Papermaking conglomerate YFY Inc (永豐餘控股) yesterday said it remains confident of its growth in the Chinese market this year, despite losses arising from the yuan’s devaluation and operations in eastern China last year.
To maximize return on investment in its Chinese business, the company has changed its strategy in the nation’s east through resource integration with northern and southern operations, as well as by dispatching more management personnel from Taiwan, Yin Kuo-tang (殷國堂), vice president of YFY’s center of corporate finance, told an investors’ conference in Taipei.
The firm said its industrial-use paper and household-use paper businesses — which contributed 35 percent and 17 percent to last year’s revenue respectively — would become growth drivers after capacity expansions take effect this year.
“A machine to produce industrial paper with an annual capacity of 300,000 tonnes will become operational in Taoyuan’s Sinwu Township (新屋) in the fourth quarter this year, while two machines to produce household paper with an annual capacity of 50,000 tonnes will begin operations in China in the second quarter,” Yin said.
Yin made the remarks after the company reported its net income fell 15.6 percent to NT$501.9 million (US$15.5 million) from 2014, with earnings per share falling from NT$0.36 to NT$0.3 amid a falling yuan and a slowdown of China’s economy.
“The losses from the yuan’s devaluation reached NT$603 million last year,” Yin said.
By comparison, the company reported foreign-exchange gains of NT$146 million in 2014.
YFY reported losses of NT$856 million in its industrial paper business last year, due to poor performance at its Yangzhou plant in China’s Jiangsu Province, Yin said.
The plant began its full-year volume production last year, but was affected by weak demand in eastern China and a lack of experience in cooperating with customers there, he added.
The household paper segment saw profit decrease to NT$172 million last year due to poor performance in Taiwan, Yin said.
However, the company’s overall revenue increased 4.4 percent to NT$63.58 billion last year from the previous year, including NT$22.5 billion from the industrial paper segment and NT$10.83 billion from household paper business, company data showed.
YFY yesterday announced a cash dividend plan of NT$0.3 per share with a payout ratio of 100 percent. The planned payout translated into a yield of 2.89 percent based on YFY’s closing price of NT$10.35 yesterday.
YFY has annual capacity to produce 935,000 tonnes of paper pulp, 1.66 million tonnes of industrial paper and 255,000 tonnes of household paper a year, company data showed.
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