Hong Kong – Profits at flexible foam company Sinomax fell by 12.1%in the first half of 2018, as the company continued to struggle with the high cost of TDI and difficulties in getting its US plant off the ground.
The company said, 'Strategically, we did not wholly transfer the [TDI] cost increase on to our customers.' This resulted in a fall in profits, but a larger share of the market. Sinomax said this was shown by a 13% increase in sales in the China market for the period. Chinese sales were HK$ 1.2 bn ($ 153m)
'We believe a larger market share will generate more sales and profit for the group in the long run,' the company said.
It also added that the TDI price is likely to 'become stable with greater supply of TDI to the market by the end of 2018'.
Sales in Europe fell by 22.8%. The number fell from HK$ 39m in the first half of 2017 to HK$ 30m in the 2018 half.
North American revenue fell by 4.5% from HK$ 838m to HK$801m. This was the result of a delay in a sales project in the US with a customer. Costs incurred in the US were $20m.
Looking ahead, Sinomax added that opening a factory in the US was an advantage. 'We are more flexible in arranging our production to minimise any additional tariffs that may arise,' it said. 'We are looking for alternative locations to minimise financial impact arising from uncertainties and to lower operating costs.'