Date
18 August 2018
Vinda chairman Li Chao Wang (center) is flanked by chief executive Christoph Michalski and CFO Vicky Tan at the announcement of the company's interim results on Thursday. Photo: EJ Insight
Vinda chairman Li Chao Wang (center) is flanked by chief executive Christoph Michalski and CFO Vicky Tan at the announcement of the company's interim results on Thursday. Photo: EJ Insight

Vinda interim profit up 30.1 percent despite soaring pulp prices

Vinda International Holdings Ltd. (03331.HK), a maker of tissue and other personal care products, said net profit in the first half jumped 30.1 percent to HK$417 million from a year earlier, despite rising pulp prices.

Revenue grew 16.3 percent to HK$7.33 billion.

In its results presentation on Thursday, chairman Li Chao Wang said the double-digit growth was driven by strong sales in all regions, and the good performance of high-margin products such as softpacks, kitchen towels and wet wipes.

Li also cited the successful price increases and cost control measures for the robust results.

Gross profit rose 13.1 percent to HK$2.18 million, although gross profit margin dropped by 1.1 percentage points to 29.7 percent.

Chief executive Christoph Michalski said the biggest challenge remains the price of pulp, which has been on the rise due to decreased wood supply and the good economic environment, and is expected to remain high in the second half.

The company also noted the uncertainty arising from the impact of the US-China trade war on domestic consumption in China as well as the country’s deleveraging efforts.

A weaker renminbi may also increase the costs of pulp imported from overseas, mostly settled in US dollars.

The company has four months of pulp reserves as a cushion, however.

Meanwhile, Li said the company will seize the opportunities from demographic changes, such as population aging, which has led to higher spending on personal care products.

The tissue segment accounts for 81 percent of the group’s total revenue.

“We’ve continued to maintain our market leadership,” Michalski said when commenting the tissue segment.

The company has boosted production capacity to 1,100,000 tons by June this year, and 60,000 tons of new capacity in Yangjiang, Guangdong by the third quarter 2018 as well as 120,000 tons in Hubei by the end of this year or beginning of next year will be added.

Vinda proposed an interim dividend of six cents, which is a cent more than that in 2017.

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