Chinese plastics molder and metals fabricator Eva Precision Industrial Holdings Ltd. said a shift into China's expanding domestic market pushed sales and profits to record highs, but the company warns that growth could slow from the aftermath of the Japanese earthquake and nuclear crisis.
The Hong Kong-based company, which is a supplier to major Japanese brands including Canon, said rolling blackouts and other problems in Japan are likely to slow its rapid growth. Disruptions in the supply from Japan of computer chips and sophisticated electronics used by its customers in their assembly plants could in turn slow orders for Eva, the company said.
Up until the recent catastrophic earthquake in Japan, our prospects had never been rosier, Eva Chairman Zhang Hwo Jie said in a statement. Still, he said the company is optimistic that the impact of the crisis will be short-term and followed by resurgent growth when rebuilding starts.
While we are not yet in a position to ascertain the final impact on the global economy, there is no denying that there will, at the very least, be a temporary slowdown in the group's rapid business growth, the company said.
Apart from the Japanese crisis, the group said in a March 30 filing to the Hong Kong Stock Exchange that 2010 was a solid year, with record sales and profit as a result of a push into the Chinese domestic market and away from its traditional export markets.
Sales for 2010 were HK$1.7 billion (US$218.4 million) and profit was HK$303 million (US$38.9 million), up 66 percent and 860 percent respectively, in contrast to financial crisis-plagued 2009. The company said it has completely recovered from the 2008 financial crisis.
Eva, which opened a new factory in Zhongshan, China, in late 2010 to cater to South China's automotive and appliance manufacturing hub, also said it plans to add a factory at its existing production base in Shenzhen by the end of this year.
Company officials said the domestic Chinese market accounted for 40 percent of its production in 2010, up from 20 percent in 2008.
Our strategic move to cater to the domestic market in China has so far yielded very positive results and indeed served to reduce our previous over-reliance on the Japanese [office automation] market, said Zhang. Our ability to provide a one-stop solution for those brand owners seeking to consolidate their supply chain also allows us to win much larger and longer 'integrated orders' from them.
The firm said its plastics injection molding sales grew 65 percent to HK$589 million (US$75.6 million) last year.
The company, which employs 3,800 at several factories in China, said previously it had about 100 injection molding machines, along with substantial capacity for injection mold making, which it said it was upgrading.
The firm said it increased its engineering staff from about 1,100 in 2009 to 1,600 last year, to try to improve the quality of its workforce. It also said it is increasingly automating its factories to deal with rising wages in China.
It said its revenues from mold manufacturing, both for plastic and metal-related projects, hit a record of HK$242 million (US$31.1 million) in 2010. Since many of those molds are typically consigned to the group's factories for part production, Eva said it expects that to a be leading indicator of continued growth.