Suzhou Hycan projects profit growth amid expansion

Chinese tinplate packaging specialist Suzhou Hycan Holdings has shared a positive outlook for its financial performance alongside insights into its procurement strategies. 

During an investor relations event, the company — known as Huayuan Holdings in China — forecasted net profit for the first three quarters of 2024 of between CNY57 million (USD8m) and CNY61m  (USD8.57m). Suzhou Hycan said the result represents a significant increase compared with the same period last year.

The company attributed this growth to the active development of domestic and international markets, the promotion of lean management practices and a strategic shift to increase the sales share of high-margin products. 

With tinplate price fluctuations affecting profitability, Suzhou Hycan said it has established long-term partnerships with major customers, supported by cost transfer mechanisms to help mitigate the impact of raw material price changes.

A long-term supply framework agreement with coatings supplier AkzoNobel will be reviewed and renegotiated every six months based on tinplate price trends. Suzhou Hycan also said it maintains a procurement cooperation contract with Nippon Paint, which includes a price adjustment mechanism. 

Similar arrangements exist with other key clients, ensuring a degree of cost flexibility. For other customers, product pricing is determined at the time of order placement, reflecting current tinplate prices, according to the company. These strategies provide some buffer against price volatility, but it acknowledges the ongoing risk if significant price fluctuations occur within agreed negotiation periods or if price adjustments cannot be mutually agreed.

According to the company, its ability to adapt to fluctuating raw material costs, coupled with strategic market expansion and a focus on high-margin products, have driven strong financial performance in 2024.