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| Nine Dragons Paper delays expansions as profits fall |
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http://www.paper.com.cn
2008-10-11 HK Edition |
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Nine Dragons Paper (NDP), the largest manufacturer of containerboard products in China and Asia, has seen its net profits slide 6.3 percent to 1.88 billion yuan in the current fiscal year.
And as a result of market uncertainties, its acquisition and expansion plans have, in part, been postponed until 2010.
The group's consolidated revenue totaled 14.11 billion yuan, representing a year-on-year increase of 43.5 percent when compared with 9.84 billion yuan last year. That increase was due to higher sales. During the 2008 fiscal year, the group's total sales of packaging paperboard products reached 4.3 million tons, representing an increase of approximately 30.3 percent from the last fiscal year.
"The group managed to achieve satisfactory value growth in production capacity, product portfolio and market distributions by leveraging sound and flexible business strategies despite the uncertainties that included economic challenges and natural disasters," Chairwoman Cheung Yan said.
Profit attributable to equity holders this financial year, however, decreased to 1.88 billion yuan, down 6.3 percent, or 126.6 million yuan, due to the slowing economy.
Cheung admitted that it was a challenging year for the company in 2008, and to cope with possible changes in the deteriorating market, she said the company has already postponed part of the expansion projects until 2010, excluding expansion plans in Tianjin. The base in Tianjin will be completed earlier than scheduled, by mid 2009.
"We will revive our expansion projects when the market rebounds or is on its way to recovery," Cheung said, adding that the company has no acquisition plans in the coming years.
The net borrowings-to- equity ratio of the group as of June 30 increased from 42.4 percent to approximately 95.9 percent due to a draw down of bank loans to fund capital requirements of the group.
When reporters asked about the alarming high gear ratio, Cheung assured them, saying: "Despite the high gear ratio, we have enough cash in hand". According to Cheung, the company has sufficient cash flow of 22 billion yuan in hand for business operations. And 43 billion yuan credit from banks, added Armstrong Zhang, the chief financial officer.
Looking forward, NDP is embracing the challenges in terms of a downturned global economy and rapid integration of the paper industry, and it looks to turn these challenges into opportunities for internal upgrades.
The company is expecting to secure a better position, despite adverse economic conditions with its enlarged production capacity of more than 8.8 million tons in 2009.
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