Sat, 21 Jul 2018 02:00:13 -0400
AMG Packaging folds toilet paper productionBY KARENA BENNETT
AMG Packaging and Paper Company Limited (AMG) on Monday announced it will discontinue the production of toilet paper effective March 31, 2018.
The company, which posted the news on the Jamaica Stock Exchange's website, noted that the board of directors made a unanimous decision on toilet paper production during in a meeting held on October 25, 2017.
In its audited financial report for the period August 2017, AMG Packaging highlighted its tissue production as a going concern led by significant increases in loss during the year.
“During the current fiscal period the toilet paper segment reported a net loss of ($39,720,298) 2016: ($40,659,034). The company has decided based on the current economic outlook, and non-realisation of expectations of brand substitution and customer loyalty, that they will cease operations of this segment in the second quarter of the upcoming fiscal year,” the company said.
It's not clear if AMG will now focus on a new product or continue with core production. General Manager Michael Chin was up to press time unable to speak with the media.
However, Chin in a statement to shareholders said the board has engaged the services of a consultant to do an evaluation of AMG Packaging's entire operation, which should be completed by mid-December, at which time it will be guided accordingly as to its next move.
He added that the company is currently transitioning from ISO 9001:2008 to the new standard ISO 9001:2015, which is scheduled to be completed September 2018.
AMG Packaging began production of its tissue line back in 2015 with hopes that the product would boost earnings for the company, whose core production was the manufacturing of boxes. Months later, in announcing that the company will be focusing on higher-quality standards, product diversification and plant upgrades, AMG Packaging introduced two lines of toilet paper, Cottony and Plush, to its Tishoo brand.
But up until July, while tissues were 27 times greater than a year earlier, the segment of the business was still underperforming. It resulted in the company beefing up strategies to yield better results, including the finalisation of supply to a major supermarket chain and vigorously expanding sales outreach efforts.
AMG closed the 2017 financial year with revenues of $660.25 million, a 5.02 per cent increase over 2016. However, manufacturing costs increased 12.90 per cent, moving from $431.60 million to $478.28 million year over year. Administration expenses and cost of sales also reflected increases.
As a result, the company saw profit decline to $32.6 million from the $82.9 million. However, AMG's revaluation of property, plant and equipment led to company posting $106 million in total comprehensive income. Cash and cash equivalents at the end of the year also declined to $17.7 million, compared to $31.6 million in 2016.
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