Chinese tissue giant Vinda posts flat growth with no further acquisition plans

Company chairman said he was aware of the Chinese government’s tightening reins on Chinese companies’ overseas deals and had no plans for further expansion in foreign countries

PUBLISHED : Wednesday, 19 July, 2017, 6:11pm
UPDATED : Wednesday, 19 July, 2017, 10:56pm

Chinese tissue maker Vinda International posted flat net profit growth for the first half of the year ended June 30, down 0.2 per cent to HK$321 million from the same period one year ago. The company said it had no plans to expand overseas at this stage amid reports of the Chinese government tightening its reins on companies’ overseas acquisitions.

The company saw its revenue grow by 11.3 per cent to HK$6.31 billion for the first half of the year, with 80 per cent and 20 per cent being generated from its tissue business and personal care products respectively.

The increase in revenue was mainly due to a significant increase in the sales of its softpack and wet wipes, as well as a rise in sales of feminine care products, according to the company.

It proposed an interim dividend of 5.0 HK cents per share, which was the same as the first half of 2016.

“I was aware of reports of the Chinese government’s been tightening reins on Chinese companies’ overseas acquisition deals,” said Li Chaowang, Vinda chairman.

“We have sufficient cash to support our expansion plans but now, we don’t have any such plans,” he said.

The third largest tissue manufacturer in China now has overseas operations in Hong Kong, Malaysia, Taiwan and Singapore, with the company’s major tissue products occupying major shares in these markets.

Found by Li, a Gungdong native in 1985, Vinda accounts for around 13 per cent of share of China’s tissue market, covering household paper products that include toilet paper, pocket handkerchiefs, boxed facial tissue and paper napkins.

Having integrated with Swedish hygiene products firm SCA, the world’s third-biggest maker of tissues, Vinda now operates SCA’s major tissue brands including Tempo, Tena, baby care product Libero, as well as Tork in the greater China region.

The company said while its booming e-commerce business, acceleration of China’s urbanisation and the country’s aging population boded well for its profit prospects, intense market competition , stabilising pulp price and uncertain movement of the Chinese currency and Malaysia’s ringgit would pose challenges.

“The only answer for us towards the intense competition is innovation, rolling out new products,” said Christoph Michalski, CEO of Vinda International.

“We would not join any price wars,” he said.

The company said it was eying to expand its designated tissue annual capacity to 1.1 million tonnes by the end of 2017, while new factories would also be built in Chinese cities.