Covid-19 cuts Top Glove both ways

TWO emojis represent Top Glove Corp’s experience over the past weeks: thumbs up and thumbs down. Ironically, both circumstances are because of Covid-19.

In the financial year ended Aug 31, 2020 (FY2020), so strong was demand for rubber gloves that the world’s largest glove maker delivered earnings of RM1.29 billion in the final three months — a record quarter — to boost full-year earnings to RM1.87 billion. Its share price enjoyed a corresponding boost.

Soon after, Covid-19 hit home. The Teratai Covid-19 workplace cluster, which consists largely of Top Glove workers in Klang as well those from factories of other companies in other areas in Selangor, reached a total of 4,093 positive cases as at last Thursday, out of 6,526 that had been tested since Nov 2.

An estimated 3,000 of those 4,093 positive cases were Top Glove workers.

As a result, 20 of the company’s factories in Meru have had to temporarily stop production, while another eight are operating at only 10% to 20% capacity. The 28 affected facilities in Meru represent about half of Top Glove’s total production capacity.

Meanwhile, its work dormitories in Klang and surrounding areas were placed under an Enhanced Movement Control Order (EMCO) from Nov 17 to 30.

Since the beginning of the month, Top Glove shares have declined 17%, with some RM11 billion in market capitalisation wiped out.

To add to its misery, Human Resources Minister Datuk Seri M Saravanan was recently quoted by The Star as saying that checks of Top Glove’s factories to date have revealed “deplorable” conditions at its workers’ housing. Saravanan also said that the Labour Department would be investigating conditions at Top Glove’s factories.

Saravanan appears to have changed his tune after defending Top Glove in July when he said allegations by the US Customs and Border Protection (CBP) of forced labour at the company’s factories were baseless. The allegations led to an import ban on two of Top Glove’s subsidiaries — Top Glove Sdn Bhd and TG Medical Sdn Bhd — by the CBP on July 15.