Malaysia’s Top Glove reports record profit, says no systemic forced labour found at firm

Image from Top Glove's media kit.

Malaysia’s Top Glove Corp Bhd said on Tuesday an independent consultant had concluded there was no systemic forced labour at the firm after it took measures to address U.S. concerns of such practices at the world’s largest glove maker.

The findings were announced as the company posted a fourth consecutive quarter of record profits, benefiting from soaring demand for its medical gloves during the COVID-19 pandemic, and said it expected to list its shares in Hong Kong in May or June of this year.

Top Glove appointed the consultant to assess the group’s trade, human rights and labour practices after the U.S. Customs and Border Protection (CBP) placed products of two of its subsidiaries on an import ban over suspicions of forced labour last year.

“The independent consultant’s opinion as of January 2021 was that there is no systemic forced labour within the group,” Top Glove Executive Director, Lim Cheong Guan, said on Tuesday.

He also said the findings come after the consultant verified the company had implemented the correction action plans it submitted to U.S. authorities for review and approval.

“We are assured by our consultant that we are very close to the finishing line. And in our recent dialogue with the CBP personnel, they also assured us that this is the final leg,” Top Glove Managing Director Lee Kim Meow told a virtual press briefing.

The CBP did not immediately respond to a request for comment on the matter.

Impactt, the independent consultant, said in a statement that Top Glove has engaged them to perform quarterly verification for a year until August 2021.

It said that as of January, it found some indicators of forced labour were no longer present among Top Glove‘s direct employees, including abuse of vulnerability, restriction of movement, excessive overtime and the withholding of wages.

Impactt said the manufacturer was making progress on other indicators such as the retention of identity documents, abusive working and living conditions, deception, debt bondage, physical and sexual violence and intimidation.

“Considering the group’s ongoing actions, these findings do not amount to systemic forced labour,” it said.

The comments come as the company reported another record quarterly profit.

Net profit soared 2,380% to 2.87 billion ringgit ($695.93 million) in the second quarter of the financial year from 115.7 million ringgit a year ago, Top Glove said in a stock exchange filing.

Strong demand boosted sales, it said, adding that greater production efficiency and higher average selling prices had also underpinned second-quarter profits.

The company said the profit achieved for the first half of the current financial year ending in August 2021 exceeded the group’s total profit for the past 20 years.

Global demand for gloves meanwhile would likely grow to about 15% per annum after the pandemic from around 10% per annum before the coronavirus, Top Glove said.

“While demand is likely to stabilise post-pandemic, the Group expects it will not revert to pre-pandemic levels owing to increased hygiene awareness as well as uncertainties surrounding the resolution of the COVID-19 pandemic,” the company said.

It added that it expected governments to continue to stockpile gloves and other personal protective equipment.

Top Glove also reported a record revenue of 5.37 billion ringgit in the second quarter, up 336% from a year ago.

The manufacturer, which is already listed in Malaysia and Singapore, is seeking a $1.9 billion dual primary listing in Hong Kong to fund ongoing expansion after its stellar performance over the past year.

But sources have told Reuters that two banks – Citigroup Inc and UBS Group AG – have opted out of the deal, citing concerns about Top Glove‘s rubber farming processes and the reputational risk of working with a U.S. sanctioned company.

Top Glove said a portion of the net proceeds from the listing will be invested in environmental, social and corporate governance practices and initiatives.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.