Asia Plastics Recycling Holding Ltd (亞塑再生), which recycles used plastic bags and other scrap to make ethylene-vinyl acetate foam in China, yesterday said its net profit grew last quarter thanks to its continued capacity expansion.
The company is the largest maker of ethylene-vinyl acetate foam in China, accounting for 5.7 percent of the market. The foam is used in shoe soles, luggage, sports products, toys and compounded building materials.
About 70 percent of the raw materials that the firm uses come from recycled plastic, making its costs lower than those of its peers in China, Asia Plastics said.
The company’s net profit increased 19.2 percent quarter-on-quarter and 8.44 percent year-on-year to NT$450.08 million (US$15.21 million) last quarter, it said in a stock exchange filing.
Asia Plastics increased the number of foam-making machines in its factory in China’s Fujian Province to 36 last quarter from 32 in the previous quarter, which helped boost its third-quarter revenue 9.47 percent to NT$1.85 billion, from NT$1.69 billion in the second quarter, said Mark Hsueh (薛又瑋), special assistant to the company’s chairman.
The third quarter is a peak season for Asia Plastics since that is when it typically receives more foam orders from downstream companies to manufacture shoes, Hsueh said.
The business’ gross margin improved to 41.7 percent last quarter from 35.21 percent in the previous quarter because it wrote off losses of NT$50 million. Asia Plastics booked losses of NT$83 million in the second quarter because the price of its inventory declined.
Hsueh said the recycling enterprise expects to write off the remaining NT$33 million in losses this quarter.
For the fourth quarter, Hsueh said the company expects revenue to increase sequentially due to the planned addition of four more machines at its Fujian plant this month. The new machines will bring the number of units to 40 and are being installed to help accommodate the increase in orders the company has seen last month and this month, he added.
Asia Plastics is also building a factory in China’s Jiangsu Province, which is scheduled to become operational after the Lunar New Year holiday next year.
Asia Plastics shares declined 1.05 percent to close at NT$85.10 in Taipei trading yesterday.