Leading industrial papermaker Cheng Loong Corp (正隆紙業) plans to increase the capacity of its Vietnamese operations to meet growing demand in the Southeast Asian country.
“We plan to invest US$1.05 billion over 10 years to make Vietnam our second-largest production base by emulating our successful experience in Taiwan,” a company official said by telephone yesterday.
Cheng Loong plans to increase output at its paper and paperboard mill in Vietnam’s Binh Duong Province from an annual output of 300,000 tonnes this year to about 750,000 tonnes next year, said the official, who asked to remain anonymous.
The mill’s utilization rate is expected to rise from 75 percent this quarter to 90 percent later this year, he said, adding that 70 percent of the mill’s output is for the domestic market, while 30 percent goes to overseas markets such as China.
The company also plans to construct a corrugated packaging plant near the Binh Duong mill in the next few years and would spend US$10 million to establish another packaging plant in Bac Giang Province, close to Hanoi, he said.
Overall, the company expects to have one paper mill and five packaging plants in Vietnam, he added.
Revenue generated from Vietnam is forecast to reach about NT$6 billion (US$192 million) this year, or 12 percent of total sales, compared with last year’s NT$2.8 billion, or 7 percent of total sales, the official said.
Vietnam sales are expected to remain steady next year, but grow significantly in 2022 once the company adds new production lines for industrial and household paper, reaching a total capacity of 1.05 million tonnes at its Binh Duong mill, he said.
The company’s new smart packaging plant in Kaohsiung’s Yanchao District (燕巢), worth NT$2.08 billion, is expected to begin operations in 2022, Cheng Loong said.
The company has four paper mills, seven packing plants and one form and packaging materials plant in Taiwan, which contributed about 70 percent of total sales last quarter, while its nine packing plants in China accounted for about 22 percent.
Second-quarter net income dipped 42.86 percent annually to NT$399.97 million due to declining non-operating income, with earnings per share of NT$36, Cheng Loong said.
Revenue fell 8.89 percent to NT$9.74 billion, but gross margin climbed from 20.64 percent to 21.72 percent thanks to its increasing array of paper products, the company said.
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