AMG Packaging reports rocky Tishoo roll out, equipment failure
AMG Packaging & Paper Company Limited started selling its first line of toilet tissues, Tishoo, in the third quarter ending May, but its distributor suffered a major setback, which curtailed the product's full roll-out.
Additionally, inside its own shop, AMG had a breakdown of a machine used to make corrugated boxes.
"Due to issues with the corrugator, we were unable to operate at full capacity. Therefore, there was a reduction in our outputs," General Manager Michael Chin told Gleaner Business.
Total revenues hit $158 million in the quarter, but that was shy of the $161 million earned in the 2015 period. This resulted in profit of $15.7 million compared to $20.8 million a year earlier.
Repairs to the equipment are ongoing.
"We brought in Chinese technicians to analyse and repair the machines. They made adjustments, but they will be returning shortly to do repairs and upgrades to the corrugator," said Chin.
Earnings per share for the quarter fell from 20 cents to 15 cents, but for the full nine months, the company is ahead at 66 cents per share compared to 51 cents in the 2015 period.
And, the outlook for earnings remains upbeat for the fourth and final quarter ending in August.
"We have high expectations, especially with the toilet paper entering the market," said Chin.
Within the third quarter, AMG launched and commenced delivery of its first brand of tissues through a major distributor, which, it said, suffered a disaster. AMG avoided naming its distributor even when asked explicitly if it related to a fire which destroyed warehouse space at Wisynco during the quarter.
"We have now currently resumed deliveries to our distributor. They are currently making preparations to launch the Tishoo brand. Our distributor will be announced in time," Chin said.
During the nine months of this fiscal year, revenue was flat at $463 million, but net profit spiked 29 per cent to $67.8 million due in part to a containment of manufacturing costs which fell from $352 million in 2015 to $317 million.