China's Chenming Paper reports 23.8% fall in Q3 profit to 232M yuan, expects several startups of pulp, LWC, tissue and kraft paper production lines to improve future performance
November 12, 2010
– Chenming Paper Holdings Ltd. saw dramatic growth in the first nine months of the year compared with the same period last year, SOHU Securities reported.
In the January-September period, the company’s operational revenue jumped 16.0% year-over-year to 12.52 billion yuan (US$1.89 billion) and its profit surged 82.8% to 1.06 billion yuan. Its net profit attributable to shareholders soared 81.9% to 840 million yuan.
In the third quarter, Chenming Paper produced 900,000 tonnes of paper and paperboard and sold 890,000 tonnes, posting 4.34 billion yuan of operational revenue, an increase of 5.4% year-over-year and 2.0% quarter-over-quarter. The net profit attributable to shareholders fell 23.8% year-over-year to 232 million yuan and fell 37.3% quarter-over-quarter.
Based in the Chinese province of Shandong, Chenming Paper has a complete range of products and its operations have been comparable with its peers. Amid the energy conservation and emissions reduction policy, demand for many kinds of paper grades as well as prices began to pick up since September. As the price of raw materials stabilized or dipped, the company was able to recover its profitability. Insiders estimate that Chenming Paper’s fourth-quarter performance will jump dramatically compared with the same period in 2009.
Moreover, the startup of many new production lines has enabled the company to enter a new round of performance growth. In October, the 98,000 tonnes per year tissue line began a trial production period of around three months. From April 2011, the 700,000 tonnes/year pulp and paper project, the 800,000 tonnes/year lightweight coated (LWC) premium paper line, and the 450,000 tonnes/year high-end fine paper line, all in Zhanjiang, China, will all start up. Also, the 600,000 tonnes/year high-grade coated kraft paper line is in the preparation stage and is expected to start up in May 2012. Overall, the new capacity hitting the market is expected to be a major factor in the company’s performance in the next several years.