Chinese paper giant Nine Dragons Paper has unveiled that it has increased profits in the last six months of last year.
In the period up to 31 December 2020, gross profit increased by 31.3% to approximately RMB 6.4 billion (£710 million) compared to the same six months in 2019.
Nine Dragons Paper said in a statement that 2020 was an exceptional year due to Covid, but the Chinese economy had stabilised unlike other nations that were still suffering as a result of the pandemic.
It also noted that the zero waste import quota had an impact even though it did not begin until the start of 2021.
Additionally, the volatile Renminbi exchange rate with countries it purchased material from also presented challenges.
It added: “Nevertheless, the Group has continued to enjoy its competitive edge as the leading enterprise in terms of production scale and raw material procurement, while providing quality products and services to customers consistently.
“Moreover, under the successful price hikes and efficient cost control measures, we obtained remarkable results with record high sales and sales volumes as well as substantial growth of overall profitability in the period, with significant profit growth for our high-end products in particular.
“In addition, we managed the inventory level and financial risk effectively. Net gearing ratio has declined to the lowest point since listing and cash flow was maintained at a healthy level.
“During the period, the Group made a breakthrough in the vertical integration of its production chain. For upstream resources, we have started a number of fully integrated pulp and paper mill projects in China, which is highly conducive to the long-term stable supply of quality raw materials as well as the control on production quality and cost effectiveness in future.
“A total of our new paper production capacity of 2.05 million tonnes per annum has officially commenced production in Quanzhou, Shenyang, Dongguan, and Hebei respectively during the period, further enhancing the economies of scale and supporting the growth of market demand.
“As of 31 December 2020, the Group’s total annual design production capacity for pulp (recycled pulp and wood pulp) paper amounted to 0.85 million tonnes per annum and 17.57 million tonnes per annum respectively, while the total annual design production capacity for downstream packaging plants amounted to 1.0 billion square metres.”