GEORGE TOWN: The rising cost of pulp and waste paper looks likely to impact NTPM Holdings Bhd’s earnings for the financial year ending April 30, 2022.

       Group chairman and managing director Lee See Jin told StarBiz that pulp prices, for example, rose to US$700 (RM2,907) per tonne from US$470 (RM1,952) in December 2020.

       The waste paper price soared to over RM1,000 per tonne from RM700 per tonne in January 2020.

       “Waste paper forms two-thirds of our raw materials for tissue paper production,” Lee said.

       He added that sea freight cost also soared to a record high due to shortage of containers.

       “The higher cost of raw materials can’t be passed to customers anymore.

       “We have already raised our tissue paper product prices by 5% to 7% in May,” he said.

       Lee said that until mid-October, the group operated at 60% to 80% capacity because of the movement control order guidelines.

       “We produce less with a higher production cost, which will impact our performance.

       “The higher production cost and reduced output will impact our earnings in this current financial year,” he said.

       According to Lee, the group will maintain a production output of 85,000 tonnes of tissue paper products for the current financial year.

       “This is what we generated last financial year, utilising 60% of the production floor,” he said.

       According to Lee, increasing the tissue output at its Ho Chi Minh City plant would help the group break even in Vietnam in FY22.

       “We have already cut down our losses in Vietnam substantially and can focus on breaking even in FY22,” he said.

       Lee noted the huge potential in the Vietnamese market, citing tissue paper consumption per capita in that country was growing at 5% to 10% per annum.

       At present, annual tissue paper consumption per capita stood at 1.4 kg compared with 0.7 kg six years ago, he said.

       “The contribution from the operations in Vietnam to the group’s revenue is currently at 6%, which the group plans to increase to 12% in two years,” Lee said.

       For the current financial year, the group’s strategy is to focus on innovation to increase its product range and enhance its competitive edge.

       It also plans to continue expanding its personal care product range in Malaysia, Vietnam and Thailand, and expand its online business.

       According to Mordor Intelligence, the global tissue paper market is expected to grow at a compounded annual growth rate of 6.45% from 2021 to 2026.

       In its report titled “Tissue Paper Market – Growth, Trends, Covid-19 Impact and Forecast (2021-2026)”, the India-based research house said tissue production globally should exceed 44 million tonnes in 2021, an increase of about 14 million tonnes over 2010.

       “Advancements in tissue manufacturing technology and the efficient use of raw materials will lead to improving both the design of tissue products and the way they are dispensed.

       “Asia-Pacific is expected to witness the highest growth rate during the forecast year due to rising disposable incomes, improving standards of living as well as rapid industrialisation and globalisation in emerging economies like China and India,” it said.