Sat | Oct 16, 2021

With factory under construction, AMG ramps up sales pitch on recycled packaging

Published:Sunday | February 28, 2021 | 12:17 AM

Michael Chin, general manager of AMG Packaging and Paper Company Limited.
Michael Chin, general manager of AMG Packaging and Paper Company Limited.

Box maker AMG Packaging & Paper Company is trying to get at least one-fifth of its customers to start buying its new packaging products to be made from recycled paper, at the commissioning of the factory, scheduled for August.

The company plans to double production capacity through the investment in the plant on which construction recently began at Retirement Crescent in Kingston. The pandemic has delayed the factory’s start-up from March to around the end of summer.

General manager of AMG, Michael Chin, said the company has been pitching the packaging to select business operators, as a cheaper option to products made from virgin paper.

“We are just waiting on the building to be finished so that we can get some recycled paper in. What this will enable us to do is cut the cost, because right now, the cost for raw material is going up rapidly. All the large mills are buying up the virgin paper,” Chin said in an interview with the Financial Gleaner after the wrap-up of AMG’s online annual general meeting.

“It is a challenge to get any type of paper, but recycled paper is where the world is going so that’s our focus. Some of our clients are importing the boxes from countries such as the Dominican Republic but we’ve gotten assurances that they will purchase from us since we can produce the same item at a lower cost than imports,” he said.

AMG, which has manufactured boxes for more than 15 years using virgin paper as input, is trying to enter a segment of the market currently served by imports. Boxes made with recycled material are largely shipped from Dominican Republic and Costa Rica.

The local packaging market, which involves a mix of imports and locally manufactured items, is shared between AMG Packaging, Jamaica Packaging Industries, Sterling Packaging and Red River Limited. AMG estimates its market share at around 30 per cent, and is looking to move closer to 50 per cent through expansion of its business.

The company has raised financing of $100 million for the recycled paper project, which is secured by mortgages over the company’s two properties at 9 and 12 Retirement Crescent.

The pandemic has squeezed the box maker’s revenues, but it still wrapped up its past financial year ending August 2020 with revenue holding within the $700 million range. Annual profit dipped but was only slightly lower at $56 million, compared to $59 million in 2019.

For the first quarter ending November 2020, sales continued to compress, falling nine per cent to $173 million, from $191 million in the year-prior period. Profit was flat at $14 million.