Profits in 2017 at Lee & Man Paper Manufacturing have increased by 76% on the year before, the company has revealed.
The containerboard and tissue manufacturer reported profits to 31 December 2017 of HK$5,040 million (£464 million) compared to HK$2,863 million (£263 million) in FY2016.
Its revenue in 2017 was HK$25,837 (£2.38 billion) up from HK$18,342 (£1.683 billion) in 2016.
Lee & Man is supplied with OCC from Mark Lyndon Paper Enterprises in the UK to its Chinese mills, and OCC and mixed paper to its mill in Vietnam.
In a statement with its results, Lee & Man revealed it is considering further investment in South East Asia.
It said: “The Group has expanded into the overseas packaging paper markets and has invested in the construction of overseas paper factories to keep pace with the expansion of markets in Southeast Asia. Notable here is that the paper manufacturing machine project in Hau Giang, Vietnam, with an annual production capacity of 400,000 tonnes has begun operation. Since the overseas packaging paper market possesses enormous potential, the Group is considering directing more resources to this sector.
“The PM21 paper manufacturing machine with an annual production volume of 400,000 tonnes at the Jiangxi plant has also begun operation. The annual production capacity of the Group’s packaging paper operation now exceeds 6 million tonnes.
“In order to address overcapacity and environmental issues in the paper industry, obsolete production facilities have steadily been eliminated in China as approval standards for new production capacities have become more stringent in recent years.
“Local government authorities intend to impose stricter environmental monitoring policies and requirements on environmental protection, which will lead to the shutdown of even more obsolete production facilities that fail to meet environmental protection standards.
“Despite the slowdown in economic growth in China, local demand for packaging paper is expected to grow steadily in the long run. In addition, the rapid development of e-commerce and online shopping has led to fundamental changes in consumption and logistics models, benefitting the packaging paper industry which is currently undergoing consolidation. Looking ahead, overall paper consumption still possesses considerable room for growth, thus the Group is optimistic about the outlook of both the packaging paper segment and the paper industry as a whole.
“Adhering to its long-held prudent strategies and with debts maintained at a reasonable level, the Group will monitor the pace of economic development in China and across Southeast Asia, while it continues to bolster the production capacity of packaging and tissue paper, as well as strengthen its presence in Vietnam. The management will also proceed with efforts to enhance production efficiency, strictly control costs and strengthen capital operation in order to maintain the Group’s competitiveness in the paper industry. Furthermore, the experienced and capable management team will continue to lead the development of the Group’s businesses and strive its utmost to raise profitability.”