Top Glove Corporation Berhad Expansion

pate boxing paw Corporation Berhad Expansion1. INTRODUCTIONTop Glove Corporation Berhad founded by the husband and wife team of Tan Sri Dr. Lim Wee-Chai, as a company chairman and Puan Sri Tong Siew Bee, executive director. Establish in Malaysia in 1991, Top Glove operated with but one factory with three second-hand employment lines. Nowadays, it is known as the world largest rubber glove manufacturer. Top Glove embarked an impressive expansion plan with the following(a) sideWorld Largest Rubber Glove ManufacturerExisting(As at December 2010)1. return of Factories202. Number of Production Lines3793. Total pieces of Gloves Produced (per category)33.75 billion4. Number of Employees10,9005. Countries of Export1806. Number of Customers900Top Glove was listed on Bursa Saham Kuala Lumpurs second board in 2001 and has been successfully promoted to the Main Market of the Kuala Lumpur Stock Exchange on May 16, 2002. Top Glove has over 15 years of experience in production of latex exa mination gloves (HWANGDBS Vickers Research, 2008). It has also diversified overseas and slump up four factories in Thailand and two in China, in addition to the 12 facilities it has in Malaysia (CIMB Research Report, 2007).1.2 Companys Core BusinessTop Gloves nature activities atomic number 18 manufacturing and trading rubber gloves, synthetic gloves and surgical gloves which are closely used in medical, industrial and food services industries. With an approximated 80% of their product is in the miscellany of natural rubber gloves and the remaining 20% are synthetic gloves (CIMB Research Report, 2007). Top Glove acts as a one-s conduct glove centre by whirl a full range of services, from manufacturing glove products to packaging, branding, gross gross as well as distribution of finished glove products through its three primary gross revenue offices in Klang, Malaysia Azusa, California and Duisburg, Germany (HWANGDBS Vickers Research, 2008). About 95% of the company sales are f or the export market.1.3 Financial PerformanceAccording to annual report 2009, Top Glove has successfully achieved the company harvest-time by showing the increment in net network for the pecuniary year. The unique harvest-time of 54% of net profit in the year 2009 as compare to the year 2008 showing that Top Glove fully utilizes the advantage of its listing as public company to pay growth that is beneficial to the shareholders.2. SALES ANALYSIS2.1 Sales issue RatesTotal sales or total revenue is the first line on any company income statement. This figure is the amount of notes that company receives during the specific time of period. Total revenue is very important to turn in money into a profit. In the past 5 years (2005 2009), Top Glove has been profitable. The sales growth for its products showing the increase in revenue for the every financial year.Top Gloves Revenue for the past 5 yearsYearTotal Revenue (RMmil)2004418.12005641.82006992.620071228.820081377.920091529.1 Source Top Glove Annual Report 2010The sales growth rates (%) from year to year ordain be calculate as below legitimate sales previous sales________________________ x 100 introductory salesYearSales harvesting Rates (%)From year to yearSales Growth Rates (%) From year 20052004200553.50200654.6654.66200723.8091.46200812.13114.69200910.97138.25Exponential functions can be utilize in growth processes. The most widely accepted method in academics to calculate total growth can be represented by the functionsy = a(1 + r)Xwhich a = initial amount sooner measuring growthr = growth rate (often a percent)x = number of time intervals that have passedThe exponential function function in computing growth rates for Top Gloves are presented as below1. Year 2005Growth rates (%) 53.50 (0.5350)Revenue amount before measuring growth (RM000) 418.1Exponential Growth Functions y = a(1+r)xy = 418.1(1+0.5350)1y = 641.82. Year 2006Growth rates (%) 54.66 (0.5466)Revenue amount before measuring growth (R M000) 641.8Exponential Growth Functions y = a(1+r)xy = 641.8(1+0.5466)1y = 992.63. Year 2007Growth rates (%) 23.80 (0.2380)Revenue amount before measuring growth (RM000) 992.6Exponential Growth Functions y = a(1+r)xy = 992.6(1+0.2380)1y = 1228.84. Year 2008Growth rates (%) 12.13 (0.1213)Revenue amount before measuring growth (RM000) 1228.8Exponential Growth Functions y = a(1+r)xy = 1228.8(1+0.1213)1y = 1377.95. Year 2009Growth rates (%) 10.97 (0.1097)Revenue amount before measuring growth (RM000) 1377.9Exponential Growth Functions y = a(1+r)xy = 1377.9(1+0.1097)1y = 1529.12.2 Growth Rates Analysis53.5% growth in 2005, Top Glove and the glove industry facing an exciting and challenging year when unexpected hike in the prices of crude oil and raw material. Top Gloves has managed to maintained company performance by continue its aggressive capacity expansion to capture a large share of the world glove market.54.66% in 2006, the sting of increasing oil and fuel prices continues to vibr ate throughout the glove and healthcare industry. These two industries feel the most pressure in deciding how to react in this situation. This is because production cost would be driven up by the increased oil and fuel prices which will impacts on the capability to deliver the products. Top Gloves still continues to stand in progressing by control over its operation costs and learned to manage the increase in the cost of oil and fuel prices. Each manufacturer can standoff these costs by their own way, however price increases are undeniable (Jeannie and Dana, 2006).By the year 2007, Top Glove achieved a remarkable revenue growth of 23.8% to RM1,228.8 million. The growth was principally due to the continued increased in client base globally and a higher volume of sales attributed to the increased capacity so that the company gains to face on the increase in direct costs.In year 2008, the growth slows to 12.13% caused by global economy. It was tough for the glove producer to continu e the business due to the tight margin and only glove manufacturers with sizable economies of scale can survive (Malaysian Rubber Board, 2008). Top Glove definitely cannot be escaped from this phenomenon. However, Top Glove had experienced to face the current world financial crisis and continues companys ability to grow over the years.Year 2009 shows that the slower growth rate goes to 10.97% achieved by Top Glove. The company started the year with aware well-nigh a strong global demand of gloves especially in healthcare industry stimulated by the global economic recovery. Furthermore, the H1N1 pandemic caused the demand of gloves contributed in abnormal return to all rubber glove manufacturers including Top Glove. Top Glove had adapted well in current economic environment by which its earning was boosted by higher sales and higher costs efficiency (OSK, 2010).3. SALES TRENDSales trend analysis is a review of sales during a specified period of time. It is could be increase, decrease or remain unchanged. The purpose of sales trend analysis is to monitoring performance and to predict future performance.Top Gloves sales trend increased year by year. It is showed that the company very focused on their nature business and will struggle to maintain companys mission as a world class glove manufacturer by providing best quality product as well as to toughen their position as the worlds largest rubber glove manufacturer.Top Gloves sales trend illustrated with a graph belowBased on the graph above, it is showed that Top Glove sales trend increment over the years. The growth might be supported by the high demanded from their customer. The surge of demand for rubber gloves used for medical and bulwark purpose forced glove industry to raise the selling price. Similarly, Top Glove also raised its products selling price to equalize the higher production costs. However, the demand for rubber gloves remained and was in fast growing even though the selling price was high.For the 5 years, Top Glove continued achieved a remarkable profit. The global phenomena such as H1N1 and SARS pandemic, hike in the price of oil and raw material, weather, war or world financial crisis which result in boost in the demand of rubber glove. Additionally, increase in health awareness worldwide also increases the demand of rubber glove. Top Glove succeed to adapt all the difficult situation year by year by their good planning of manufacturing processes and providing a high quality of product.4. CONCLUSIONAs a conclusion, Top Glove Corporation Berhad continued achieved a remarkable profit by increasing their revenue and sales growth rate from year to year. The companys show strong sales performance was endorsed to high demand for gloves especially form healthcare industry and emerging market which demand for gloves is expected to growing for a double digit every year. Even though there are more challenges to overcome, Top Glove positive to increase their remarkable revenue a nd sales growth rates for every year and believe to maintain its leadership in the global market by continue providing a top quality of product.