Taiwan’s largest papermaking conglomerate, YFY Inc (永豐餘控股) swung into the red last quarter, primarily due to foreign-exchange losses of nearly NT$420 million (US$13.95 million).
The company posted a net loss of NT$45 million for the January-to-March quarter, or NT$0.03 per share, compared with a net loss of NT$120 million in the same period last year and a net profit of NT$9 million in the previous quarter.
In the first three months, sales increased 3.3 percent year-on-year to NT$15.51 billion, buoyed by rising global pulp prices and better-than-expected demand, the firm said.
“We saw an increase in orders from our clients [last quarter], but the local currency’s rapid appreciation blotted out the firm’s profitability,” company spokesman Yin Kuo-tang (殷國堂) told an investors’ conference on Monday, referring to the New Taiwan dollar’s appreciation against the US dollar.
Despite the losses, Yin said that the company’s capacity adjustments at its industrial paper plant in Yangzhou, China, have begun to bear fruit.
YFY’s industrial paper business managed to stay profitable last quarter, he told investors.
From January through March, YFY’s industrial paper segment posted operating income of NT$224 million, compared with a net loss of NT$184 million in the same period last year.
The company’s pulp business and household paper products division reported operating income of NT$223 million and NT$67 million over the period respectively, the group said.
Yin gave a relatively positive business outlook for the rest of the year, saying that one of the company’s major capacity expansion projects is likely to be completed by the end of this year.
A new machine to produce industrial paper at its plant in Taoyuan’s Sinwu District (新屋) started trial operations in the first quarter, the firm said.
The new machine is expected to raise YFY’s production capacity of industrial-use paper from nearly 720,000 tonnes per year to 750,000 tonnes per year, the company said.
In addition, a cogeneration system is to be built at the Xinwu plant to reduce emissions costs generated during the papermaking process, YFY said.
In related news, Chung Hwa Pulp Co (中華紙漿), a major subsidiary of YFY, posted net profit of NT$135.1 million for last quarter, a 73.2 percent surge from the same period last year, representing earnings per share of NT$0.12 on the back of soaring global pulp prices.
The company’s sales increased 5.4 percent year-on-year to NT$5.55 billion, data showed.
International pulp prices this month reached US$280 per tonne, compared with US$190 per tonne in the same period last year, a company official said.
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