Nine Dragons posts strong sales volume in FY2020

Nine Dragons Paper (Holdings) Ltd., Hong Kong, has announced it achieved an overall “record high sales volume” in the 2020 fiscal year, according to the company’s fiscal year 2020 annual results. In fiscal year 2020, which ended June 30, the company achieved a year-over-year increase of about 8.5 percent compared with the same time frame in 2019.

The company reports that net profit was RMB 4.2 billion (or about $616 million), a year-over-year increase of 7.5 percent. Gross profit margin in the fiscal year increased 2 percent compared with the same time frame in 2019, and net profit margin in the fiscal year increased 1 percent compared with the same time frame in 2019.

Nine Dragons notes in its latest earnings report that the global economy and the Chinese paper packaging industry faced several “severe challenges” in the 2020 fiscal year. Despite the challenges, Nine Dragons says it was focused on achieving “steady growth.”

“As the global pandemic is getting more stable, despite great uncertainties remain, a series of stimulating measures and the policy of ‘Plastic Ban Order’ launched by the central government will be significantly conducive to the demand for packaging paper,” says Cheung Yan, chairlady of Nine Dragons Paper (Holdings) Ltd. “In the mid- to long-term, under a tighter supply and rising cost of raw materials, our edge of economies of scale as a large paper manufacturing enterprise will further prevail. Leveraging our competitive edges as the industrial leader, we are prepared to maintain the quality of products and stable raw material supply by consolidating the domestic raw materials supply and market. We will strive to expand our market share, maintain a healthy gearing ratio and sound cash flow management, with the ultimate target to enhance the overall profitability level.”

Capacity expansion plans

The company reports that it also focused on enhancing its ability to acquire high-quality raw materials and tried to secure raw material substitutes. Nine Dragons says it is building its first fully integrated pulp and paper mill in the Hubei province of China, which is expected to have a production capacity of 0.6 million metric tons per year for pulp. The company also plans to add 0.6 million metric tons per year of production capacity for pulp in Shenyang, China.

“By the end of 2022, the total design production capacity for kraft pulp and recycled pulp of the group is expected to exceed 2.0 million [metric tons per year],” the company states in its latest earnings report.

To date, the company has added 1.1 million metric tons per year of production capacity for linerboard in China’s Hebei and Guangdong provinces in the second half of this year. In Malaysia, Nine Dragons is adding about 0.55 million metric tons per year of production capacity for packaging paper that will be online by the end of 2022. The company also plans to add 1.2 million metric tons per year of production capacity for packaging paper in its Hubei pulp and paper base by the end of 2022. Upon completion of these projects, Nine Dragons’ total design capacity for paper production is expected to reach 19.32 million metric tons per year.

ND Paper Inc., a subsidiary of Nine Dragons Paper (Holdings) Ltd., is also planning to open ND Packaging this fall in Mount Pleasant, Wisconsin. According to a news release from Wisconsin’s Racine County Economic Development Corp., ND Paper invested about $35 million in the startup of a new 350,000-square-foot warehouse and distribution facility for ND Packaging. The company says the new facility in Mount Pleasant complements the company’s paper mill in Biron, Wisconsin, by manufacturing corrugated boxes.

“We chose Racine County not only because of their established reputation of being a welcoming business community, but also because of the people on the local level and the relationships established,” says John Parent, general manager of ND Packaging.

Additionally, Nine Dragons has announced plans to add packaging facilities its Chengdu and Chongqing packaging plants. The company will also continue to enhance the production efficiency of its carton box plants and expand its customer base in order to strengthen its downstream business.

In the past fiscal year, Nine Dragons says River Dragon, its newly launched brand, was recognized by customers and helped to drive up sales volume and market share for the group.