Papermaking conglomerate YFY Inc (永豐餘控股) yesterday reported NT$1.07 billion (US$35.5 million) in net profit for last quarter, the highest since 2009, thanks to rising paper prices.
The figure represents a 202.9 percent surge from NT$352.47 million in the same period last year and earnings per share of NT$0.64, up from NT$0.21 per share a year earlier, the company said in a statement.
Sales in the July-to-September quarter totaled NT$17.47 billion, a 12.2 percent annual increase from NT$15.56 billion, with gross margin up to 17.35 percent, compared with 15.98 percent a year earlier, the statement said.
The strong performance was due mainly to surging wastepaper prices in China, which boosted paper product prices there, a YFY official said by telephone.
Chinese clients contributed more than 50 percent of revenue in the company’s industrial paper sector last quarter, YFY said.
The official, who declined to be named, said wastepaper prices in China last quarter hit about US$340 per tonne, jumping by more than 80 percent from US$180 per tonne in the same period last year.
Improving production efficiency at YFY’s industrial paper plant in Yangzhou, China, also lent support to the company’s performance there, the official said, adding that the facility has been running at almost full capacity.
The papermaker is capable of producing 940,000 tonnes of industrial paper products per year in China, company data showed.
YFY’s industrial paper business last quarter generated an operating profit of NT$435 million, indicating significant improvement from losses of NT$126 million a year earlier.
However, its household paper business posted losses of NT$67 million, compared with earnings of NT$124 million in the same period last year, data showed.
The company attributed the weaker-than-expected financial result of its household paper business to a decision not to increase prices for household paper, in an effort to retain customer loyalty, and prices that were too low to reflect rising material costs.
YFY shares yesterday gained 2.07 percent to close at NT$12.35 in Taipei trading, easily beating the benchmark TAIEX, which dropped 0.53 percent.
In related news, Chung Hwa Pulp Corp (中華紙漿), a YFY subsidiary that specializes in printing and writing paper products, also saw its net profit for last quarter grow on an annual basis on the back of increasing pulp prices.
Net profit last quarter totaled NT$171.98 million, which translated into a 233.6 percent increase from NT$51.55 million a year earlier.
Sales in the third quarter rose 6.2 percent annually from NT$5.35 billion to NT$5.68 billion.
Global pulp prices were about US$650 per tonne last quarter, up from between US$470 and US$480 per tonne in the same period last year, a Chung Hwa Pulp investor relations official said, adding that the firm has raised its product prices three times this year in response to rising material costs.
Chung Hwa Pulp said that it is likely to increase selling prices further by the end of this year, as pulp prices hit US$720 per tonne this month, the highest in three years.
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