China Flexible Packaging Holdings, the manufacturer of biaxially-oriented polypropylene film in China, says net profit for the three months ending 31 January 2010 (1QFY2010) rose 328% y-o-y to RMB24.9 million ($5.1 million) due to an increase in sales as well as the improvement on gross profit margin over this period.

The group’s total revenue in 1Q 2010 amounted to RMB267 million, which was a 49.2% or RMB88 million increase from RMB179 million in 1Q 2009. The increase was mainly due to improved demand of our products as results of the global recovery. The group also benefited from higher demand of the high shrinkage film due to the recovering food and beverage segment.

The group’s profit before tax increased by 329% or RMB26.6 million from RMB8 million in 1Q 2009 to RMB34.6 million in 1Q2010. Gross profit margin also improved to 20% in the same period, mainly due to the increase in the selling price of the group’s products. In addition, the cost of raw materials maintained at a relatively stable level; coupled with the higher contribution from the high shrinkage film which has higher gross profit margin.

Selling and distribution costs increased by 9.85% or RMB1.1 million from RMB11.3 million in 1Q2009 to RMB12.4 million in 1Q 2010. This was generally in line with higher business volume in 1Q2010.

The group’s administrative expenses also increased by 6.65% or RMB0.3 million from RMB4.5 million to RMB4.8 million in the same period. Similarly, the increase was in line with the higher business activities.

Chinaflex says it maintained a healthy balance sheet with no borrowings. At the end of the reporting period, the group’s cash balance remained at RMB82.3 million.