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MANUFACTURING | Tony Chua, Hong Kong

Samson Paper profit up 16.7% to HK$40.48mn

The company benefits from enlarged contribution from manufacturing business as the company’s turnover rose by 16.2% to HK$2.6bn.

Samson Paper Holdings Limited (“Samson Paper”), a vertically integrated paper trader and manufacturer in Hong Kong and the PRC, announced today its interim results for the 6 months ended 30 September 2011. 

During the review period, against the backdrop of tough operating environment, Samson Paper registered a growth in both turnover and profit attributable to shareholders. The former grew by 16.2% from HK$2,303,948,000 to HK$2,676,451,000, while the latter marked an increase of 16.7% to HK$40,479,000. The gross profit margin of the Group’s paper trading business was put under pressure by a short-term surge in the domestic paper supply, yet due to the greater sales contribution generated by the Group’s paper mill in Shandong, as well as higher profits from paper manufacturing business relative to paper trading business, the Group’s overall gross profit margin was maintained at 9.9%, whereas net profit margin was maintained at 1.5%, both at levels similar to the same period last year. Earnings per share increased by 6.2% to HK3.4 cents(2010/11 Interim: HK3.2 cents). The Board of Directors recommends payment of an interim dividend of HK0.5 cent per share which is comparable to same period last year’s HK 1.0 cent prior to the issuance of one-for-one bonus share.

The Group has always made unwavering efforts to put stringent cost control measures in place. During the review period, the Group streamlined processes to improve operational efficiency and prudently predict inventory requirements with a view to maintain the inventory to appropriate levels. Furthermore, in response to higher borrowing costs along with the domestic tightening credit policies, the Group reduced the level of cash on hand to HK$661,307,000 (31 March 2011: HK$ 834,982,000), in order to optimize the use of cash on hand and reduce interest expenditures. On the other hand, the turnover days for the Group’s account receivable was maintained at 81 days.

Mr. SHAM Kit Ying, Chairman of Samson Paper, said, “During the review period, I am pleased that Samson Paper has once again achieved satisfactory results. With the integration of formal commission of the third production line of our paper mill during the period and the magnificent synergies created from our extensive distribution network, the Group is set to succeed again.” 

Future Development
As domestic economic development is blessed with a more optimistic outlook than other Western countries, the Group believes that the paper industry can sustain a positive development, according to a Samson Paper report.

Mr. Dennis LEE, Deputy Chairman & CEO of Samson Paper, said, “To flexibly keep ahead of the developments in the macro-economic environment, the Group will strive to make itself well-positioned to enhance its own strengths. The cost and financial control measures exercised by the Group have been proved to be effective. Looking ahead, the Group will further monitor customer credit and cash flow, as well as offer high value-added services to quality customers to reduce credit risk.

“Leveraging on the widespread distribution network built by Samson Paper over the years, together with the synergies of the paper manufacturing business, a solid foundation has been laid for the Group’s business. The Group will adopt a flexible business development strategy to enhance competitive edges, and to capture each and every opportunity to deliver the best return for our shareholders.”

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