Lee & Man reports slimmer profits

Asian paper and board producer still nets $180 million in the first half of 2020; cites scrap paper sourcing as problematic.

August 5, 2020

Hong Kong-based Lee & Man Paper Manufacturing Ltd. says it recorded a net profit of nearly $181 million in the first half of 2020 on a sales volume of 2.78 million tons of finished containerboard and other paper and board products.

The first half profit figure is down 16 percent from the nearly $217 million Lee & Man cleared in the first half of 2019.

In notes accompanying the firm’s 2020 first-half results, Lee & Man says packaging remains “as the core business” of Lee & Man, but access to imported recovered fiber is presenting a challenge to the firm.

“Since the outbreak of the US-China trade war in 2018, the packaging paper business in Mainland China has been relatively weakened,” says the firm. “In addition, Mainland China has embarked on an import restriction policy for [scrap] paper starting from 2017. The relevant policy has restricted the supply of raw materials and has had some bearing on the domestic paper manufacturing industry.” Lee & Man says it “is actively seeking alternative methods for the import of [scrap] paper.”

“The paper manufacturing industry still faced certain pressure in 2020,” says Raymond Lee, the company’s chairman. “Under the impact of the global novel coronavirus, as well as the ongoing United States-China trade frictions, the cost of paper production recorded a substantial increase, which has affected consumer confidence.”

Lee continues, “Lee & Man Paper has proactively responded to the changes in the market. The group has been committed to developing a vertical business model, through active consolidation of its upstream resources covering pulp manufacturing and recycling of [scrap] paper, so as to achieve an integrated industrial chain to ensure the supply of raw materials. At the same time, by expanding scale, controlling costs and strengthening production capacity leveraging the existing business foundation, the group will have more opportunities for business development.”

The company says its current focus lies on the development of various types of linerboard, corrugating medium, coated duplex board and tissue paper, “with an intensive effort being devoted to segmental markets to cater to the needs of different customers.”

The company says its tissue business has maintained steady growth, and its existing capacity has reached 900,000 tons annually.

Without specifying any new mill or paper machine expansion projects, CEO Edmond Lee states, “Leveraging the existing business foundation, the group will support the ‘Belt & Road’ initiatives, targeting the Southeast Asia market for international development and an increase in new production capacity.”

Lee & Man currently operates five paper production plants in China and one in Vietnam. Its total annual production capacity is 6.18 million tons of containerboard; 180,000 tons of pulp; and 900,000 tons of tissue paper.