Fri, Aug 23, 2019 - Page 12 News List

Swancor profits shoot up due to divestment gains

POOR DEMAND:The firm’s core business, fine chemicals, saw sales drop 12.89% annually last quarter, with shipments falling by 1,867 tonnes

By Natasha Li  /  Staff reporter

Resins and composite materials manufacturer Swancor Holding Co Ltd (上緯) yesterday reported that net profits surged to NT$350.25 million (US$11.16 million) last quarter from NT$53.52 million in the second quarter last year, mainly due to divestment gains it made selling holdings in its renewable energy and offshore wind farm subsidiary.

The sale of a 95 percent stake in Swancor Renewable Energy Co (上緯新能源) to New York-based Stonepeak Oceanview Holdings Co helped boost the company’s earnings per share to NT$3.81 last quarter, compared with NT$0.6 a year earlier, the company said.

However, the company’s core business — fine chemicals — faced headwinds in the second quarter as shipments fell to 13,500 tonnes from 15,367 tonnes a year earlier.

Fine chemicals saw sales decline 12.89 percent year-on-year to NT$1.44 billion last quarter, but nonetheless contributed to 92.07 percent of the firm’s overall revenue of NT$1.56 billion.

“We were suffering from low demand in the Chinese market,” Swancor chairman Robert Tsai (蔡朝陽) told an earnings conference in Taipei.

The chemical market in China is under increasing pressure, as Chinese authorities are enforcing strict health and safety regulations following the explosion of a chemical plant in Jiangsu Province earlier this year, Tsai said.

“Our anti-corrosion products were heavily impacted,” he said.

Market demand might improve after China’s National Day holiday on Oct. 1, when Beijing is set to clarify its stance on health and safety regulations, he added.

The fine chemicals business is expected to see revenue grow 10 percent in the second half of the year, because of new orders from some major clients and specific demands from other clients, Tsai said.

“We aim to maintain gross margin at wbout 20 percent in the second half,” he said.

The company reported gross margin of 22.21 percent in the first half.

The company still has an interest in the nation’s wind power industry as it holds a 7.5 percent stake in Formosa I Wind Power Co (海洋風力發電) off the coast of Miaoli County, Taiwan’s first offshore wind farm, Tsai said.

“We are installing the seventh wind turbine right now,” Tsai said, adding that 20 wind turbines would be installed by the end of October.

Last month, Swancor signed a contract with MHI Vestas Offshore Wind A/S to provide materials such as epoxy resin and carbon fiber sheets, which are needed to produce wind turbine blades.

The company has received orders of about 60,000m from MHI Vestas for the second half of the year, Tsai said, adding that the company is looking to set up a second plant in Taichung and expects to enter mass production by the fourth quarter next year.

“We believe we can lead the market of raw materials for wind turbine blades,” Tsai said.

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