Emery Oleochemicals Seeks Expansion
Building on ‘Unique’ Strengths Following Change of Ownership
Emery Oleochemicals (Selangor, Malaysia), the world’s leading producer of oleochemicals from natural oils and fats, has faced tough economic conditions since its creation, but it is proving to be resilient. The company was launched in November 2008, when Cognis sold its 50% stake in Cognis Oleochemicals, an equally owned joint venture with Sime Darby Plantation (Kuala Lumpur), to PTT Chemical International, a subsidiary of PTT Chemical (Bangkok). It was renamed Emery Oleochemicals last May.
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Emery Oleochemicals’ 2009 sales decreased 34%, to $752 million, due to the global recession, group CEO Kongkrapan Intarajang tells CW. The decrease reflfl ects a 27% fall in average selling prices and the weakening of the euro against the dollar. However, volumes decreased by just 10%, a “stand-out performance” that enabled the company to keep plant utilization relatively high. “We took a hit in the fourth quarter of 2008 and business was neutral in 2009,” Kongkrapan says. “Earnings were a bit down but prices have since come back. A lot of our products are resilient because they are ingredients in health- and personalcare products,” he says. Kongkrapan was appointed Emery Oleochemicals CEO last October, having switched from PTT Chemical, where he was a senior v.p.
Emery has total capacity of about 1 million m.t./year, and is the only player in its market with major production in Asia, Europe, and North America, Kongkrapan says. Its facilities are in Canada, Germany, Malaysia, and the U.S. Emery is one of the top three producers of oleochemicals of all types and its main competitors include KLK Oleochemical (Selangor) and Twin Rivers Technologies (Quincy, MA).
Emery’s products are derived from natural renewable raw materials. It uses palm oil and palm kernel oil as feedstock in Asia, tallow in the U.S., and a combination of other vegetable oils and tallow in Europe. The company makes basic oleochemicals such as fatty acids and alcohols, glycerine, methyl esters, and methyl ester sulfonates for use in the manufacture of soaps and detergents, cosmetics, pharmaceutical products, and other applications. The company also makes oleo specialties such as plastic additives.
“We have a unique combination of upstream strength, and production and application knowledge,” Kongkrapan says. Sime Darby Plantation is the world’s largest listed plantations company and the world’s leading palm oil producer, accounting for about 6% of global palm oil production. PTT Chemical is Southeast Asia’s third-biggest producer of olefins. The company’s investment in Emery is in line with PTT’s strategy to become more involved in “greener, natural-based chemicals,” Kongkrapan says.
Emery’s selling point is “green, environmentally friendly products,” Kongkrapan says. The company’s high value-added products include its oilfield drilling chemicals. They are the only products of their type to receive U.S. EPA approval to be injected into the ground, because of their biodegradability. The products have “huge potential,” Kongkrapan says.
Emery is planning to expand now that its long-term ownership structure has been resolved and it has been reorganized and rebranded. “We have a good business model and now we have to run it well,” Kongkrapan says. The company aims to launch in 2010 a five-year strategy combining organic growth, and mergers and acquisitions (M&A), Kongkrapan says. The program will be “quite fl exible,” he says. “We will look at the market first and decide where we want to go.”
The plan’s two main targets will be to strengthen Emery’s basic oleochemicals business and expand in specialties. “If an M&A opportunity falls into one of these two categories, and it’s in a good geographic area with good market growth, we’ll look at it,” Kongkrapan says. “We won’t do much outside these product areas.” Emery also aims to achieve a greater balance in its portfolio. Basic oleochemicals currently account for about 75% of total sales.
Emery’s expansion plan includes a project to add 300,000 m.t./year of fatty acid capacity at Carey Island, Malaysia. The plant will be located adjacent to a soon-to-be completed Sime Darby palm kernel crushing facility.
The company, meanwhile, is planning “a small investment” to build a plant at Telok Panglima Garang, near Selangor, to make additives for polyvinyl chloride, and esters for health and personal care products. Start up of the facility is slated for early 2011, Kongkrapan says. It will be Emery’s second plant for the products. The existing unit is at Loxstedt, Germany.
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