Hong Kong-based Lee & Man Paper Manufacturing Ltd. has announced 2017 annual results that include total revenue of HK$25.84 billion ($3.3 billion) and a net profit increase of 76 percent compared with 2016.
The firm, which produces linerboard, corrugating medium and tissue products, indicates its revenue figure in 2017 increased by 40.9 percent compared with the previous year. Lee & Man’s reported net profit of HK$5.04 billion ($640 million) represents a 76 percent increase compared with the previous year.
“The Chinese government’s efforts to eliminate obsolete production facilities while implementing environmentally friendly policies had helped gradually reduce excess capacity in the industry during the year,” says Dr. Raymond Lee, chairman of Lee & Man Paper. “Demand recovering during the year also notably improved the demand and supply equilibrium in the industry,” he adds.
Lee continues, “Paper [costs have] increased as a result of the surge in energy, raw materials and transportation costs. The overall increase in sales revenue as well as the value-added tax refund policy enabled satisfactory growth in the group’s profit margin. Looking ahead, the group is optimistic about the outlook of the paper industry. As the rapid development of e-commerce and online shopping has fundamentally changed consumption and logistics models, [this] in turn has benefited the packaging [sector, which is] currently undergoing consolidation. Overall paper consumption still has considerable room for growth.”
Lee & Man’s tissue paper business now has a total annual production volume of 685,000 tons. That business unit has 10 tissue paper manufacturing machines with a total annual production volume of 465,000 tons in Chongqing in western China; a machine with 110,000 tons of annual output in Jiangxi Province in southeastern China; and a 110,000-tons-per-year machine in south China’s Guangdong Province.
The company indicates it has been able to reduce the production cost of tissue paper thanks to greater economies of scale from increased production volume and steady supply from its pulp production facilities in Chongqing. Another two production lines with a combined annual production capacity of 110,000 tons in the Chongqing Industrial Park will begin production in 2018, boosting Lee & Man’s annual tissue output to tissue paper is expected to reach 795,000 tons.
On the packaging side, Lee & Man states it continues to invest in its paper manufacturing operations in Vietnam, with an annual production capacity of 400,000 tons now in operation there. In 2017 another paper machine also came online in Jiangxi, China, meaning the company is now capable of producing more than 6 million tons of packaging paper and board per year.
“Adhering to its long-held prudent strategies and with debts maintained at a reasonable level, the group will monitor the pace of economic development in China and Southeast Asia, while continuing to bolster production capacity for packaging and tissue paper, as well as strengthen its presence in Vietnam,” remarks Edmond Lee, CEO of Lee & Man Paper.
“Management will also proceed with plans to enhance production efficiency, strictly control costs and strengthen capital operations to maintain its competitiveness in the paper industry,” he adds.