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Malaysia’s Top Glove says no systemic forced labour found in the firm, posts record profit

Stock Markets7 minutes ago (Mar 09, 2021 06:05AM ET)

(C) Reuters. General view of a Top Glove factory in Klang

By Liz Lee

KUALA LUMPUR (Reuters) – 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 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 posted 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 (NYSE:C) and UBS Group AG (SIX:UBSG) – 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.

Malaysia’s Top Glove says no systemic forced labour found in the firm, posts record profit

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