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New Toyo's subsidiary to cease production of tissue paper on trade war woes
New Toyo International Holdings announced on Monday after trading hours that its subsidiary Sen Yang Enterprise Co (Senyang) will cease production of tissue paper by Sept 15, 2019, on the back of recurring losses.
Senyang, however, will continue with the trading of tissue paper products. The decision was the result following a group strategic review amid global trade tensions, as the board does not expect Senyang’s performance to improve significantly in the near future.
The group had faced several adverse factors, including fluctuating pulp prices against intense domestic competition of tissue paper caused by the US-imposed tariff on Chinese tissue exporters to the US. In addition, it took longer than expected time to obtain full production capacity, as well as the time to secure the Forestry Stewardship Certification needed for export sales.
The net loss attributable to the tissue paper business for the financial year ended Dec 31, 2018, was S$1.85 million. Based on the company’s preliminary assessment, the tissue paper business is expected to report a net loss of approximately S$11.4 million for the full financial year ending Dec 31, 2019.