Hong Kong-based Cosmos Machinery Enterprises Ltd. saw a small turnaround in the first half of 2017, as sales grew 6.4 percent to HK$1.15 billion ($147 million) while the company posted a modest profit of HK$6.8 million ($870,000).
That compares to a loss of HK$41 million ($5.3 million) in the first six months of 2016, the company said in its mid-year financial report released Aug. 10 to the Hong Kong market.
Exports to North America and Europe ticked up, but fully 90 percent of Cosmos's sales continue to be to Hong Kong and mainland China.
Cosmos has not posted an annual profit since 2014.
The uptick in the first six months of the year came after the company said in early July that it planned to sell one of its plastics processing factories in China, but then abruptly canceled the sale a few weeks later.
In the earnings announcement, signed by Chairman Tang To, Cosmos chalked up the first-half gains to improved sales by both the company's machinery and plastics processing units.
In May, CEO and Executive Director Freeman Tang told Plastics News at the Chinaplas trade fair that the company's sales were up strongly in the first quarter of this year, spurred by the two-platen J-series and hybrid injection-molding machines sold under the company's Welltec brand and strong customer support for Cosmos's iSee Industry 4.0 software.
On the machinery front, Cosmos cited the success of providing integrated injection-processing solutions tailored to the mainland's automotive, infrastructure components and daily-needs-products industries. Cosmos expects Beijing policy will fuel demand of this segment in coming years.
The Made in China 2025 policy will drive demand for integrated manufacturing solutions, while Beijing's emphasis on reducing coal pollution will spur growth of its energy-efficient large-scale rubber injection molding machines, the company said.
Cosmos singled out the success of its Zhuhai processing plant making in-mold labeling for food-packaging and cutlery customers. The plant has installed clean-room injection molding and a lab to meet international hygienic standards.
Earlier this year, the company announced it had revamped production at its Dongguan and Wuxi injection molding machine factories.
The company's Dongguan plant, which has a beefier technical team, now specializes in custom and industry-specific machines, while the Wuxi plant focuses on standardized machines.
Challenges in coming years include rising costs of manufacturing and raw materials costs, a volatile capital market and currency fluctuations, the company said.
But the company said it "observed a recovery of the sales momentum in the manufacturing businesses" in the first half of the year: "In addition to the continuing tight control over the production costs and operating overheads, the overall performance of the group is expected to improve gradually."
The improved earnings in the first half came after the company posted a loss of HK$334 million ($42.7 million) in 2016, including HK$135 million ($17.3 million) in restructuring costs.
It reported 2016 sales of HK$2.19 billion ($281 million), an 8.5 percent decline from the previous year, which was itself a 4 percent decline from 2014, its last full year of profitability.
But the company said it had hoped to generate some cash from the 83 million Chinese yuan ($12.4 million) sale of its MS Plasticorp unit in Dongguan, including land and a factory, to Dongguan City Dingtong Precision Metal Co. Ltd.
Cosmos announced the planned sale on July 4 and called for an emergency board meeting to ratify it, but on July 28 — the date of the scheduled meeting — the company announced that the proposed sale had been terminated by agreement of both parties. The July 28 announcement did not offer details of why the sale fell through.
In recent years, Cosmos has been busy moving chess pieces. In its March annual report for 2016, the company announced an ambitious plan to cut costs and boost efficiency, including closing its Dongguan MS Plastics Products Co. Ltd. unit and another operation, Dongguan Cosmos CNC Machinery Ltd.
In 2012, Cosmos shuttered an appliance and electronics molding plant in Wuxi, instead focusing resources on a then-new plant in nearby Hefei.
