Hong Kong – Coronavirus lockdowns and slower economic activity in the first half of 2020 drove Hong Kong's only listed foamer, Sinomax, into an operating loss of HK$3m ($380,000). In the same period in 2019, it made an operating profit of HK$52.7m.
It was not all bad news in the half, however, as sales in Europe and overseas rose from HK$24m in the first half of 2019 to HK$51.7m in 2020. This was because of increased sales to customers in Vietnam.
Coronavirus hit the sales in the largest market, China, which fell by 39% to HK$554m. The decline in north America was 11.6%, with sales dropping to HK$485m.
It cut costs in selling and distribution as the volume of sales fell, and also laid off staff where it could.
The company added that it has changed its management team in the US. The factory there started operating in 2017 and, Sinomax said, significant losses were incurred over the years. ‘In May 2020, our US factory started reporting an operating profit, mainly resulting from various savings including materials and labour efficiency,’ it said. ‘In June and July 2020, the reported operating profit is consistently improving, and we hope that this trend will continue.'
Sales from online customers started to grow from the second quarter.
'Following the outbreak of coronavirus and the US – China trade war, US importers have started to revisit their supply chains,' the company said. ‘[With production in China, Vietnam and the US, we can] arrange our production and logistics schedules with flexibility to minimise the overall costs including production, tariff and transportation.'
It added that, based on the recent monthly results and increasing demand, it is optimistic.
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