank you for joining us for the briefing for the Top Glove Third Quarter Financial Results. In the preceding quarter, second quarter financial 2025, we took off with some uplifting news. The skies had cleared. Our business was regaining altitude. With profits soaring from quarter one, we were on the right trajectory. The upward momentum was expected to continue well into quarter three. However, as with any journey, there were some unexpected turns in recent months. Uncertainty concerning tariffs has prompted a degree of hesitation among some of our customers in the U.S. initially. At the same time, increased competition in the European regions placed additional pressure on pricing. Accordingly, these quarter results reflect an altitude adjustment. Still, despite the headwinds, we remain profitable while growing our sales volume.
This is a clear testament to the effectiveness of our quality and cost efficiency initiative, the efforts of our team, and the essential nature of our glove. In quarter three, our financial health continued to strengthen, supported by improved net cash flow from operating activities and a 23% reduction in net borrowings. As a result, our net gearing ratio stands at just 0.1 times. I'm also pleased to note that Top Glove achieved a commendable overall ESG score of 4.1 out of 5 for the June 2025 review of the FTSE ESG score. This places us amongst the top 10% of over 700 companies assessed in the global healthcare segment and ranked number two in the global medical supply sector. While pockets of turbulence on long-haul flights are to be expected, they are also temporary. Rest assured, we are keeping a steady hand at the controls.
With improved feasibility of tariffs expected by early July, we are confident of moving forward with greater certainty and speed. With this, allow me to take you through the presentation on our third quarter performance. For the third quarter 2025, Top Glove recorded a revenue of MYR 830 million, representing a 6% decline from the previous quarter. However, sales volume rose by 4% despite the drop in revenue, primarily due to the lower average selling price and a weaker USD. The third quarter was marked by uncertainty and competition stemming from tariff development. On 1st April, a 25% tariff was announced, leading to a temporary order with deferral and cancellation by some U.S. 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 U.S. resumed, driving a strong 24% Q o Q sales volume growth to the U.S. market. On the other hand, competition intensified in Europe as Chinese manufacturers facing restricted access to the U.S. market shifted their focus there. As a result of both market uncertainty and increased competition, ASP declined by 5% for nitrile gloves and 3% for natural gloves. For the third quarter financial 2025, EBITDA stood at MYR 117 million, a decline of 11% Qo Q, while PATAMI rose by 17% to MYR 35 million, up from MYR 30 million in second quarter financial 2025. This quarter included a non-core gain of MYR 26 million, comprising a MYR 30 million gain from land disposal, partially offset by a MYR 3 million foreign exchange loss on the foreign currency loan.
Excluding non-core items, core EBITDA was MYR 91 million, down 32% from MYR 133 million in the previous quarter, while core PATAMI came in at MYR 9 million. The softer performance in third quarter can be attributed to the following factors: the lower ASP, as explained above; weaker USD, which is a reversal of forex trend, saw the USD shift from the uptrend in second quarter to a downtrend in third quarter, impacting revenue translated from export sales and also the USD proceeds received. ASP raw material price mismatch normalized in third quarter, while second quarter benefited from a temporary mismatch where ASP remained high and raw material price cost declined. This advantage was no longer present in third quarter financial 2025. However, on a nine-month comparison, sales revenue surged by 55% to MYR 2.6 billion, accompanied by a 65% increase in sales volume compared to nine months FY2024.
So, the EBITDA was at MYR 341 million, with PATAMI at MYR 71 million, comparing a negative PATAMI of MYR 58 million in nine months FY2024. The core EBITDA of nine months FY2025 at MYR 311 million, with an improvement of 221%, and core PATAMI at MYR 41 million, which improved 129%. So, from the early quarterly performance comparison, as shown in the graph here, quarterly performance can be sensitive to external factors such as forex movement, raw material price trend, and ASP fluctuation, which can result in a higher movement quarter-to-quarter comparison. However, if we look at the nine months year-to-date view, it provides a more balanced reflection of the company's underlying performance.
As comparison of nine months 2024 and before pandemic with the nine months 2025, the nine months 2024 core EBITDA margin of 12% is a strong improvement from the 6% core EBITDA in nine months 2024 and a three percentage points below the nine months 2019 level, putting it closer to the pre-pandemic margin, reflecting overall group improvement in the post-COVID period. Next, we zoom into the two main glove type performance, the Nitrile Glove and NR Glove. Nitrile Glove's sales volume increased by 4% in third quarter, driven primarily by growth in the U.S. sales. ASP was adjusted downwards to enable cost pass-through and to remain competitive in a challenging market landscape. As for natural glove, the sales volume showed a slight increase of 1%.
ASP was lowered in response to a declining raw material cost to maintain price competitiveness and to capture more sales in the non-U.S. region. A 9% decline in Nitrile's latest concept prices contributed to a reduction in cost per carton. Based on the movement of ASP and cost per carton, margin for Nitrile and Natural Glove have declined compared to second quarter, but remained higher than in first quarter 2025. Next, on our sales to various regions, overall total sales volume increased Q on Q by 4%. In third quarter, we recorded a strong growth in North America, which is mainly U.S., with sales increased by 24% Q on Q, contributing 26% to the total sales. Sales in Western Europe declined by 11%, in line with the expectations, as Chinese manufacturers shifted their focus to the region following the imposition of the U.S. tariff.
Eastern Europe saw a slight decline of 2%, accounting for 21% of total sales, and our sales in Asia remained stable at 21%, while the Middle East recorded a robust 43% increase, contributing 6% to the total sales. As for the products mix, as shown on the right-hand side, the products mix remained relatively stable, with Nitrile Gloves maintaining a consistent share of 60% of the total sales. Next, on the capacity, current capacity, which is spreading over three countries. In terms of in third quarter, we are running a capacity of 61 billion pieces of running capacity, with the utilization rate on running capacity at 61%. However, the recent month of June, the utilization rate has increased to 65%, as monthly sales continue to increase after May 25.
Next, on the cash flow, on the net cash and gearing position, we can see that there is good improvement in this quarter in terms of cash flow. Operating cash flow improved to MYR 78 million for the quarter. However, the total cash position declined in May 2025 due to the utilization of cash reserve to repay the bank borrowings. In total, we have repaid MYR 215 million bank borrowings during this period. The stronger operating cash flow coupled with loan repayment reduced net debts to MYR 461 million, a decrease of 23% or MYR 140 million. As of 31 May 2025, the net gearing ratio stood at just 0.1 times, significantly lower compared to the pre-COVID level of 0.85 times in terms of the net gearing.
Next, update on the sustainability, as mentioned earlier, the FTSE ESG assessment, which the results were released on the 23rd of June 2025. Top Glove surpasses global average healthcare industries and Malaysian medical supplies in the assessment, with a commendable score of 4.1 out of 5, total score of 5. This places the company in the top 10% ranking in the global healthcare sector among more than 700 companies assessed. Also notably, Top Glove ranked number two among global medical supply sector and number one among the Malaysian glove manufacturers. Although we have a good scoring in the FTSE ESG assessment, sadly, the company is yet to be reinstated in the Bursa for Good Index. We are actively engaging with FTSE and Bursa Malaysia to address the gaps and is working towards the reinclusion.
Going forward in terms of the outlook, company performance, sorry, in terms of the outlook, we remain positive on the outlook of the glove industry and are confident in our ability to deliver stronger sales growth in the fourth quarter. As with any business, occasional challenges are to be expected. Opportunity to capture additional U.S. sales are anticipated once there is greater clarity on tariff, particularly with the tariff on China-made glove unlikely to be lower than Malaysia. Quarterly fluctuation in average selling price are expected, driven by market competition and raw material cost volatility, factors that are part of the normal business cycle. Market conditions are expected to stabilize over time. The final tariff decision by the U.S. government will provide much-needed visibility for both manufacturers and customers. To mitigate the impact of USD volatility on our profitability, we will maintain a consistent hedging policy.
On the cost front, raw material prices are expected to continue declining gradually, which would help ease some of the pressure from price competition. At the same time, improvement, improved in utilization, which is 65% in the month of June and expecting to go up in coming months, will drive cost optimization and strengthen our competitiveness in a challenging market environment. With that, I'll pass it to Michelle Voon to commence the Q&A session.
Thank you very much, Mr. Lim, for the insightful presentation. Ladies and gentlemen, we've now come to the Q&A session. To pose a question, please click the raise hand icon located at the bottom of your screen. Alternatively, you may type your question at the section marked Q&A, also located at the bottom of your screen.
In the interest of time, we respectfully ask that you keep to a maximum of two questions, including a follow-up question. Thank you. Let's begin. We'll start with the written questions we've received, and the first is, what is the management's best guess on the new tariff to be announced by President Trump? Will Malaysia still have the advantage of lower tariff compared to Asian countries, ASEAN countries?
Okay, Tan Sri Dr. Lim Wee Chai will answer this question. So, our guess is the tariff 10% is the minimum. And before 10%, there were 24% tax on this for Malaysia. We are among the lowest among the ASEAN countries. For those ASEAN countries, they're producing gloves, like Thailand, Vietnam, Indonesia, even Cambodia. Our guess should be about 10% plus 24% divided by two. It should be 34% divided by two, about 17%.
Compared with China, we are still much better off. Compared with Thailand, also we are better off. We are still better off in terms of tariff itself. I think more important is quality and cost efficiency. We have to emphasize a lot of improving in our quality and cost efficiency. Thank you.
Thank you very much, Tan Sri. Our next question, what is the current demand for gloves from clients? Has it seen an increase in demand?
Yeah, I will take that question. I think we always say the glove demand is always there. It's a necessity. In fact, it has been growing steadily, about 6-7%, or certain years even more, 8%, 10%. We definitely see an increase this third quarter. Because of the U.S. tariff, also we're seeing more inquiries and more orders shifting to outside of China.
That's why you can see our sales have been growing in the past few months.
Thank you very much. That was Mr. Lim Jin Feng. Our next question is, could management guide on what will be the impact from the revision on electricity tariffs?
Yeah, I'll take the question. There will be a new tariff, but there are changes in how TNB will charge the electricity. There are some components being removed and some components being added. Overall, I think in the near term, we can say the electricity should be to the end user like us, it should be lower by about 5%-10% in the near term. Long term, because it's subject to monthly adjustment, we still have to observe further.
I think the monthly adjustment factors is on the crude oil price movement and the exchange rate as well.
It is to replace the ICPT that is earlier. We have to observe further.
Thank you very much. That was Mr. Ng Yong Lin. Our next question, do you see any positive impact on the company after the EU imposed restrictions on medical glove imports from China?
Overall, it should be positive for the medical devices. Those countries are exporting from those outside China to Europe. However, for the glove, because of the limit of the tender, which is set at EUR 5 million, a high limit, which most of the glove tender will fall below it. I will say that that is a good direction as well, that you know the EU may emphasize to look at out of China as well. Hopefully, gradually, they may consider revising some of the limit that eventually will benefit us as well.
Even for the private sector as well, the message from the EU can be good for the private companies as well in the U.S. as well, that to look at source to diversify out of China as well.
Thank you very much, Mr. Lim Cheong Guan. Now, ladies and gentlemen, we'll move on to some verbal questions from participants who have raised their hands. The first question comes from Chun Sung Oong from RHB. Chun, could you please unmute and proceed with your question?
Hi, good afternoon, management. Thank you for taking my questions. I have three questions here. I think we are now towards the end of June. Have you actually started seeing a better order visibility for the next one to two months as U.S. inventory are expected to be fully depleted? Do you expect to regain your pricing power subsequently?
My second question will be on your ASP. Will you actually try to pass on the effect of weaker dollar to your customer in your coming quarter? What is the current ASP breakdown between U.S. and non-U.S. market? And my last question would be your breakdown between unrealized and realized forex during the quarter. Thank you.
Okay, I will answer the first question. Whether order increase or not, as you can refer to page 5 or 14, on the nine months' sales revenue, we increased 55%, as you can see. The sales revenue page 9. Page 9. Okay, 55%. Our order book has increased relatively compared with one year ago. In terms of profit, PATAMI also we increased 222%. The order book is increasing. Basically, because we managed the quality and cost efficiency of our staff and workers are more efficient now. Less people, but high productivity.
It is a much better position now. We can see the order will continue because why China captures so big market share? Their price is low. If we can match their price, we should be able to get the orders. One, two years ago, our selling price compared with China is about 20% or $4, $3, $4. Now, our price is very close. It would be the same or maybe 50% higher, but very minimum. Our cost has improved a lot. China sells low price because their cost, they work very hard, very efficient, very smart. Their costing and selling price is low. Now we are matching with their selling price. We are able to capture a lot of their sales. The bottom line is our sales will continue to increase. Thank you.
Yeah, on the ASP, definitely the U.S. ASP is higher than the non-U.S. I would say maybe about $1.50 to $2 U.S. dollar difference. Why U.S.A. price is not able to move up too much? Because there's still competition within Malaysia, Thailand, Indonesia, basically the non-China countries. There's still competition among us. That's why the U.S. ASP cannot be too high as per what the tariff is. Yeah.
I think the slight decline in the ASP also is in view of the raw material price as well. If you look at the raw material price, I think going forward, we're expecting nitrile and natural rubber as well expected to go down by close to 14%. During this period, we do share some of this cost saving with our customers as well.
I think once the tariff, there's more clarity on the tariff, then I think on customer side, at least certainty is there. In terms of the orders, we expect that it will flow in. Especially even now as well, I think in terms of utilization, as I shared earlier. Current June utilization is 65%, which is already better than the average in the third quarter of 61%. I think clarity for the customers once tariff is fixed, so they can actually place orders without expecting that, you know, in case the tariff is back to 20%, then they have to, you know, come up with a higher cost, import cost as well, compared with 10% right now. On the third question on the forex, realized unrealized forex.
If you look at the earlier slides as well, where we have settlement of the loan, MYR 215 million loan, and the foreign currency loan, which we have the unrealized gain accumulated early on. When we settle this month, we realize this unrealized amount. You can see that the movement is a lot. There is a reason why this quarter as well, in terms of disclosure, we combined both to avoid some confusion because it is just a movement from unrealized to realized gain. The figure can be MYR 20 million realized gain from the loan reversal of the unrealized of around MYR 25 million unrealized from the unrealized gain as well. There is a big movement. I think net net, net net, we are looking at, if you look at in terms of the total realized forex, it is close to MYR 20 million.
The reversal is actually, sorry, the overall unrealized forex is a MYR 40 million loss. But out of it, some of it is actually reflected in the reversal realized portion because of the repayment of the loan. Some will factor in the reservables as well as the 31st May, the reservables. Because of the weakening of dollar as well. In our May closing as well, we do factor in some of these unrealized loss as well.
Thank you very much. We'll move on to our next question. It comes from Nicole Goh of UBS. Nicole, could you please unmute and proceed with your question?
Hi, thanks. Thanks very much for taking my questions. I think my question is with regards to ASP. I think I know just now you mentioned that the difference in U.S. versus non-U.S. is about $1.50 to $2.
But, you know, can you just give us a bit of a sense of what is it at this point in time? Because I think previously we were looking at high teens for U.S. and mid-teens for non-U.S. Is that still the same? I think that's my first question. My second question is that I think in terms of longer-term outlook, yes, once this tariff, U.S. tariff is, once we have clarity on the U.S. tariff, what happens next? How do you see your competitors, or at least the Chinese manufacturers, you know, trying to open up factories outside of China? How do you see that actually progressing? Thanks.
Yeah, I'll take the first question in terms of the ASP for the U.S. order as well.
I think I thought we have guided early on that early on expectation of the ASP to U.S. to increase to $20, $21. What we have realized in the second quarter, which is February, was close to around average around $19- $20. ASP was adjusted lower, mainly because the month of April, as well as I mentioned, I explained earlier, is that when the tariff was imposed, then a sudden, you know, surprise to our customers in the U.S. as well. We do see some withdrawal in terms of demand, and coupled with the lower raw material price as well. We do adjust some of these, the ASP to around the around $18-$19 level.
Okay, for the tariff fund, U.S. tariff fund, earlier we also explained. U.S. tariff as a factor.
You asked about the China, they try to produce outside China, like in Indonesia or Vietnam or Thailand or Cambodia. Actually, we are very happy that they produce outside China. Why? When they produce outside China, the cost will be higher. Their cost definitely about 5%-10% higher easily. They will not sell so cheap when they export or produce in Indonesia, for example. The raw material, they have to import from China or from other countries. The nitrile, the tank, the chemical. Also, they send their management staff is like expatriate. The staff costs are so high. Labor costs, it's not easy for them to manage the Indonesian or workers that are outside China. The supporting industry is not as efficient as China. The government is not as efficient as in China. It's a different game.
We are very happy that they produce outside from China. If they produce and expand in China, then we are a bit worried. We are very happy that they produce outside China. Thank you.
Yeah, on the U.S. tariff and also on the demand. As we always say, the demand is always there. It's just that sometimes the supply chain or, you know, whether people order a little bit more or a little bit less on gold, which sometimes will affect our order books. Because of the tariff, it slowed down a little bit. I think now we can see in May, June, or going forward, July, we see the orders are coming back. There's only up to a certain month they can on hold not to order. Because of the demand and the consumption, it's always there.
Now, whether the tariff or no tariff announced, we can already start to see the orders are coming back.
One thing about glove, medical glove especially, whether you got tariff or no tariff, it is a necessity product. You are 100%, 200%, they still have to import and they still have to buy.
The impact may be just a short-term impact. In the longer run, medical glove is still a necessity. If you look at it as a percentage of medical costs, it is a relatively very low value. Okay.
All right. Okay, thank you very much on that optimistic note. We will move on to the next verbal question. This comes from Jack, UOB Kay Hian. Jack, could you please unmute and proceed with your question?
Hi, good evening. Thank you for taking my questions. I got two questions.
The first one is on what is Top Glove given cost for some of the generic gloves? Because if you compare that to China's current ASP in Europe region, is it similar? That's my first question. My second question is on the capacity targets. Does Top Glove still intend to expand to 67 billion pieces by end of 2025? Yep. Those are my questions. Thanks.
Yeah, I think in terms of the break-even, of course, depend on the raw material price and also ASP as well. But in general, based on current situation, I would say it's around MYR 14 to MYR 15 ringgit level in terms of break-even. per carton pieces.
Yeah, on the capacity one, yeah, we are still on track to achieve towards what we have planned earlier by the end of the year. We will continue to monitor the order trend.
Then also planning to run back some of the lines which we earlier already temporarily put on hold or shut down temporarily at that time.
All right. Thank you very much. Our next question comes from Andrew Lim, Affin Hwang. Andrew, could you please unmute and proceed with your question?
Hi, hi, morning everyone. Thanks for the session. Two questions. I'll just ask one at a time. Just to get some clarity on the June, July sort of ASPs, I think we mentioned that raw material prices are coming down, so you revised it downwards. Would it be safe to assume that it will fall down to that $16-$17 USD levels? Because the $18-$19 levels was for 3Q, right?
Yeah. Yes. And also, it's a difference between the U.S. pricing and the Euro pricing.
$18, $19 is for U.S. and the other one will be for the Euro pricing.
Okay, that means for 4Q 2025, I think the average should be around $16-$17 for U.S. And then for Europe, it will be closer to $15. I mean, safe to be around here, right?
The U.S., then it will also depend on the tariff because it is early July. The expectation then depends on the tariff condition. Understood. It is different, then pricing may change.
Okay, thanks. Last one from me, for the July deliveries in terms of volumes. Is it able to sustain month on month? Because your June saw about an 8% increase, right, compared to 3Q. July month on month, can it sustain?
Now, based on the projection and the orders, we are looking at an increasing trend.
April, I would say, is one of the lowest because of the uncertainty. Then we see May increase and June increase. Overall, the quarter was 24%. Going forward, June, July, I think expecting that for quarter four, we are looking at maybe around 15%-30% growth in terms of sales volume again.
15%, 20% means Q on Q, is it?
Yes, correct. Yeah. I mean, U.S., there's a big market. I said now we only have between 26% of the market shares. There is still opportunity for us to increase that in the U.S. market.
Understood. Maybe just last, oh, sorry, go ahead.
Oh, this average selling price depends a lot on supply and demand, just like any other products. When the supply reduces, now the China, some of the glove factory, the capacity, the percentage has reduced.
The utilization rate reduced. Last time, talking about nitrile glove, they were running about 50%-100%. Now average maybe 50%-60%. Their supply reduced. U.S. also, the importer, because of the tariff uncertainty, their order also reduced. The stock level is also very low because the consumption is continuous every day. They need to use. The importer order less, the factory, especially in China, produce less. Mean the supply is coming down. Give another few months, suddenly there is shortage of gloves in the customer's store or warehouse. They will be banned by again. The price will increase, but not so much because the capacity, if your price increase, then the unutilized capacity, they will upline again. Every selling price is a lot to do with supply and demand. Thank you.
That's all from me. Thank you so much, management.
Have a good evening.
Okay, thank you very much. We will take some written questions now. The question we received is, what is the gap that Top Glove needs to address to be included in the FTSE4Good Index?
Yeah, I think in terms of the gap that I mentioned here is that if you recall that we were excluded in 2021 or end of 2022, mainly because of the labor compliance issue. But since September 2021, we have fully complied with the requirement. CBP has also updated us as well from the WRO. FTSE has a sort of a two-year period to be exclusion and the exclusion. By right, in terms of calendar year-wise, we should be in by 2024. I think the issue mainly in terms of we have done all the corrective action. It's more of a disclosure requirement.
Based on the December, then when we were not included, we did follow up and they did give us a list of what are things that should be disclosed and which we have actually disclosed as requested and acknowledged by them as well. I was surprised that this quarter, one of those items that we have disclosed in terms of the working hours and all that, we have disclosed it and they still responded as that non-disclosure, which gives us zero marks on that. That is an item that they actually need and the response and to be inclusion. In this case, it is only one item and we have actually responded and they acknowledged, received our reply as well. Hopefully we are following up and request for meeting on that and hopefully it is an error on your side.
Hope that they can do the correction and actually put us back into the index. Otherwise, it doesn't make sense. You are ranked here globally, ranked number one among the glove manufacturers, number two among the medical supplies, but we are still not in Bursa FTSE4Good Index. Also, we requested FTSE, if any issue, they can actually clarify with Bursa Malaysia as well, which in Malaysia, they would understand better as well whether we still have any of these labor compliance issues or not. It is an issue that is non-existent and I believe it is just that we have to continue to discuss with them.
Thank you very much, Mr. Lim. Our next question. How many factory workers does Top Glove have in third quarter and second quarter FY2025?
Yeah, third quarter FY2025, we should have around 8,000, 8,000, 8,000 plus workers.
Compared to the previous quarter, every month we have a reduction of about 50-100 workers because some come back, some go back. The reduction is about 50-100 pax. Quarter to quarter should be reduced about 150-300 people, 300 workers. We still continue to improve and also, despite the reduction in the workers, we still push out more output, able to produce more output over the quarter to quarter. Continue to identify and see how to improve the workers' efficiency, the staff and employee efficiency.
As you can refer to the previous chart, the volume increased quarter- on- quarter 4%. That is 4% increase. The worker we reduced about 2%. We increased our productivity by 6%, 4% plus 2%. This indicates the efficiency of our workers has improved.
Staff efficiency also has improved. We have about 2,200 staff and 8,300 workers. Total manpower workforce, we have about 10,500 as of today, which efficiency has improved a lot. Thank you.
Thank you very much, Tan Sri and Yong Lin. Our next question. What is the expected impact of the 2% EPF contribution on foreign workers?
The 2% impact, it will be around MYR 200,000 a month. If you translate that in terms of the selling price, it will be 0.1% of the ASP.
Thank you, Mr. Lim. Our next question. Is Top Glove impacted in any way by the changes to the SST framework being implemented on July 1? Does Top Glove foresee any impact on domestic glove prices or margins due to SST adjustments?
Yeah, on the SST, there is an exemption actually, even though the guideline mentioned about there is SST imposed on the raw material, but there is an exemption, which is an exemption of the 5% as provided under one of the schedule as well. It will not affect us in terms of this SST, just that we have to apply for the exemption.
Thank you very much, Mr. Lim. Our next question. We'll just pull that up, please. Just a minute while we pull that next question up. What is your current gas tariff in MYR, MMBTU?
Yeah, our gas tariff is around MYR 40-MYR 45 to MYR 50. It depends, varies from each company, but ours should be around MYR 45-MYR 46. We foresee it will trend down in the coming quarters as well because of the global crude oil price.
Thank you, Yong Lin.
Our next question. How is Top Glove adapting its supply chain or customer mix to mitigate the geopolitical challenges?
I think in terms of the supply chain, let's say in terms of raw material, nitrile, we source it from countries in Korea, Taiwan, Thailand, even Malaysia as well, we have these raw material supplies. I would say well diversified in terms of source of raw material. And in terms of customer base, you know, if you look at customers, we are present in almost every country in the world. In terms of the geopolitical as well challenges, that actually is diversified. Even from the countries of operation as well, we have Malaysia, also in Thailand and Vietnam. We look at the diversification.
In fact, we also want to have more clarity in terms of the tariff as well so that we can also look at expanding our operation in Vietnam as well. As I said, now we just put on hold pending this clarity in terms of what is the percentage of tariff from Vietnam, let's say versus Malaysia or versus Thailand. Versus China as well.
Thanks, Mr. Lim. Our next question. Any issue on the shipment due to war? Also with LNG and butadiene prices rising due to political tensions, do you think GP margins could soften in the next quarter?
I think latest is that there is no war. Temporary cease and hope that will hold.
In fact, if you look at the effect on the crude oil price, it seems normalized. Of course, the initial day, then there is an increase in terms of the price. Early on, expectation above MYR 100, but actually it came down. I think today price is like MYR 64, MYR 65, which is already came down compared with past few weeks as well. I think overall, as long as there is cease fire, there should not be any. There is definitely a link between the crude oil and crude oil supply on LNG and butadiene as well. Commodity price, you know, is also beyond our control as well. Any effect, you know, it will have a temporary effect as well on not just glove. I believe any sector as well will be affected as well. We hope that, you know, let us look forward.
There is no war going forward among all the countries.
Thank you very much, Mr. Lim. Our next question. Given the intense competition, sorry, given the intense competition from Chinese players, how can Top Glove improve its efficiency, particularly in automation and AI?
Yeah, as can see earlier, with the lesser people, lesser manpower, we have to, we have no choice, but we have to look into this area. For staff also, for staff, we try to use more AI, those AI tools that we have in all the works that we do every day. Hopefully, it can replace some of those more manual work with AI, auto generate, auto calculate, or generate those reports and slides.
For workers also, we try to study what they are doing and also further invest in certain automation that can directly help to reduce the workers, also make their work easier. We can move around the workers. On the other side, we try to push up and improve the output of the production that we have so that indirectly the number of workers that we use to produce the glove will be better. That is what we are doing and we will continue to do. It is a continuous process.
At the moment, our quality cost efficiency has gone up very well. Compared with one or two years ago, as I mentioned earlier, our costing is very close to China manufacturer. That is why we could capture market share as we did the past two quarters. It is still growing.
Our sales order, the customer now, many of them coming back and we can compete with China manufacturers. Thank you.
Thank you, Tan Sri, and thank you, Yong Lin. Our next question. Is the group seeing an increase in sales volume from U.S. in the next few months? How much sales volume to U.S. market are required to compensate for the drop in Europe markets?
Yeah, I'll take that question. Definitely we have seen an increase in sales volume from U.S. as if you follow the last few quarters, we have been seeing the North America percentage have been increasing. Now I think it's at 26%. Going forward, we'll probably continue to increase. Whether, how to compensate, how much to compensate, we will estimate maybe 35%-40% when this North America percentage portion reach about 35%- 40%.
Thank you very much, Jin Feng.
The next question on everybody's lips. Any dividend expected for FY2025?
Yeah, the dividend policy. The company said continue to maintain the dividend policy, which is 50% on PATAMI. As you can see from our nine months results as well, we are in the positive PATAMI. As I said, nine months is MYR 74 million. Going forward with the quarter four PATAMI as well. As long as there is a positive PATAMI, the board will, you know, look into this dividend as well, dividend policy.
Thanks, Mr. Lim. Our next question. What is the status of land disposal? Will there be any further land disposal in the future?
Maybe I can answer. We will continue to dispose those land that is not required for the time being. We still have some land, but not much left. Most of the lands are profitable.
We will continue, but it's not so much like before. Thank you.
Thank you, Tan Sri. Our next question. Is TG able to pass on those incremental costs like revised electricity tariffs and 2% EPF for foreign workers?
As we explained earlier, all these pricing are dependent on supply and demand. As I said earlier, the China supply has reduced and the U.S. stock position also reduced. It should be easier to pass the cost to the customer now. Okay, thank you.
Thank you, Tan Sri. Our next question. Can you please explain why there is a nil net profit attributed to Sukuk holders this quarter? Do you expect so going forward?
Yeah, I believe you refer to the Perpetual Sukuk, which we have fully redeemed in February, end of February, and replaced with this Senior Sukuk of MYR 800 million.
We redeemed MYR 1.18 billion and replaced with the MYR 800 million Senior Sukuk. So that the term of classification treatment as well. Senior, the Perpetual Sukuk was treated as equity. So in terms of the profit distribution, it's actually below PAT under PATAMI level, 200 PATAMI. Whereas for the Senior Sukuk, it is part of the liability side, the borrowing side. So the profit or interest portion is taken up before the PBT level. That's a second quarter and third quarter, that's the difference. That's why if you look at in terms of disclosure, finance cost as well, for third quarter is higher than second quarter, even though effectively the finance cost is actually lower. It's just that a portion of this Perpetual Sukuk is taken up at the below PAT level. There will not be any Perpetual Sukuk profit distribution going forward.
It will be the profit distribution for the Senior Sukuk, which is part of the finance cost.
Thank you, Mr. Lim. Our next question. What is the current utilization rate in June 2025? Any plan to resume those temporary seized factories at this moment?
Yeah, our current utilization rate is around 60%-65% of our running capacity. We try to arrange in a way that we maximize running the lines, all the lines in the existing running factories. Yes, we have plans to in future to resume those temporarily seized factories. We also keep it maintained well so that anytime we can update when we need it.
Thank you, Yong Lin. Our next question is any hedging policy to mitigate the forex risk?
In terms of hedging, yes, we have the hedging policy.
If you look at in terms of the cost price and selling price, are mainly dollar, almost I think 95% will be in US dollar. And in terms of the input cost, almost close to 50% will be in US dollar. The open dollar position is actually around 50% as well, 100% minus the cost of 50%. Of this open position of 50%, our policy is hedge half of this, which is 50% again. Effectively, it's actually hedging is 25% of our dollar proceeds. We go on a one month forward basis and or one month to two months forward basis, most of it on one month forward basis. It's an ongoing effect.
Even though there is this hedging policy that we have done, there will be some of this forex effect as well, like you have seen in this quarter three as well, especially when the rate is on the way down. It is different. Like for example, this quarter is a forex loss, whether it is the realized or unrealized as well. Whereas quarter two, if you look at quarter two, it is actually a forex gain. There is no difference in terms of hedging policy, it is just that sometimes the direction is different, so it has an impact on loss by buying. I think what is important is that we have presented to look at more on the nine months performance.
Nine months performance will have sort of balance up all these one quarter, the head wins or the tail wins as well, so that you can have a more fair comparison as shown in this slide as well. Otherwise, quarter to quarter, three months, three months. The movement can be quite significant or more volatile.
Yeah, on the sales side, I often mentioned to CG that the hedging is mainly to help to slow down the changes so that our sales side have more time to have some pricing transfer or adjustment.
It's more to stabilize the back. We do not hope for gain. We also want to mitigate the loss as well, more to stabilize it. It's a consistent month to month hedging that we are doing.
Just to slow down the fluctuation. If we change 10%, then maybe the final impact is only 5%.
Thank you very much, Jin Feng and Mr. Lim. Our final question, what is the current customer inventory level, meaning last for how many months for U.S. and Europe markets?
When we travel to overseas, we meet customer and customer come, or we have video conferencing, we always ask what is the current customer inventory level. From our survey, we understand that average during the normal time, normal times before pandemic or just six months ago or one year ago, the inventory of average importer about two to three months, two to three months. Because of the uncertainty of the tariff and the current situation, customer tend to reduce the order. They reduce, I think it's about one month. The current stock level at the customer side may be about one to two months. You know, one month, how much the difference?
One month stock is equal to, I estimate it's about 20 billion glove. It's huge. When the customer in the world gets that gift for one month extra, it will be 20-25 billion glove. The stock level of the customer is very important to determine the glove selling price. This 20 billion glove stock reduction in the market over the past two months during the U.S. tariff problem or the war, they will affect the stock level. You know, business men, they don't like uncertainty. When there is uncertainty, when they don't know what will happen, they will hold on their orders, they'll hold on their investment, they'll hold on their purchase. It's the cycle. They'll hold on means that the demand reduces. When they start buying again, they want to top the stock, and then they'll bend it by.
There's in the history and the past, there's always a cycle. Maybe coming one is a small cycle. Pandemic one is a big cycle. Thank you very much.
Thank you very much, Tan Sri. On that note, this brings our Q&A session to a close. Thank you very much for your active participation, ladies and gentlemen, and to our spokespersons for the responses. To round off our webinar, may we once again invite Mr. Lim Cheong Guan to deliver his closing remarks. Mr. Lim, please.
Ladies and gentlemen, while the skies are maybe cloudy for now, the fights continue as we are on the long-haul flights. Our destination remains sustainable growth and stakeholder value creation. Near-term conditions are fluid, but our long-term outlook is undeemed.
The glove industry fundamentals remain strong, built on the growing global needs for single-use PPE in the healthcare industry, food handling, and other critical sectors. These needs are undiminishing anytime soon. If anything, they are growing alongside greater health and hygiene awareness post-pandemic. We continue to focus on what we can control, strengthening product quality, driving operational efficiency, and mitigating risks across our production and customer footprint. As we do, we remain committed to upholding the timeless principle of responsible growth and sustainability. Indeed, long-term success must go hand in hand with ethical business practices as well as caring for both people and planet. As always, we appreciate your continued trust and support as we chart a deliberate path forward, one that pushes broadly through short-term uncertainty to deliver long-term value.
We also take this opportunity to wish our Muslim friends Selamat Menyambut Awwal Muharram and happy holidays to everyone. Thank you.
Thank you, Mr. Lim. Ladies and gentlemen, to round off the session, we will perform the Top Glove Top Quality and Efficiency Clap in line with Top Glove's theme for the year 2025. If we're ready, let's perform the clap together. Thumbs up, ready? One, two, three. Top Glove. Top Quality. Top Efficiency. Top Consistency. Improve, improve, improve.
Thank you. Bye-bye.