* Q2 net profit up 2,380% vs year prior
* H1 profit exceeds total profit for past 20 years
* Says demand to stabilise, won’t revert to pre-pandemic level
* Says consultant finds no systemic forced labour since January (Adds U.S. Customs’ comment)
KUALA LUMPUR, March 10 (Reuters) - Top Glove Corp Bhd said an independent consultant has found there is “no longer” any indication of systemic forced labour at the world’s largest medical glove maker after it took steps to address U.S. allegations of such practices.
The firm announced the findings on Tuesday as it posted a fourth consecutive quarter of record profit - benefiting from soaring demand for its gloves during the COVID-19 pandemic - and revealed it aimed to list shares in Hong Kong in May or June.
Top Glove appointed London-based ethical trade consultancy Impactt to assess its trade, human rights and labour practices after the U.S. Customs and Border Protection (CBP) last year placed products of two of its subsidiaries on an import ban due to suspicion of forced labour.
“The independent consultant’s opinion as of January 2021 was that there is no systemic forced labour within the group,” said Top Glove Executive Director Lim Cheong Guan.
He said the findings came after the consultant verified the company had implemented correction action plans submitted to U.S. authorities for review and approval.
“We are assured by our consultant that we are very close to the finishing line. And in our recent dialogue with the CBP personnel, they also assured us that this is the final leg,” Top Glove Managing Director Lee Kim Meow told a virtual news briefing.
The CBP told Reuters it has received and is evaluating Top Glove’s request for modification of the ban.
“The length of the review process for such petitions varies with the individual facts and circumstances of each case,” the CBP said in an email.
Impactt in a statement said Top Glove had engaged it in July to perform quarterly verification until August this year.
It said as at January, it “no longer” found indicators of forced labour among direct employees such as abuse of vulnerability, restriction of movement, excessive overtime or the withholding of wages.
It said Top Glove was making progress on other indicators such as the retention of identity documents, abusive working and living conditions, deception, debt bondage, physical and sexual violence and intimidation.
“Considering the group’s ongoing actions, these findings do not amount to systemic forced labour,” it said.
The findings come as Top Glove booked record revenue of 5.37 billion ringgit ($1.30 billion) for the second quarter of its financial year ending August, up 336% from the same period a year prior, and a 2,380% rise in net profit to 2.87 billion ringgit.
Top Glove attributed the surge to strong demand as well as greater production efficiency and higher average selling prices. It said profit achieved for the first half of the current financial year exceeded its total profit for the past 20 years.
After the pandemic, global demand is likely to grow to about 15% per annum versus 10% per annum beforehand, Top Glove said.
“While demand is likely to stabilise post-pandemic, the Group expects it will not revert to pre-pandemic levels owing to increased hygiene awareness as well as uncertainties surrounding the resolution of the COVID-19 pandemic,” the company said.
It said it expects governments to continue stockpiling gloves and other personal protective equipment.
The manufacturer, which is listed in Malaysia and Singapore, said it is seeking a $1.9 billion dual primary listing in Hong Kong to fund expansion after such a strong year.
It said it will invest a portion of the listing proceeds in environmental, social and corporate governance practices and initiatives.
Still, sources have said two banks - Citigroup Inc and UBS Group AG - opted not to sponsor the listing due to the reputational risk of working with a U.S.-sanctioned company.
$1 = 4.1170 ringgit Reporting by Liz Lee; Editing by Louise Heavens and Christopher Cushing