Papermaking conglomerate YFY Inc (永豐餘控股) yesterday reported that its third-quarter net profit dropped 22 percent year-on-year, dragged down by foreign-exchange losses and capacity adjustments.
Net income fell to NT$352 million (US$11.04 million), or earnings per share of NT$0.21, for last quarter, company data showed.
Revenue also slid 4.1 percent to NT$15.6 billion during the same period.
“The foreign-exchange losses reached nearly NT$382 million last quarter,” YFY spokesman Yin Kuo-tang (殷國堂) told an investors’ conference in Taipei, attributing it to the New Taiwan dollar’s appreciation and the yuan’s depreciation against the US dollar.
Recent capacity adjustments at its industrial paper plant in China’s Yangzhou (揚州) in Jiangsu Province also affected its bottom line, YFY said.
The company’s industrial paper segment reported a net loss of NT$403 million in the third quarter, while its pulp business and household paper products division posted net profits of NT$209 million and NT$37 million respectively.
“Shipments to Chinese downstream companies have weakened significantly due to a slowdown in China,” Yin said, adding that a new management team is working on the Yangzhou plant’s transformation.
The adjustments are expected to bear fruit next year, he told investors, but did not indicate a capacity target.
The plant mainly produces container boards for downstream packaging companies, with an annual capacity of 966,000 tonnes, company data showed.
Despite the losses, YFY is optimistic about next year, supported by its fast-growing household paper products business, whose net profit jumped from NT$9 million in the second quarter.
The company plans to expand the division’s customer base on e-commerce platforms and develop more high-margin products, such as radio frequency identification tags, Yin said.
YFY shares yesterday gained 1.1 percent to close at NT$9.15 in Taipei trading, outperforming the TAIEX, which dropped 0.1 percent to 8,931.03 points.
YFY’s subsidiary, Chung Hwa Pulp Co (中華紙漿), also reported its net income for last quarter, which plunged 80.9 percent to NT$51.5 million from a year earlier, due to falling global pulp prices.
International pulp prices dropped to a low of NT$460 per tonne in July, an investor relations official said.
YFY expects earnings to recover, as it plans to launch a series of medical-use paper products next year, which offer a higher margin of between 20 and 30 percent.
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