Tissue issue hits Vinda shares

Vinda International (3331) saw its shares dive as much as 14 percent yesterday on a slump in its first-quarter net profit under cost inflation and the possible divestment by its controlling shareholder Essity.

The Guangdong tissue maker said its net profit for the three-month period ended March plummeted 88.4 percent to HK$40 million from one year ago, though total revenue increased 8.8 percent to HK$4.97 billion over the same period.

Operating profit plunged 85.4 percent to HK$65 million, with the profit margin trimmed by 8.5 points to 1.3 percent.

Vinda said the profit was mainly squeezed by the cost inflation in the past quarter, though it raised the prices of tissue products last year to mitigate the rising costs of raw materials.

Meanwhile, Vinda's controlling shareholder Essity Aktiebolag will start a strategic review of its ownership of Vinda, an attempt to reduce consumer tissue's share of Essity's total assets.

Essity is considering reducing or selling all of its holdings in Vinda International.

The Swedish hygiene and health company owns 51.59 percent of Vinda, and Vinda accounted for 16 percent of Essity's net sales last year.

Vinda's shares once lost as much as 13.8 percent yesterday, before closing at HK$20.4 apiece, 6.42 percent lower than the previous close.