Wed | Jul 18, 2018

Box maker positions for expansion in 2019

Published:Wednesday | February 21, 2018 | 12:00 AMSteven Jackson/Senior Business Reporter

AMG Packaging & Paper Company Limited will use this year to strengthen its core box-making operation, following losses from a short-lived foray into toilet paper, and is already looking ahead to 2019 as the year of business growth.

The company said at its annual general meeting on Tuesday that it is likely to go to the market next year to raise funds for expansion, but is yet to decide on the type of financing.

"It could be in the form of a bond or rights issue," said AMG Chairman Barrington Chisholm. "At that time, we will come back to shareholders to ask them to fund the expansion," he said.

The company remained tight-lipped on the expansion plans, but wanted shareholders to know it would surround AMG's core box business.

In the 2017 financial year, AMG made earnings per share of $0.07 compared to $0.16 in 2016. Asked the target for 2019 earnings, Chisholm told the Financial Gleaner that "30 cents per share wouldn't be unreasonable."

The closure of AMG's toilet tissue factory started in the November quarter. The toilet paper assets were estimated at $79 million then, down from $106 million a year earlier. The chairman indicated that AMG has a buyer lined up.

"AMG accepted an offer to purchase the equipment," said Chisholm, who declined to name the buyer. "It is a local company in the toilet paper business that will buy the assets in order to grow their business."

AMG made three brands of tissue - Tishoo, Cottony and Plush - but sales fell short of expectations over three years of operation, notwithstanding revamped distribution arrangements. A full accounting of the losses is still to be disclosed.

steven.jackson@gleanerjm.com