Nine Dragons Paper announces record profit

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Nine Dragons Paper mill
A Nine Dragons recycled paper mill

Chinese containerboard manufacturer Nine Dragons Paper has revealed record profits and sales for the six months up to end of December 2017.

The group, which is supplied with material by ACN Europe from the UK, announced its profit was up 117.3% to RMB 4,350 million (£495 million) on the same period in 2016.

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Year-on-year sales were up 34.1% to RMB 25,649 (£2.9 billion).

The company also said that three new paper machines will begin production before the end of 2018, with three more coming on-stream during 2019.

In its financial statement, the company said: “PM2(VN) at the Vietnam base has already commenced production in August 2017, bringing the Group’s total design production capacity to 14.08 million tpa. As for the markets in Mainland China, based on the current development plan, a total of 3 new paper machines at the Chongqing base, Quanzhou base and Hebei base are expected to commence production successively before the end of 2018.

“Furthermore, before the end of June, 2019, there will be a new paper machine commencing production in each of Shenyang base, Dongguan base and Quanzhou base respectively. The total design production capacity of the above-mentioned six new paper machines is 3.25 million tpa, bringing the Group’s total design production capacity to over 17 million tpa by then. Upon such expansion, these production bases will see significant improvements in their economies of scale, in particular those bases where the current capacity scale is relatively small.”

The company also outlined the impact of the Chinese import restrictions. It said: “During the period, the Chinese government continued to drive the reform for economic and
environmental development. With more stringent regulatory measures in environmental
protection, the supply-demand dynamics of packaging paperboard industry saw further
two improvements, which provided strong support to product prices in general. The profitability of packaging paperboard industry has basically been stabilised at a reasonable level.

“Meanwhile, the government strengthened the management and control for reducing the
import of recovered paper, which led to significant price fluctuations in both domestic and imported recovered paper during the Period. In such an extremely challenging market environment, the leadership advantages of ND Paper became more prominent.

“With efficient purchasing and sales teams as well as its own big data database, the Group kept pace with the market closely in raw material purchasing and product sales, which enabled it to proactively execute flexible strategies on the various aspects of product pricing, sales volume, inventory levels, etc., with profit maximisation as the most important goal.”

Nine Dragons chair Cheung Yan said: “The magnificent blueprints of China’s deepening
economic transformation, sustainable development and building a beautiful China will
provide the room for long-term and stable development to enterprises emphasising
management enhancements and environmental protection.

“The continued closure of non-compliant capacities will bring potential to the packaging paperboard industry. More high-quality products will be provided by the Group’s new capacities to replace the low-quality ones in the market. Meanwhile addition of new capacities in the market during certain periods and tightening control over import of raw materials will expose the Group to three stern challenges.

“The Group has confidence in and ability to address such challenges by  devoting ourselves to improving our ‘inner power’ and adjusting to supply-demand dynamics according to market changes, with a view to creating synergies among different industry segments and enhancing the industrial chain both upstream and downstream.

“In the future, the Group will continue to forge ahead and provide our customers ‘a piece of exemplary quality paper’ with the best price/value, and uphold our relentless pursuit of creating better values for our shareholders.”

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