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AMG Packaging to begin factory expansion next month

AMG Packaging Limited will begin its planned factory expansion next month.

Management said measures implemented to cope with the COVID-19 pandemic and a bond raise in 2019 helped the company’s cash position, preparing it for expansion.

AMG’s balance sheet as at year-end August 31, 2020, showed a 186 per cent increase in cash and cash equivalents closing at $259.3 million, compared to $90.5 million 2019.

This increase is mainly due to the $100 million bond dated September 2019, management stated in its annual report released on Thursday.

Proceeds from the bond raise will develop a property on 12 Retirement Crescent, which was delayed due to the pandemic. A contractor has been selected to begin constructing an additional 11,370 square feet in February 2021.

AMG meanwhile, noted that accounts receivables for the period have increased by 8.19 per cent as the pandemic caused everyone to tighten up on their cash flow.

Chairman Peter Chin stated, “The advent of COVID-19 has had a negative effect on Jamaica’s economy and the world economy in general. The company, like most businesses, was affected negatively by the effects of the COVID-19 pandemic.”

“Since we are providers of packaging, our business is highly dependent on the success of our customers in their respective markets. Sales were severely affected in the third quarter but recovered somewhat in the fourth quarter,” Chin added.

Sales for the year dipped by just under 10 per cent from the prior year moving from $762 million in 2019 to $720 million in 2020. Net profit also decreased by just under 10 per cent, moving from $59 million in 2019 to $56 million in 2020.

“Our future expectation is that the business environment will gradually normalize as vaccines become available to combat the virus. This will also lead to the return of normalcy in our business,” AMG Pacaking’s chairman said.

In the meantime, AMG Packaging will continue to look for ways to control costs and seek new customers to diversify its customer base, according to Chin.

For the year ended August 2020, AMG  was able to achieve a higher gross profit compared to the prior year despite lower sales. This was due to improvements in the manufacturing costs, management said.

Total manufacturing costs decreased by 9.47 per cent, moving from $594.32 million to $538.00 million.

Accordingly, gross profit increased from $175.8 million in 2019 to $189.5 million in 2020.

Source: https://www.loopjamaica.com/content/amg-packaging-begin-factory-expansion-next-month

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