Tissue paper to push AMG sales

amgSales at AMG Packaging fell in the November quarter but profit jumped sharply as raw material input cost declined, pushing gross profit from $34.3 million in 2014 to $51.5 million while net profit rose to $28.8 million for the quarter, up a strong 87 percent over the $15.5 million 2014.
Sales fell slightly from $151.5 million to $149.3 million but with the new paper tissue plant likely to be fully on stream in March, sales could start to rise quickly again.
Administrative and other costs were held in check very well, with some falling below the amounts incurred in 2014 while the company incurred $5.9 million in cost relating to the new paper tissue plant operation.
The company indicates that change in product mix helped in the reduction of sales and seems to have pushed up profit margins. “Changes in product mix played a major role in reducing volumes. During the year, we were able to negotiate discounted prices for cash payments of raw materials” Managing director Michael Chin informed IC Insider. Going forward “we are still targeting the import market, as well as increasing our clients’ product base” Chin further stated.
The new paper tissue operation seems poised to deliver further growth with indication that profit margins could be as much as 100 percent. Information obtained by IC Insider suggests that at this early stage, the toilet tissue is well received by the market, with the prices being very competitive. The company management stated that the output will be sold through by third party distributor.
Earnings per share ended at 28 cents u from 15 cents in 2014. IC Insider expects earnings for the full year to be around $2 per share with profit coming from the new operations. The performance of profit for the quarter and expected new business encouraged investor to push the stock price to a high of $21.50 with a nearly a 200 percent gain for the year.
The company closed the quarter with cash flows from operating activities amounted to $32 million for the year versus $19 million in 2014 and ended with cash funds of $87 million, up from $33 million in 2014. The company has equity of $406 million and borrowings of $146 million.

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