Tue | Jul 27, 2021

Despite paper turmoil, AMG Packaging surpasses pre-pandemic earnings

Published:Wednesday | July 21, 2021 | 12:07 AM

Corrugated box manufacturer AMG Packaging & Paper Company Limited grew earnings 11 per cent to $42 million for the nine months ending May 2021, but saw a fall-off in revenue as the market continues to grapple with a shortage in paper supply and increased freight costs.

Industry-wide, local manufacturers and cardboard importers have been increasing prices, beefing up production on specific items and engaging with clients on product delays to compensate for changes in the market.

AMG Packaging itself has stated in its financial report that it continues to monitor what is happening on the world and local markets, and has been making adjustments in its operation to balance the effect of COVID-19 on its business.

“The company has put in numerous measures to combat COVID-19 to ensure the staff and consumers are well protected at AMG. The shortage of paper on the world market, as well as the increases in freight costs, continues to drive up the cost of paper,” said AMG Packaging Managing Director George Hugh in a statement appended to the financial results.

Still, earnings for the box manufacturer have outperformed AMG’s comparative 2019 earnings results – a period which saw the company coming full circle from losses of $31 million in 2018 to net profit of $36 million.

The same held for the third quarter, March-May 2021, with earnings of $21 million outperforming the near $17 million recorded in 2020 and the $14 million reported in the 2019 period.

Throughout the pandemic, AMG Packaging has been pumping cash into a second factory at Retirement Crescent in Kingston scheduled for commissioning in August. The plant is being financed from a $100-million bond, which matures in 2026.

The company plans to double production capacity with the addition of the new plant and is looking to increase its share of the market from 30 per cent to 50 per cent through recycled paper products to select customers.

With its ongoing capital investments, the company’s cash holding, which went from $75 million in May 2019 to $233 million in 2020, has since fallen back somewhat to $143 million.