Color and specialty chemicals supplier Everlight Chemical Industrial Corp (永光化學) yesterday said that it would continue increasing production of high-value-added products in the second half of this year to differentiate itself from Chinese companies, who tend to sell lower-priced chemicals.
“Our strategy is not to have a price war with other companies, but to focus on increasing sales of higher-margin products, such as ultraviolet absorbers and digital textile printing,” Everlight Chemical president Chen Wei-wang (陳偉望) told an investors’ conference in Taipei.
Despite intensified competition from Chinese rivals, the company reported that the strategy paid off in the first half of this year, when its net income grew 11.31 percent year-on-year to NT$220.64 million (US$7.04 million), or earnings per share of NT$0.4, although revenue dipped by 2.75 percent to NT$4.76 billion.
Gross margin edged up 0.6 percentage points to 22.6 percent from a year earlier, company data showed.
Profit from Everlight Chemical’s color chemicals business, one of its major revenue sources, fell 20 percent year-on-year to NT$273 million, due to a shortage of raw materials, although sales increased 4 percent on the back of increased output of high-value-added products, he said.
Demand for color chemicals is expected to remain weak in the second half, but, with supply greater than demand, the company would have more room to negotiate on price, he added.
The company increased production capacity for color chemicals by 30 percent in the first half, but would not continue the expansion in the second half, Chen said.
“We will only add capacity once demand bounces back,” he said.
Profit from its specialty chemicals business in the first half surged 118 percent year-on-year to NT$120 million, thanks to a diversified product portfolio, although sales dropped 4 percent.
The company’s toner business showed net losses of NT$7 million in the first half, with sales decreasing 8 percent, company data showed.
Everlight Chemical plans to develop new products for its pharmaceuticals business, it said, without elaborating.
Asked about the effects of the Japan-South Korea trade spat, the company said that it does not benefit from the row as it does not produce high-end photoresists that it could supply to South Korean semiconductor companies.
Chen said that production of those products requires considerable investment and a top-tier verification system.
Everlight Chemical shares yesterday closed up 0.31 percent at NT$16.2 in Taipei trading.
This story has been corrected since it was first published when it incorrectly reported that Everlight Chemical's revenue plunged by 79.56 percent to NT$4.76 billion in the third paragraph. The company's revenue dropped 2.75 percent year-on-year to NT$4.76 billion in the second quarter.
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