Shiner reports subdued Q3

Global packaging materials supplier Shiner International has announced third quarter results that see revenue up 20 percent but net income down by more than 70 percent.
 
Shiner’s total revenue for the third quarter up to September 30, 2011 increased by 20 percent to US$18.6 million, up from US$15.5 million in the third quarter of 2010. Net income for the third quarter of 2011 decreased 70.7 percent to US$0.4 million, compared to US$1.3 million for the third quarter of 2010. Gross profit declined from US$3.4 million to US$2.1 million year-on-year.
 
The company said total revenue increased mainly as a result of increased sales in biaxially-oriented polypropylene (BOPP) tobacco film and color printing products, which increased 3.4 million and 0.6 million, respectively, in the third quarter of 2011 compared to the same period in 2010. Revenue from BOPP tobacco film surged 92.9 percent to US$7.1 million, from US$3.7 million, primarily due to the increasing volume from existing customers, while revenue from coated film only increased 6.7 percent to US$6.9 million. Revenue from color printing products increased 76.2 percent to US$1.4 million from US$0.8 million, due to a new color printing sales order with Want Want China Holdings Limited, a large manufacturer and seller of snack foods and beverages in China. For the three months ended September 30, revenue from advanced film decreased 33.8 percent to US$3 million from US$4.5 million for the same period in 2010. This decrease was primarily due to a decline in the use of higher cost advanced film by manufacturers by the deteriorating global macroeconomic environment. Approximately 81.8 percent, or US$15.2 million, of total sales in the three months ended September 30 were made to customers in China.
 
The decrease in net income was primarily due to increased labor costs, depreciation of the new property and no other income from a former landlord offset by an increase in subsidy income.
 
Qingtao Xing, chief executive officer and president of Shiner, said: ‘We are pleased by the promising revenue growth in the third quarter of 2011, which we believe is primarily attributable to the diligence of our employees. At the beginning of 2011, the management developed a strategy to increase sales revenue, expand market share and improve our brand influence in order to perform in today's ever-changing market conditions. We believe that our sustained growth in revenue over the last two quarters is a result of this strategy. Although our gross margin and net income decreased in connection with larger price discounts, one of our strategies, the sales volume increased from our existing BOPP tobacco film customers as well as from newly attracted global customers in the coated film sector, including Marubeni Specialty Chemicals Inc. We expect that we will be able to adjust the sale price of our products as market conditions improve or as we gain additional market share.’
 
Xing concluded: ‘In addition, on October 29, we completed the installation of a new BOPP production line at our Hainan facility, which we expect to be operational in December 2011 after testing and adjustments. We believe that the completion of this new production line will significantly improve our ability to meet increasing demand from our customers and expand our market share.’
 
At the end of October, Shiner was part of a trio to announce a global marketing partnership agreement alongside Germany’s Treofan Group and Alliance Packaging Group Hong Kong.
 
Under the terms of the agreement, sales and research teams from the partner companies will collaborate.  Treofan will have exclusive responsibility for marketing and sales of coated films and tobacco films for Shiner in Europe and the Americas; Shiner will gain access to Treofan’s advanced technologies for tobacco films and packaging for sale in the Chinese market; and Alliance will have the primary responsibility for sales and marketing for all packaging films from Treofan and Shiner in the Asia-Pacific market.