Hong Kong — Sinomax, a Hong Kong based foam manufacturer, has issued a profit warning for the first half of 2017, opened a US plant and signed a manufacturing agreement.
Sinomax warns on profits, opens factory
The company said that its ‘operation costs remain high, largely due to the trial-running costs of the US factory and the high price of toluene diisocyanate.’
To meet the expected increase in customer’s orders in the second half of 2017, the group ‘incurred additional marketing and logistics expenses in the first half of the year.
The board anticipates that the high costs of production and operation of the group will have an adverse impact on the overall financial performance of the group for the six months ending 30 June 2017,’ it said.
At the same time, the company, announced that its US subsidiary has started commercial production at its US factory in Tennessee. The firm said it had "been experiencing a delay in ramping up the US factory to full commercial production."
This is because the time required to develop and trial production of new products had been longer than Sinomax had anticipated.
In addition, in June this year, the American subsidiary signed a three-year strategic partnership with Serta Simmons Bedding to develop a new bed-in-a-box range for some Simmons Bedding’s Serta and Beautyrest brands. These will be available for sale through existing and prospective retail channels of Serta Simmons Bedding in July this year. Boxed mattress offerings under the Serta and Beautyrest brands will be made at the US factory, Sinomax said.