Chinese mill group Nine Dragons has reported lower profits in its 2021/22 Interim Report.
Gross profits fell 27.5% to RMB4.6 billion (£546 million) from RMB6.5 billion (£773 million) in the previous period.
The company said that this was due to the selling price of its products increasing at a slower rate than the increase in cost of raw materials.
Revenue for the period actually increased by 11.6% to RMB34.4 billion (£4.09 billion) compared to the same period last year.
Nine Dragons chair Cheung Yan said: “During the period, the Chinese and global economic recovery was hard struck with the impact of the new COVID-19 variants.
“Coupled with the effect of the dual control of energy consumptions policy, soaring coal prices and increasing transportation costs, China’s manufacturing industry in general, the paper manufacturing and packaging industries were confronted with unprecedented challenges.
“Under the severe market conditions, the Group adhered to the strategy of “prudency for sustainability” to surmount all difficulties and challenges. While stabilising production and costs, we put more emphasis on maintaining the sales effectiveness and ensuring high standard of product quality and services.
“Leveraging various advantages of its leading position, the Group gained support from its customers and safeguarded steady sales successfully during the Period. Cash flow, internal control measures and finance risks also remained well under control. However, given the surging costs of raw materials and energy, the profit attributable to the equity holders suffered a setback as compared with the corresponding period last year.”