Emery Geared for Profit Growth

Emery Oleochemicals Group, 50 per cent owned by SimeDarby Bhd, is geared for competition and profit growth after a year of internal restructuring and rebranding.

Emery was previously known as Cognis Oleochemicals (M) Sdn Bhd, which was equally owned by Germany’s Cognis GmbH and the then Golden Hope Plantations Bhd. In October last year, Thailand’s PTT Chemical Public Co Ltd, through its wholly-owned unit PTT Chemical International Pte Ltd, took over Cognis GmbH’s stake for 104 million (RM530 million), while Golden Hope, which has since merged with Sime Darby, retained its 50 per cent stake. PTT Chemical is Thailand’s biggest national oil and gas company listed on the Stock Exchange of Thailand (SET), garnering 30 per cent of the SET’s market capitalisation. It made more than US$2.5 billion (RM8.5 billion) revenue last year. Emery chief executive officer and board member Dr Kongkrapan Intarajang said the group has been busy with internal restructuring and reorganising its operations in the US, Canada, Germany and Malaysia since PTT Chemical’s entry.

“Previously, the group operated regionally. Now, it has been reorganised to operate across regions and interact seamlessly as a global company headquartered here in Malaysia.

“We have trimmed it into three main regions comprising Asia, Europe and the US,” Kongkrapan said in an interview with Business Times.

To serve its customers better, the US will be the centre for products of which the feedstock is tallow-based; Europe for vegetable oil- and tallow-based products; and Asia for vegetable oil-based products.

“In this way, we can leverage the different strengths in each region,” Kongkrapan said.

Emery is Malaysia’s second largest oleochemical company and a leading global player, with total capacity of one million tonnes of all vegetable oils. It posted revenue of more than US$1 billion (RM3.38 billion) last year.

Emery makes fatty acids, fatty alcohols and specialities from all vegetable oils such as palm oil, rapeseeed and soyaoil.

The base material is used across the healthcare, personal care, consumer products and food industries as well as industries to make products such as food additives, shampoo, detergents cosmetics, soaps, surfactants, candle solvents, drilling fluids, acne cream and ice-cream.

Kongkrapan said Emery was poised for competitive challenges and profit growth.

“One year of restructuring is over. With our strong fundamentals and leadership position, we are now ready to grow and serve our customers to be among the top players,” he said.

Kongkrapan expects the group to match 2008 revenue this year.

“Next year, we expect single-digit growth in profit; and higher growth in the years ahead.”

To gear for competition, the group will look at its existing businesses to improve efficiency, synergy between regions and strengthen cooperation between Sime Darby and PTT Chemical.

In upstream activities, Emery’s feedstock is ensured owing to Sime Darby’s position as a strong plantation player with landbank of over 556,000ha in Malaysia and Indonesia, accounting for 6 per cent of the world’s crude palm oil output.

In the downstream field, PTT Chemical, traditionally known as a strong petrochemical company, is steadily growing its oleochemical business, which accounts for 20 per cent of its operations.

“Malaysia’s strong oil palm industry puts it as the oleochemical capital of the world and, together with the company’s other plants in Cincinnati in the US, Toronto in Canada, Dusseldorf and Loxstedt in Germany, and Telok Panglima Garang in Selangor, the group is all set for growth,” Kongkrapan said.

To enhance its competitiveness, the group will undertake long-term projects to ensure sustainable growth and add value, such as growing its specialty products like plastic additives for plastic product manufacturing.

Emery will also increase research and development spending, which currently constitutes less than 2 per cent of group revenue.

Kongkrapan added that the group was planning a new plant at its existing site in Telok Panglima Garang, scheduled to be completed in 2011. It is at the open tender stage to invite contractors.

The group is also open to mergers and acquisitions, but, for now, aims to grow organically. It has yet to receive any solid proposals, he said.

Source : Business Times

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