YFY Inc (永豐餘控股) on Friday said that global risks remain this quarter, the traditional peak season, after reporting that net income last quarter fell 41.3 percent from a year earlier.
“The rapid changes in the global epidemic situation make it hard to predict the operational risks in the supply chain for raw materials, as well as in labor supply and logistics,” the papermaking conglomerate said in a statement after a conference call with investors, referring to the COVID-19 pandemic.
“On top of that, ESG [environmental, social and governance] issues have become much more important for the market, since climate change has always been an urgent challenge,” it said.
Photo: Lee Chin-hui, Taipei Times
CIRCULAR ECONOMY
YFY said it is committed to a circular economy and would continually develop biogas and other renewable energy sources associated with solid recovered fuel to achieve energy transformation in its daily operations.
The company primarily makes containerboard and packaging paper products, which accounted for 43 percent of its revenue in the third quarter.
Pulp and fine paper products made up 22 percent of its revenue, while household products and specialty materials contributed 11 percent each, with other products, such as latex materials and radio frequency identification tags, accounting for the remaining 13 percent, company data showed.
YFY’s revenue last quarter increased 5.3 percent from a year earlier to NT$19.79 billion (US$710.95 million), but net income fell 41.3 percent to NT$1.3 billion, which the company attributed to production disruptions at its operations in China and Southeast Asia due to COVID-19 outbreaks, as well as China’s new rules on carbon emissions and energy consumption.
Earnings per share were NT$0.78 last quarter, while operating margin fell by 1.2 percentage points to 6.8 percent because of the rising costs of raw materials, coal and logistics, it said.
In the first three quarters, revenue grew 21.6 percent year-on-year to NT$63.65 billion, as a better product mix and rising product prices offset negative effects of COVID-19 and China’s power restrictions, the company said.
On an annual basis, operating income expanded 98.4 percent to NT$7.25 billion last quarter, due to contributions from its pulp, industrial paper and specialty materials business segments, YFY said.
Net income increased 10.4 percent to NT$4.55 billion, with earnings per share of NT$2.74, the highest for the period on record, the company added.
Separately, Chung Hwa Pulp Corp (中華紙漿), a YFY subsidiary, also said that uncertainties abound for the pulp and paper market in Asia this quarter, including logistics snarls, China’s energy policy and prices of raw materials.
The company has decided to raise prices of some products, such as cultural paper, special paper and cardboard, by 5 to 10 percent by the end of the year to reflect the cost increases, it said on Friday.
REVENUE DECLINE
Revenue last quarter decreased from a year earlier to NT$5.18 billion due to seasonal price declines for pulp, the outbreaks in Southeast Asia and the impact of logistics issues, it said in a statement.
Thanks to dividend income from its invested businesses, net income last quarter was NT$153.09 million, with earnings per share of NT$0.14, it added.
The company said new production lines in its Hualien plant commenced production last quarter, which would expand the scope of its non-plastic products business, such as its own-brand “CircuWell” paper products, which are water-proofed, grease-resistant and heat-sealable, and can be recycled along with regular paper and board to mitigate the damage to environment.
In the first three quarters, revenue increased 21 percent year-on-year to NT$16.4 billion and net income totaled NT$655.99 million, compared with losses of NT$214.96 million a year earlier.
Earnings per share were NT$0.6, it said.
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