Since opening its plant in Upper Macungie Township in 2015, a Chinese plastics manufacturer has continued to experience strong growth.
In its fourth quarter and fiscal year 2016 financial results, Fuling Global Inc. reported sales volume and revenue increases along with plans to add injection molding plastic manufacturing in the third quarter of 2017 to its Lehigh Valley plant.
“Our company has been growing pretty significantly over the past three years,” said Gilbert Lee, chief financial officer for Fuling Plastics. “The market has been showing 3 percent to 4 percent growth each year. We have definitely increased our market share in the U.S. We have a lot of investment in technology and R&D [research and development].”
The company produces and distributes plastic cutlery, cups, plates, straws and other tableware items. Adding plastic injection molding equipment would allow Fuling Plastics to produce plastic forks, knives, cups and containers at its Lehigh Valley site, where it only makes straws using the process of plastic extrusion.
However, just making straws is not going to give the company a lot of profit, and the margins are thin, Lee said.
“We have to try to bring in other types of products,” Lee said.
The next product it plans to add to its Lehigh Valley plant is injection molded food containers.
Fast food restaurants such as Burger King, Wendy’s and Subway make up about 30 percent of its customers, but the bulk of Fuling’s business is through selling to food service supply distributors, Lee said.
Production for injection molding is expected to begin in August, Lee said.
Furthering the company’s growth prospects, Fuling Global is building a fourth factory in China, with the first phase to be completed by the end of this month and production starting in April, Lee said.
The new factory will more than double Fuling Global’s capacity in the next three years, he added.
“The reason we didn’t grow more in 2016 was because of capacity restraints,” Lee said.
However, he said the company expects those restraints to be gone in 2017.
“We anticipate strong growth in 2017,” Lee said. “We’re getting more and more new customers and larger customers.”
With sales volume for the entire company increasing by 40.6 percent year-over-year that more than offset the decrease in average selling prices, Fuling Global revenues grew by 37.5 percent to another record high of $31.8 million in the fourth quarter, according to the earnings report.
The report said:
• Revenues increased by 37.5 percent to $31.8 million for the three months ended Dec. 31, 2016, from $23.1 million for the same period last year. The report said this was mainly because of an increase in overall sales volume and partially offset by the decrease in blended average selling prices.
• Gross profit increased by 8.3 percent to $5.8 million for the three months ended Dec. 31, 2016, from $5.3 million for the same period of last year. Gross margin decreased by 4.9 percentage points to 18.2 percent from 23.1 percent for the same period of last year. The report said the decrease in gross margin was primarily because of a rebound in oil prices that led to rising raw material prices.
• Net income attributable to Fuling Global decreased by 58.4 percent to $.04 million, or 3 cents per basic and diluted share, for the three months ended Dec. 31, 2016, from $1.1 million, or 8 cents per basic and diluted share, for the same period of last year. The decreases in net income and earnings per share were primarily because of a decrease in subsidy income and higher provision for income taxes for the three months ended Dec. 31, 2016.
• Total sales volume increased by 40.6 percent to 12,932 tons for the three months ended Dec. 31, 2016, from 9,197 tons for the same period of last year. The increase in sales volume was across the board in all categories.