Source: China Good Packaging Network
On the evening of February 26, Nine Dragons Paper announced its interim results as of the end of December 31, 2018. Due to the increase in raw material costs and the decline in product prices, the gross profit margin of Nine Dragons Paper declined significantly, dragging down overall performance.
At the same time, Nine Dragons Paper plans to add four cardboard paperboard machines with a total capacity of 2.05 million tons per year, which will be put into production in the second quarter of this year. After the four paper machines are put into production, together with the upgrading and expansion of the four US plants, the total capacity of Nine Dragons Paper will exceed 19 million tons by the end of 2021.
Due to the increase in raw material costs and the decline in paper prices, Nine Dragons Paper's profit fell 43.5%
Nine Dragons Paper Co., Ltd. is a well-known papermaking enterprise in China. Its products include cardboard (cattle cardboard, environmentally friendly cattle cardboard, white-faced cattle cardboard and coated cattle cardboard), high-strength corrugated medium, coated gray-white paper, and environmental protection. Type of cultural paper (including offset paper, copy paper, etc.) and specialty paper.
In the past two years, Nine Dragons Paper has earned a lot of money. However, in its recent results announcement, its profit fell 47.8% and its gross profit margin hit a four-year low.
Sales
During the period, Nine Dragons Paper's sales revenue was approximately 30.328 billion, an increase of approximately 18.2% over the same period last year. Among them, the packaging paper business (jam, high-strength corrugated core paper and coated gray-backed whiteboard paper) accounted for about 86.2% of total sales revenue, and cultural paper, high-priced specialty paper and pulp products accounted for 13.8% of total sales revenue.
The sales of Nine Dragons Paper are mainly from the Chinese market (especially the cardboard and high-strength corrugated paper business). During the Period, China's sales revenue accounted for 89.0% of the total sales revenue, while the remaining 9.1% and 1.9% of sales revenue were sales revenue generated separately from the US and Vietnam markets.
Gross profit and gross profit margin
During the period, the gross profit of Nine Dragons Paper was approximately RMB 4.713 billion, a decrease of 25.1% compared with the same period last year. The gross profit margin decreased from 24.5% to approximately 15.5%, mainly due to the increase in raw material costs (mainly waste paper and coal costs) and the decline in product prices.
profit
During the period, the profit attributable to equity holders of Nine Dragons Paper was approximately 2.259 billion. Excluding the exchange loss (net of tax) of operating and financing activities of approximately RMB 198 million, the profit attributable to equity holders during the period was approximately RMB 2.458 billion, representing a decrease of approximately 43.5% as compared with the same period last year.
Nine Dragons Paper said in its performance report that the decline in earnings was mainly due to the Sino-US trade warfare that the manufacturing industry tends to be conservative and affects its product demand. At the same time, the import waste paper quota is reduced and the quality requirements are increased, resulting in import and domestic waste paper supply and prices. The violent volatility has dragged down the selling price of the products, which has greatly affected the profitability of the group.
However, its sales and sales revenues are still growing. Nine Dragons Paper said that with its comprehensive product portfolio and an unmatched network of extensive production bases in the industry, the Group is able to leverage its cross-regional sales advantages to reduce finished product inventory when the market environment slows down, resulting in sales and sales of major businesses. Income has reached a record high.
Four paper machines will be put into production in the second quarter of this year, and the total capacity will exceed 19 million tons by the end of 2021.
As of December 31, 2018, Nine Dragons Paper's total designed annual production capacity was 15.3 million tons. Among them, in the domestic aspect, cardboard, high-strength corrugated core paper, coated gray-backed whiteboard paper, cultural paper, high-priced specialty paper and pulp products are about 7.6 million tons, 3.4 million tons, 2.6 million tons, and 1.1 million tons, respectively. About 600,000 tons.
In foreign countries, the four US pulp and paper mills have an annual production capacity of about 1.3 million tons. Among them, the annual production capacity of single-sided coated paper, copper-clad paper and coated mechanical pulp paper and specialty paper for cultural paper is about 900,000 tons, and the annual production capacity of recycled pulp and hardwood pulp is about 400,000 tons.
During the reporting period, the sales volume of Nine Dragons Paper products reached 7.5 million tons, an increase of 19.0% over the same period last year. Among them, sales of China's business increased by 700,000 tons, sales of Vietnam's business increased by 100,000 tons, and sales of newly acquired US business increased by 400,000 tons.
At the beginning of this year, the Chongqing base put into operation a 550,000 t/y boxboard machine, and the total design capacity of Nine Dragons Paper reached 15.85 million tons. At the same time, Nine Dragons Paper will actively reach the goal of completing the construction of four new paper machines in China this year: three new paper machines in Shenyang, Hebei and Quanzhou bases are expected to be put into production in the second quarter; new paper machines located in Dongguan base are expected It was put into production in the third quarter.
Nine Dragons Paper said that it will actively develop and carry out upstream development in the future to ensure stable, reliable and cost-effective supply of raw materials for its production, and to carry out a series of four pulp and paper mills in the United States. The equipment upgrade and expansion plan is expected to exceed 19 million tons by the end of 2021.
Overall, limited by the Sino-US trade war, the domestic economic environment and the fluctuation of waste paper prices, Nine Dragons Paper's paper prices fell, and profitability fell sharply. However, with the gradual expansion of production capacity and the gradual recovery of the domestic economy, the leading position of Nine Dragons Paper will be further strengthened.
Editor in charge: Gu Wen
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