Nine Dragons highlights expansion plans in FY2019 interim results

Nine Dragons highlights expansion plans in FY2019 interim results

ND Paper, a subsidiary of the group, plans to implement a series of equipment upgrades at its four U.S. mills.

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Nine Dragons Paper (Holdings) Ltd., Hong Kong, announced its consolidated interim results of the company and its subsidiaries for the six months ended Dec. 31, 2018. According to a Nine Dragons news release, the Hong Kong-based company achieved a revenue increase of about 18.2 percent over the corresponding period last year. 

The company attributes the growth to its packaging paper business, including linerboard, high-performance corrugating medium and coated duplex board, which accounted for about 86.2 percent of the revenue, with the remaining revenue being generated from its printing and writing paper and high-value specialty paper and pulp products.

According to a Nine Dragons news release, the group’s total design production capacity in packaging paperboard, printing and writing paper and high-value specialty paper and pulp products as of Dec. 31 was 15.3 million tons per year, comprising about 7.6 million tons per year of linerboard, 3.4 million tons per year of high-performance corrugating medium, 2.6 million tons per year of coated duplex board, 1.1 million tons per year of printing and writing paper and 0.6 million tons per year of high-value specialty paper and pulp products. 

Additionally, Nine Dragons reports that its new paper mill in Chongqing base began production in February 2019, adding another 0.55 million tons per year to the group’s capacity. 

During the period, ND Paper, a wholly owned subsidiary of the group, completed the acquisition of two pulp mills—the Fairmont Mill in West Virginia and the Old Town Mill in Maine. The Fairmont Mill manufactures and distributes recycled pulp with a production capacity of 0.22 million tons per year. The Old Town Mill, which used to manufacture and distribute bleached hardwood kraft pulp with a production capacity of 0.16 million tons per year, will be converted to produce unbleached kraft pulp. Together with the Rumford Mill and the Biron Mill acquired by ND Paper LLC in fiscal year 2018, these four mills in the United States are expected to offer access to high-quality raw material for the group’s primary business, with significant synergies, including cost savings, exhibited in a vertically integrated business model.

The group is actively pursuing the goal of completing the construction of four new paper machines in China in 2019, among which a total of three new paper machines at the Shenyang base, the Hebei base and the Quanzhou base are expected to start production in the second quarter of 2019. Also, a new paper machine at the Dongguan base is expected to start production in the third quarter of 2019. Upon the start of production, these four paper machines will add 2.05 million tons per year to the group’s total design production capacity. 

Additionally, ND Paper LLC plans to implement a series of equipment upgrade and expansion projects at its four pulp and paper mills in the U.S., which may all be completed and begin production before the end of 2021. By then, the group’s production capacity in the U.S. will increase by 1.4 million tons per year, bringing its global total production capacity to more than 19 million tons per year. 

“For future market outlook, it is expected that China will continue to implement stringent environmental policies, making the advantages of large enterprises becoming more prominent,” says Cheung Yan, chairlady at Nine Dragons. “Yet, the group is confident about the fundamental of domestic consumption and industry demand in China and believes that there is some growth potential in market demand. Meanwhile, the group remains cautiously optimistic and positive about the [China-U.S.] trade war."