In 2018, the global economic and trade conditions were extremely complicated. Originally favorable emerging markets slowed down due to global turmoil arising from the US-China trade war. International financial markets were volatile and uncertain, and increasing geopolitical tensions added to uncertainty in trade. Globally, the US was alone in posting a relatively strong performance, in response to tax cuts implemented to promote economic development and corporate profit growth. Elsewhere, however, economic momentum of major economies turned from steady to weak, including China, Europe, and emerging markets. Global Insight predicted worldwide economic growth of 3.2% in 2018, slightly lower than 3.3% in 2017.
Taiwan's paper industry continued in its thriving development in 2017. Due to China's ban on imports of waste and the US-China trade war, demand sharply increased among emerging markets such as China and Southeast Asia. This brought excellent export opportunities for Taiwan's paper industry, both in terms of pricing and quantity. Meanwhile, domestic production and sales of containerboard increased steadily, and prices remained stable; performances were great in these respects as well. Although uncertainty existed in the domestic and international industrial environments, in terms of factors such as trade wars and exchange rates, the overall operating performance was still better than last year. According to the statistics of the Taiwan Paper Industry, the domestic production volume of paper and paperboard increased by 5.7% in 2018 compared with last year to reach 4.25 million tons. This was the best performance over the past decade, with total sales growth of 5.7%. China has eliminated backward production capacity as it implements its ban on foreign waste imports and undertakes environmental protection and rectification, and this in turn has enhanced industrial concentration. However, the US-China trade war has led to stricter recovered paper import policies; combined with exchange rate movements. This has led to a slowdown in China’s economic growth rate and the paper business has experienced unstable development. Thus, market sentiment is biased towards conservative wait-and-see. Vietnam's economic growth rate stood at 7.08% in 2018, the highest over the past decade. Domestic demand was strong in the country, while exports, manufacturing, and foreign investment all increased. This in turn brought economic benefits and contributed to the growth of packaging paper demand; future expansion can also be expected.
In 2018, total consolidated revenue of the whole group was around NT$41,181.51 million, an increase of 4.0% compared with the previous year, and net profit after taxes amounted to approximately of NT$4,090.19 million, an increased by 189.5%. The overall profile of production and sales is as follows:
The Group's paper mill in Shanghai was shut down due to its geographical location and long-term policy considerations. While gaining on sale of investments, profitability was still higher because of the increase in prices and quantity of containerboard and converting products.
Our efforts and achievements in management and operations in 2018 are as follows:
- We ranked 61st among the 2017 World’s Top 100 Paper Companies by Pulp & Paper International Magazine.
- We ranked 87th on the list of the Top 2000 manufacturers as published by Common Wealth Magazine.
- The 300,000 tons of corrugating medium production capacity of Cheng Loong Binh Duong Paper Co., Ltd. in the first phase has fired up in December 2018，and then the Corrugator Plant of Cheng Loong Long An Container Co., Ltd. will be completed and start up in the first quarter of 2019. In line with local market demand in Vietnam, it will gradually contribute to the Group's operational growth momentum.
- We also continued to participate in CSR public welfare and green promotion activities. It sponsored the 2018 Taichung World Flora Exposition, the Taiwan Lantern Festival in Chiayi, and the Taoyuan Agriculture Expo, etc. These activities were undertaken in response to the concepts of environmental protection and to promote the creativity and image of the circular industry.
- In the aspect of green sustainability, energy conservation and emissions reduction, we won numbers of awards and certifications.
As for the global economic outlook in 2019, global economic growth momentum will slow down due to the turmoil of the trade war and decreasing demand in China, coupled with the diminishing effect of tax cuts in the United States, tightening monetary policy, and political risks in Europe. Despite arduous challenges in the future, we can still prepare for ourselves from knowing both ourselves and competitors! In the new year, all the factories and subsidiaries in the Group need to work together, flexibly respond to markets, implement lean management, and improve the performance of the Group. In doing so, we will create new achievements in the 60-year history of Cheng Loong Corporation. Looking ahead 2019, we define our major business policies as follows:
- 1. Develop talent advantages and lay out investments to enhance growth momentum.
- 2. Enhance international competitiveness and implement localized operations.
- 3. Standardize lean management and innovate business models.
- 4. Implement environmental safety and health (ESH) programs while also reducing carbon emissions and conserving energy, to build a circular production system.
- 5. Manage a green supply chain to ensure the competitiveness of materials sourcing.
- 6. Expand markets through marketing in order to ensure full production capacity.