01/11/2013

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MALAYSIA: Top Glove raises prices on higher labour costs

The policy, which took effect on 1 Jan 2013, was likely to cause the glove producer's labour cost to rise by some 50%, chairman Tan Sri Lim Wee Chai said. Labour cost made up 9% of Top Glove's production costs for the September-to-November quarter last year. "We have already informed our customers about our product price increase,” Lim told a briefing for the media, analysts and fund managers on 8 Jan. 2013.UOB Kay Hian Research head Vincent Khoo said a 3% to 5% increase in the average selling price of its gloves to mitigate the impact of the minimum wage was "sufficient”, given that the group was also in the midst of automating all its production processes.Currently, Top Glove factory workers are paid some RM1,200 per month, inclusive of overtime... With the implementation of the new wage policy which sets the minimum wage at RM900 for Peninsular Malaysia their salaries would increase up to RM1,800 per worker, said Lim.Meanwhile, Lim said the rubber glove manufacturer was on track to increase its production capacity by 15% to about 45 billion pieces in the current financial year ending 31 Aug. (FY13).Also, a capital expenditure of RM200 million had been set aside for FY13, largely to be used for capacity expansion, said Lim. With the completion of the acquisition of the 95% equity stake in PT Agro Pratama Sejahtera in Indonesia, Lim said the group was in the process of land preparation and was projected to commence its first rubber tree-planting cycle by the middle of this year.This was to ensure consistent latex supply in the future and also mitigate latex price volatility on the group's performance, he stated.Top Glove remained in a net cash position of RM345.9 million following such upstream plans, he noted."We remain open to mergers and acquisitions,” Lim replied when asked, but did not elaborate.Top Glove has just completed the purchase of Malacca-based GMP Medicare Sdn Bhd, a producer of medical and examination gloves.(Syed Rashid Ali, Karachi, Pakistan)
Source: Daily "The Star", Kuala Lumpur; 9 Jan 2013

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