Categorized | Singapore Trading News

China Paper full-year earnings plummet 39.2% to 79.5m yuan

A FALL in gross profit coupled with a rise in operating expenses saw China Paper Holdings Ltd’s net profit dive 39.2 per cent to 79.5 million yuan (S$15.8 million) for 2011, from 130.8 million yuan for the preceding year.

Revenue inched up 0.3 per cent to a record high of 1.06 billion yuan. This was due to strong growth from its coated paper business, which compensated for decreases in sales of other paper products and paper chemicals.

But gross profit dropped 14.2 per cent to 215.1 million yuan. Administrative expenses more than doubled to 42.2 million yuan from 20.2 million yuan ‘mainly due to the inclusion of non-cash cost of equity-settled share-based payment’ relating to performance shares.

The Shandong-based paper manufacturer said that excluding coated paper, sales of its products were affected by a 10-day closure of production lines in Q1 2011, due to unscheduled repairs.

Earnings per share for the period stood at nine fen, down from 20 fen a year before. No dividend was declared.

Said China Paper’s executive chairman Chen Yong: ‘Our strong financial position has allowed us to better weather the current market slowdown and higher cost inflation, while continuing our investment plan.’

While it remains ‘cautiously optimistic’ about the group’s financial performance for the next 12 months, China Paper said that inflationary pressures and rising costs both outside and within China continue to be of concern.

The group also expects its supply of power to become ‘strained and unpredictable in the future’, given China’s serious power shortages and the rising cost of electricity.

‘Rather than waiting for the (worst) situation to happen, the group has already started exploring available options to secure its power supply in FY2011, including the setting up of its own power generation facility.’

China Paper’s shares closed unchanged at 7.5 cents apiece yesterday.

adapted from

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