Broad-based Chinese plastics firm Cosmos Machinery Enterprises Ltd. has closed an appliance and electronics molding plant in Wuxi, as tougher economic conditions sharply cut sales, pushing the firm into a small loss in the first half of the year.
The Hong Kong-based company, which has units that make injection molding and extrusion equipment, mold plastic products and manufacture printed circuit boards, saw overall sales drop 21 percent to HK$1 billion (US$128.9 million) on a loss of HK$2.49 million (US$321,000).
But the firm told the Hong Kong stock market that it's hoping for a second-half rebound, as new product development and cost controls begin to show results and looser monetary policy in China brings growth to some industries.
The filing revealed the firm decided early this year to shut the plastics processing plant in Wuxi and focus resources on a new plant in nearby Hefei, taking advantage of Hefei's growth as a manufacturing center of household appliances.
Cosmos' plastics processing unit saw sales drop 41 percent in the first half of the year, to HK$152.2 million (US$19.6 million).
But some parts of its processing business did well, including food packaging, cutlery and containers with in-mold labeling. Exports of disposable cutlery to Japan in particular increased.
Cosmos is also one of China's larger makers of injection presses, and plastic equipment is its largest single business, accounting for about 45 percent of total sales.
That unit fared better than plastic products, though its sales were still down 22 percent to HK$450 million (US$58.1 million).
“The oversupply of general injection molding machines in the market exacerbated the vicious competition, which also extended to servo-drive energy-saving injection molding machines,” it said.
The firm said new product development could boost sales, including a new U(J) Se series of ultralarge-shot injection machines up to 4,000 metric tons, aimed at infrastructure markets like pipe fittings and manhole covers; and its new electric-hybrid machine.