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[FENC] buys a 90% stake in US recycling company

Post Date 2019.06.05From:Taipei Times By Kwan Shin-han

Polyester and textile maker Far Eastern New Century Corp (FENC, 遠東新世紀) has acquired 90 percent of the shares of US polyethylene terephthalate (PET) recycler Phoenix Technologies International LLC, an investment that is expected to contribute to its sales this quarter.

The company bought Phoenix Technologies for NT$316 million (US$10.04 million) through its chemical fiber subsidiary APG Polytech USA Holdings Inc, the company said in a filing with the Taiwan Stock Exchange on Monday.

Phoenix Technologies produces recycled PET (R-PET) to make plastic containers for drinks, food, cleaning products and other daily necessities.

“The newly acquired plant has an output of 36,000 tonnes of R-PET per year and we expect it to contribute to sales right away as it is already in operation,” FENC chief financial officer Wang Chien-cheng (王健誠) told the Taipei Times by telephone yesterday.

The Ohio-based plant is to focus mostly on the US market and FENC plans to acquire more facilities for the plant if demand continues to grow, he said.

“The purchase of Phoenix Technologies is to meet the growing demand for R-PET from global beverage and daily necessity brands,” Wang said.

Governments around the world have also demanded that international brands increase the use of recycled material in their products to help protect the environment, he added.

FENC also has major R-PET plants in Taiwan and Japan, with annual outputs of 55,000 tonnes and 50,000 tonnes respectively.

Following the latest acquisition, the company expects its annual R-PET output to rise from last year’s 225,000 tonnes to 261,000 tonnes, it said.

The purchase is FENC’s third investment in the US in the past 18 months.

The company bought a PET plant in West Virginia from M&G USA Corp and land in Ohio in January last year.

It also jointly acquired another PET plant in Texas with two foreign companies in December last year.

Accumulated investments in the US have totaled more than NT$13 billion since last year, company data showed.

Petrochemical, textiles and polyester products contributed 65 percent of sales last quarter, while the telecom business accounted for 33 percent, and property and other services accounted for the other 2 percent, FENC said.

The company’s first-quarter net income dipped 18.37 percent to NT$2.02 billion from a year earlier due to higher crude oil prices.

Earnings per share decreased to NT$0.40, while gross margin dropped 3.36 percentage points to 17.56 percent.

The company’s petrochemical business would bounce back this quarter on foreign-exchange gains, Wang said.