Papermaker Chung Hwa Pulp Corp (華紙) gave a conservative outlook for this quarter due to annual maintenance and lackluster orders amid a US-China trade dispute.
“We remain conservative for this quarter as the US-China trade dispute lingers, making customers cautious in placing orders,” Chung Hwa Pulp spokesperson Chen Jui-ho (陳瑞和) told an investors’ meeting in Taipei on Thursday.
Regular inspections of its factories would lower its utilization rate this quarter, Chen said.
South American leaf bleached hardwood kraft pulp (LBKP) was US$700 per ton (0.91 metric tonnes) last month, down from US$760 a year earlier, Chen said.
“We expect the price of LBKP to fall further this month due to US-China trade tensions, but it might bounce back in the second half as a shortage of pulpwood remains,” Chen said.
The company said it would strengthen its business in India and in Central and South America, as its first-quarter sales in the regions grew 20 percent and 10 percent respectively.
Net income attributable to its parent firm soared 87.78 percent annually, but fell 10.41 percent quarterly, to NT$84.63 million (US$2.7 million) from NT$45.07 million a year earlier, thanks to an income tax recovery of NT$20 million.
Earnings per share increased to NT$0.08 from a year earlier, but held steady from the previous quarter.
Gross margin increased slightly to 8.15 percent from a year earlier, but dipped from the previous quarter due to the firm’s investment in Dingfung Pulp & Paper Co Ltd (鼎豐紙業), it said.
Meanwhile, papermaking conglomerate YFY Inc (永豐餘控股) on Thursday gave a moderate outlook for this year after reporting flat performance last quarter.
YFY spokesman Yin Kuo-tang (殷國堂) said that the trade dispute softened demand for paper and pulp last quarter, but added that the firm would undergo a thorough product portfolio adjustment.
“The real problem was China’s ban on foreign waste imports in January last year, which has made it difficult to acquire materials to make recycled paper,” Yin said.
YFY’s factories in Yangzhou, China, did not win the quota for wastepaper, as Beijing decided to give the quota to the top three domestic manufacturers, it said.
“It will be difficult for other paper companies to get cheap materials,” Yin added.
The company this year aims to raise profits by focusing on high-margin paper and cleaning products, it said.
YFY’s net income climbed 10.01 percent to NT$121.3 million, from NT$110.26 million a year earlier, while earnings per share remained unchanged at NT$0.07.
Gross margin increased 1.35 percentage points to 15.14 percent, while revenue fell 3.65 percent year-on-year to NT$15.25 billion, compared with NT$15.83 billion in the same period last year.
Shares of Chung Hwa Pulp yesterday closed down 1.35 percent at NT$9.47, while shares of YFY closed down 0.43 percent at NT$11.45.
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