Nine Dragons posts higher sales and lower profits for first half of 2012/2013 business year

New production capacities boosted Nine Dragons Paper’s sales in the six months ended 31 December. The market, however, was still not strong enough for higher paper prices.

Although sales and operating profits of Nine Dragons Paper were higher year-on-year for the first half (ending 31 December) of the 2012/2013 fiscal year, compared to 2011 net profit of the group was down by 20% to RMB677m. Sales revenue was 16.6% higher at around RMB 14.7m compared with the same period last year. Sold volumes touched a new record figure of 5.3 million t of paper.

Nine Dragons Paper explained that the market had stabilised since mid-2012 even though the world economy continues to be burdened by the European debt crisis and growth remains marginal in western industrial nations. As the Chinese market gradually recovers from austerity measures, the paper industry in China began to bottom out. There are signs of a moderate recovery with progressively higher selling prices and a slight recovery in business results, Nine Dragons Paper reported.

According to the company, the first half of the 2012/2013 fiscal year saw all paper machines working virtually to capacity. Two new paper machines, PM 34 in Tianjin and PM 33 in Chongqing, each with a capacity of 550,000 tpy of coated duplex board, were added in July and November 2012, taking the total production capacity of Nine Dragons to 12.55 million tpy at the end of the reporting period on 31 December 2012.

Nine Dragons is purchasing more recovered paper to match the progressive increase in production. About 25% of the recovered paper needed in the reporting period was procured on the Chinese market, the company added.

Nine Dragons Paper has several expansion projects on the agenda until 2015. PM 35 with a capacity of 350,000 tpy of kraftliner and PM 36 with a capacity of 300,000 tpy of testliner will be commissioned in June this year at the Quanzhou mill. PM 37 is slated to be started in Shenyang in June 2014. This machine will mainly produce kraftliner with a capacity of 350,000 tpy.

PM 39 at the company’s Leshan mill is a new project. The machine will produce high-performance recycled corrugating medium for the local market. It is currently being built and is slated to be commissioned in December 2013. Recovered paper for PM 39 will be fully procured in China.

The last expansion project the company has announced to date is PM 38 in Shenyang, which is to start operation by the end of December 2015 with a capacity of 350,000 tpy of testliner. It is to take the total production capacity of Nine Dragons Paper to over 14 million t annually.

⇒ Find this article and any associated background information in EUWID Pulp and Paper no. 09.