Yuen Foong Yu Paper Manufacturing Co (永豐餘) has decided to spend US$200 million to add a third production line at its Yangzhou plant in China, to tap the fast-growing industrial paper market there.
Yuen Foong Yu, one of Taiwan’s leading paper and pulp makers, said on Saturday that its board of directors had approved the investment plan.
The company expects the new production line, which will boost the plant’s production capacity to 1 million tonnes, to begin operating in the fourth quarter of this year.
The firm said it was expanding the plant to take advantage of the strong demand for industrial paper in China, which has outstripped supply and forced the country to fill the gap with imports.
Yuen Foong Yu began investing in Yangzhou in November 2004. Its first and second production lines became operational in December 2006 and August 2007 respectively.
According to the investment plan, the new production line will include a virgin pulp supply system, wastewater treatment devices and an electricity generation system, to improve product quality and the working environment.
Yuen Foong Yu said the firm expected to take advantage of the eurozone’s debt problem, which has placed downward pressure on the equipment market, to negotiate advantageous terms for equipment for the new line.
Yuen Foong Yu operates another 12 paper manufacturing plants in China and produces a total of 860 million square meters of paper products a year, making it one of the largest paper suppliers in China.
In the 11 months to November, Yuen Foong Yu posted NT$59.58 billion (US$1.97 billion) in consolidated sales, compared with NT$51.3 billion for all of 2010.
In the first three quarters of last year, the company made consolidated net profits of NT$2.16 billion, or NT$1.15 income per share, up from NT$997 million in net profit, or NT$0.48 income per share, a year earlier.