AMG Packaging & Paper Limited expects its toilet tissue business to generate greater returns with the finalisation of a distribution deal with a major supermarket chain.
The company, which makes most of its money from cardboard or corrugated paper sales, made a profit before tax of $8.2 million on sales of $157 million in the second quarter ending February 2017 compared to a $23.4-million profit a year earlier.
"Sales of our toilet paper products have not materialised as we had projected. We have put strategies in place to address this, which we expect to yield positive results," said Michael Chin, general manager, in the company's financials released this month.
Those strategies include finalising supply to a major supermarket chain and vigorously expanding its sales outreach efforts.
"We anticipate an uplift in sales within the third quarter," said AMG.
Over six months, the company generated $27.9 million net profit or three-quarters less financial gain than the $49 million a year earlier.
Revenues over six months totalled $312.49 million compared with $304.99 million in the corresponding period in 2016. Gross profit declined to $87.4 million from $107.96 million in the prior year.
AMG now makes three lines of tissue, including Tishoo, Cottony and Plush. The stock market still appears bullish on the direction of the business, as the AMG stock is still priced at above the junior market price-to-earning average.
In the previous quarter, Chin said that the company was trying to find another distributor or to sell the tissues themselves. Calls and emailed queries to AMG for an update were not immediately returned.
AMG started making its first line of tissue, Tishoo, in 2015 and subsequently hired Wisynco as distributor. It began making Cottony and Plush six months ago.
Over 12 months, AMG revenues dipped nearly one per cent lower to $629 million for its year ending August 2016. Net profit, however, grew 4.3 per cent to $83 million year-on-year.