Lee & Man Paper Manufacturing said its HK$1.26 billion expansion plan in Vietnam would be put on hold indefinitely to reduce the company's debt level after it delivered a 6.9 per cent decline in first-half net profit yesterday. The mainland's second-largest containerboard maker said it would focus on cost control instead of expansion in the face of slowing demand. 'The management believes the next six months will be extremely difficult because of the current global economic crisis and market slowdown,' the company said in a filing to Hong Kong stock exchange. Chief executive Raymond Lee Man-chun said the Vietnamese project would be postponed until after 2010, but the company would proceed with it eventually, having already committed 30 or 40 per cent of the total investment. 'With less capital expenditure, we hope to reduce our net debt-to-equity ratio from 0.84 in financial year 2008 to 0.65 in financial year 2010,' he said. At the end of September, Lee & Man had net debts of HK$7.29 billion. Cash on hand stood at HK$233 million, down from HK$318 million at the end of March. Mr Lee expected the company to record losses in November and December as the average selling price of its products dropped but raw materials costs remained high, despite recent declines. 'November was the worst month in Lee & Man's history,' said Mr Lee. 'We have never seen the average selling price plummet so quickly and dramatically.' He added that prices had since stabilised and the company was expected to return to the profit from January. The average selling price for containerboard fell to HK$2,700 per tonne from the beginning of October from HK$3,500 per tonne during the first half of the year. A serious fire at the raw materials warehouse at its plant in Jiangsu province earlier this month cost the company HK$20 million. The company said net profit for the six months to September dropped 6.9 per cent to HK$668 million from HK$718 million a year earlier on higher costs, although turnover was up 41 per cent to HK$5.49 billion from HK$3.89 billion. An interim dividend of 5 HK cents was declared.