HONG KONG (Sept. 28, 2:10 p.m. ET) — The slow economies in North America and Europe and rising costs in China hit profits for Hong Kong-based compounder and trading firm Ngai Hing Hong Co. Ltd., the company said in a Sept. 27 financial filing.
On the positive side, the company said the “steady economic growth” in mainland China was a bright spot, supporting a 13 percent increase in sales volumes, as the company's overall sales were up 33 percent to HK$1.68 billion (US$215.4 million) in its fiscal year ending June 30.
Much of that increase, though, reflected inflation and higher selling prices resulting from higher oil prices, leaving the firm concerned about market conditions.
“Looking ahead, the global market will remain volatile under the influence of the euro debt crisis,” the company said. “It is believed that corporate financing will become a key concern for exporters and manufacturers and present new challenges for upstream plastics companies.”
Operating profit rose only 5 percent, to HK$53.9 million (US$6.9 million), much less than sales growth.
“With the increased sales volume, inflation and implementation of minimum wage legislation in mainland China and Hong Kong, the group's administrative expenses and sales and distribution costs have risen,” the company said in a report to the Hong Kong Stock Exchange.
The company said it would continue expanding its sales offices in mainland China, and said its new and larger compounding facility in Hong Kong, which opened this year, was helping it pick up business in mainland China and become more efficient.
It said it was focused on research and development in several areas to replace wood and metal products with plastics, and was said it expected steady revenue growth from its strategies.
About two-thirds of the company's revenues come from its plastics trading business, with the rest from compounding colorants and engineering plastics.