The world needs more gloves, STAT!
With factory workers around Malaysia having contracted COVID-19, VIP Gloves (ASX: VIP) has presented as one of the last factories standing, prompting a rise in glove prices as the order book is now fully committed for 2021, more than 12 months ahead of time.
Despite increases to their production capacity since the onset of COVID-19, rapidly increasing global demand for hygiene products such as gloves, these additional production lines still haven’t been enough to keep up with demand.
“Our factories are currently working 24/7 to fulfil the existing orders and new orders are still coming in with higher Average Selling Prices,” said VIP Gloves Executive Director, Mr WM Chen.
Production lines 5 & 6 are expected to be completed by December 2020 while further lines 7 & 8 are expected to be operational by April 2021. Even with these facilities coming online, VIP Gloves is desperately trying to accelerate construction before they commit to further orders.
Demand for gloves manufactured in Malaysia has heightened amid various factory shutdowns in the nation as a result of workers contracting COVID-19. VIP Gloves however has confirmed that none of their workers have tested positive, enabling them to be one of the few manufacturers that can conduct business as normal.
As a result of the rapidly growing demand for gloves around the world, VIP Gloves has confirmed a higher Average Selling Price (ASP) than historical standards, with the Company anticipating a 50% ASP increase between October and December 2020.
Earlier in the month, VIP Gloves announced plans to construct a new $30 million manufacturing plant next to their existing one which would house 10 new production lines to increase production capacity by an estimated 2.5 billion gloves per annum which will bring their total capacity to 3.5 billion per annum.
For the Quarter ending 30 September 2020, VIP Gloves reported $6.6 million in revenue which delivered $1.38m positive cash flow.