Chinese mill group Nine Dragons Paper has issued a profit warning blaming the high cost of raw materials for an expected profit drop.
For its financial year ending June 2022, and ahead of its annual results that are expected to be published in September, the company warned that profits could be up to 60% lower than the previous year.
A statement from chair Cheung Yan said: “The board of directors of the company wishes to inform the shareholders of the company and potential investors that, based on the preliminary review of the management accounts of the group, if exchange gains on operating and financing activities (net of tax) were excluded, the profit attributable to equity holders of the company for the year ended 30 June 2022, is expected to decrease not more than 60% as compared to the year ended 30 June 2021.
“The decrease was mainly due to the increase in the selling price of the products was much slower than the increase in the cost of raw materials with sales volumes remaining relatively stable amid the Covid-19 pandemic.”
