PM Packaging Announces 2021 Interim Results
During the Period, the corrugated packaging industry was affected by the ongoing rise in raw material prices. Consequently, the Group's net profit contracted despite a year-on-year increase in revenue of approximately 26.5% to RMB1,116.7 million during the Period (Corresponding Period of 2020: approximately RMB882.8 million). Gross profit rose by approximately 5.7% year-on-year to RMB178.1 million and consolidated gross profit margin was approximately 15.9%. The Board has declared an interim dividend of HK$0.08 per share (Corresponding Period of 2020: nil).
Construction of New Production Plant
In 2020, the Group established a new production plant in Shandong province (the "Shandong Plant") with an annual production capacity of approximately 78 million square meters of corrugated sheet boards and corrugated packaging products. Its utilisation rate reached approximately 70% as at 30 June 2021, and this rate is expected to improve when the COVID-19 pandemic subsides.
As for the new production plant in Foshan (the "Foshan Plant"), it was still under construction as at 30 June 2021 and is currently at the final stage of construction. It is expected that completion would take place in September 2021 and that production would commence in the fourth quarter of 2021. Foshan Plant is expected to achieve synergy effect and to further strengthen the Group's market share in Southern China market.
Mr. CHENG Hsien Chun, Chairman of PM Packaging, said, "In the first half of 2021, we continued to face unfavorable influences, including the global economic downturn, COVID-19 pandemic, and rising raw material costs. After analyzing the Group's overall situation, we will continue to monitor market conditions and take appropriate steps to cope with the changing market demand. We will also expand our plant network and enlarge our market share by constructing new production plants, so as to consolidate the Group's market positon in the PRC corrugated packaging industry."
Business Review
During the Period, the Group recorded growth in revenue from sales of corrugated packaging products and corrugated sheet boards. Revenue from sales of corrugated packaging products was approximately RMB1,012.7 million, representing an increase of approximately 26% when compared with the last corresponding period, and accounting for approximately for 90.7% of the Group's total revenue for the Period. Revenue from sales of corrugated sheet boards was approximately RMB104.0 million, representing a year-on-year increase of approximately 31.9%, and accounting for approximately 9.3% of the Group's total revenue for the Period.
The improvement in sales performance of corrugated packaging products and corrugated sheet boards was mainly attributable to the increase in sales volume contributed by existing plants and new plants as well as increase in average unit prices.
Future Development
Looking ahead, the Group will continue to expand its plant network by constructing new facilities in the PRC, which will also help extend its geographical coverage and enhance market penetration, and thus strengthen the Group's market position in the country's corrugated packaging industry.
In addition to the Shandong Plant and the Foshan Plant, during the Period, the Board had resolved to establish another new production plant in Chuzhou, Anhui Province (the "Chuzhou Plant") with an estimated annual capacity of 75 million square meters of corrugated sheet boards and corrugated packaging products. The Directors consider the Chuzhou Plant, when it comes into play, would continue to expand the network of production plants in East China and minimize the Group's production lead-time and respond promptly to customers' requests and needs which are particularly important to remain competitive in the corrugated packaging industry.
Meanwhile, as the first manufacturing group in the PRC to achieve carbon neutrality, the Group is actively promoting photovoltaic power generation at its plants and advancing low-carbon emission business operations. The first phase of work has commenced at the Zhejiang Plant and Wujiang Plant, thus helping the Group save on electrical expenses and contribute to environmental protection as well as drive green and quality development across the industry.
By upgrading production equipment and purchasing new machinery and equipment for its existing plants, the Group will continue to streamline production processes and increase automation of such processes, leading to improved production efficiency, revenue and profitability as well as greater value creation for shareholders.
About Pacific Millennium Packaging Group Corporation (stock code:1820)
Established in 1994, Pacific Millennium Packaging Group Corporation is principally engaged in the manufacturing and sale of corrugated packaging products and corrugated sheet boards in the PRC. The Group is the second largest corrugated packaging product manufacturer in both the Yangtze River Delta Region and Bohai Rim Region of China and is ranked seventh amongst the corrugated packaging product manufacturers in the PRC*. PM Packaging operates fourteen production plants (including Foshan Plant, which is under construction; and Chuzhou Plant that is under planning) located in northern, north-eastern, eastern and southern regions of the PRC. With stable and long term customer relationships, the Group has developed a diversified customer base with the majority of its clients being leading players in their respective industries.
*In terms of revenue in 2017 according to Frost & Sullivan
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