OREANDA-NEWS. April 02, 2013. For the year ended 31 December 2012, the Qunxing Paper Holdings Company Limited recorded a turnover of RMB1,880.4 million (USD 30 million), representing a decrease of 6.2% from the turnover of RMB2,003.7 million (USD 322.6 million) in 2011. Gross profits dropped from approximately RMB326.9 million (USD 53 million) in 2011 by 36.7% to approximately RMB207 million (USD 33.3 million).

In 2012, profits declined by 66.1% to RMB75.3 million (USD 12 million), as the company said in a press release received by Lesprom Network.

Decrease in profits of the Group during the year under review was mainly attributable to decrease in overall sales volume, which led to an increase in the fixed cost shared by each tonne of products and therefore a decrease in the gross profit margin, as well as a loss from disposal of the legacy production line #2 upon completion of reconstruction and commencement of commercial production of rebuilt production line # 2.

Furthermore, the Group’s profit was also adversely affected by increment in administrative expense resulting from the Company’s measures to investigate audit issues raised by its former auditors; and an increase in income tax expenses in the PRC as compared to the same period last year as the tax concession to which the Group was entitled as a foreign investment enterprise expired at the end of 2011.

Commenting on the Group’s annual results, Dr. Zhu Yu Guo, Chairman of QX Paper said, “China’s economic growth witnessed a slowdown, coupled with the central government’s measures to cool the property market, the sales of floor space of commodity housing only recorded a slight increase of 1.8% to 1,113.04 million square metres. This also represented a decline of 2.6 percentage points in sales growth from 2011, dampening the demand for decorative items and thus affecting the Group’s business.”

During the year under review, the overall sales volume of the Group’s products decreased, which mainly reflected customers’ more prudent approach to placing orders under the influence of the macroeconomy, as well as the direct impact of intensifying competition in the PRC’s decorative base paper market on the sales revenue of the Group.

The overall sales volume of the Group dropped from 164,202 tonnes for the previous year by approximately 3.5% to 158,405 tonnes in 2012. The sales volume of its major product, decorative base paper, was down by 8.4% from 142,480 tonnes of 2011 to 130,529 tonnes of 2012, whereas the average sales price was maintained at a steady level.

The sales volume of printing paper product increased by approximately 28.3% from 21,722 tonnes in 2011 to 27,876 tonnes in 2012, while average selling price of printing paper product decreased by approximately 4.9% from RMB6,602 (USD 1.06) per tonne in 2011 to RMB6,278 (\\$1) per tonne in 2012.

Qunxing Paper Holdings Company Limited is currently the largest decorative base paper manufacturer in the PRC, specialising in the production of decorative base paper products and printing paper product.