Business

AMG flushes away $34 million with toilet paper disposal

BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com

Wednesday, July 18, 2018

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AMG Packaging and Paper Ltd booked losses of $34.3 million from the disposal of its toilet paper business for its third quarter ended May 31.

The company, which is now in the business of manufacturing boxes, expects to increase future earnings now that it has stripped itself of producing toilet paper. Still, AMG Packaging and Paper may have to wait awhile before operations return to normalcy as it finds itself struggling to keep up with increases in the cost of paper to manufacture its products.

General Manager Michael Chin, in an adjoining statement to company financials announced that in short order, customers will see a price adjustment on its products following a decline of 410,.3 million or 44 per cent in AMG's net profit year over year.

“The management team continues the drive to contain costs in these challenging manufacturing times,” Chin said.

AMG Packaging and Paper got started in toilet paper business with Tishoo back in 2015 after it invested in a factory at Orange Street in downtown Kingston. The company planned on capturing at least 10 per cent of the tissue market in Jamaica, but had its sales setback when fire destroyed the warehouse of AMG's distributor.

The box manufacturer then added Plush and Cottony to the product range and revamped distribution of the products, but continued to see sluggish sales to imports from Trinidad and the United States.

Despite a 17 per cent increase in sales, AMG Packaging and Paper profit dipped to $12.7 million for the three months up to May. The company posted increases in both cost of inventories and direct costs, which brought total manufacturing cost up to $155.7 million or 35 per cent more than cost of sales for the comparative period a year earlier.

AMG Packaging and Paper showed slight improvement in containing costs for the quarter, moving from $26.8 in 2017 to $26.6 million the quarter under review. Earnings per share stood at $0.25, 20 cents below share value last May.

Cash and cash equivalents of the company stood at $76.1 million -- more than quadrupling the $13.2 million AMG posted in 2017. The company had assets of $399 million to liabilities of $187 million.

AMG is optimistic about future growth of the company and is looking to improve its market performance with the expansion of its box business. The company has hopes of re-entering the market but did not disclose if it will be using bonds or rights issue.

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