Wednesday, April 14, 2010

Top Glove can weather rising costs, ringgit

Top Glove can weather rising costs, ringgit

KUALA LUMPUR, April 14 —Top Glove can overcome the impact of rising raw material costs and foreign exchange fluctuations by raising product prices, said a senior company official.

“Any impact will be short term in nature as the company will pass through the impact to the customers,” said executive director Lim Cheong Guan, referring to the recent sharp rise in rubber prices as well as the fast appreciation of the ringgit currency.

“Gloves are a necessity in the medical industry, any price increase is negligible to the end users compared with the total medical cost,” Lim told Reuters via email.

Malaysian rubber glove makers, including industry leader Top Glove, supply more than 60 per cent of the world’s rubber latex gloves, which have seen a spike in demand following the outbreak of the H1N1 flu in 2009.

Tokyo rubber futures this month hit a 20-month high on the back of strong oil prices and tight physical supply.

The ringgit is up about 7 percent year-to-date, making it the best performing Asian currency. A stronger ringgit will eat into glove makers’ profits as their products are sold in US dollar.

The price of latex, from which gloves are made, will likely come down in May when the current supply squeeze resulting from dry weather conditions eases, said Lim.

Rubber supply in Thailand and Malaysia, the world’s biggest and third-biggest producers respectively, has gradually declined since the dry season began in late February. — Reuters

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