Victrex PLC Joint Venture (5673Z)
January 13 2020 - 3:46AM
UK Regulatory
TIDMVCT
RNS Number : 5673Z
Victrex PLC
13 January 2020
13 January 2020
Victrex plc
Investment to create a joint-venture for PEEK manufacture in
China
Development of PEEK polymer capacity in China sets the stage for
further regional growth opportunities and further differentiates
Victrex's range of PEEK & PAEK grades
Victrex plc today announces the creation of a joint-venture
between its subsidiary, Victrex Hong Kong Limited, and Yingkou
Xingfu Chemical Company Limited, to build and operate a new PEEK
polymer manufacturing facility in Liaoning, China, subject to
certain performance conditions, including finalising land purchase
and permit applications. Victrex, which will be the majority
partner and lead the joint-venture, will benefit by further
differentiating and complementing its portfolio of PEEK and PAEK
grades, in anticipation of a range of significant long-term growth
opportunities across several end markets in China, as well as
aligning with China's 'Made in China 2025' initiative, where
specifying domestically produced PEEK in certain applications is
expected to gain momentum.
Victrex already has an established relationship with its
joint-venture partner through its monomer supply chain, with
Yingkou Xingfu having significant experience of developing and
operating chemical facilities in China which meet international
quality, process and environmental standards.
Today's announcement builds on Victrex's recent appointment of a
General Manager for China and an increased commercial presence, as
well as its strong technical service offering to customers, which
includes its existing Technical Centre in Shanghai. The investment
sets the stage for Victrex to serve some of its regional customers
from a local facility and in a more diverse way. Victrex will also
oversee the management of process know-how and intellectual
property during development of the polymerisation process.
Victrex's share of the overall investment, the majority of which
comprises capital investment during construction, is expected to
total GBP32m funded in cash, with approximately GBP28m of capital
expenditure and GBP4m of start-up costs, with commissioning of the
facility anticipated in early 2022. The new plant will eventually
be capable of producing up to 1,500 tonnes* per annum. Establishing
a new PEEK polymer plant in China is in line with Victrex's record
of investing in capacity ahead of demand, with an expectation that
future capacity increases will be more gradual, rather than larger
multi-year investments.
Jakob Sigurdsson, Chief Executive of Victrex, said: "This
investment is in line with our record of not only investing ahead
of demand, but in complementing and further differentiating our
range of PEEK and PAEK grades, as well as setting the stage for
specific geographic growth, whereby we can capitalise on the
significant opportunities in China and the Asia Pacific region by
having a competitive manufacturing presence there.
"Alongside the Made in China 2025 initiative, some of our
increasingly diverse application areas mean our customers require a
quality and differentiated PEEK offering. Whilst we already
manufacture a range of PEEK and PAEK grades, this will enhance our
portfolio, making us even better positioned in a region where we
have seen strong growth in recent years and continue to see
attractive opportunities, aligned to our know-how and strong
technical and application development capabilities.
"Overall, we believe this is a good entry point to a China
manufacturing operation, working with an established partner and
offering an attractive returns profile."
The joint-venture will establish Victrex Hong Kong Limited as
the majority partner with a 75% share, with leadership being
assumed by Victrex once the facility is operational. The investment
follows on from Victrex commencing a debottlenecking project at its
main Hillhouse UK facilities in FY 2020, which will add up to 1,000
tonnes per annum of nameplate capacity when completed.
This announcement is a class 2 transaction made in requirement
with the UK Listing Rules.
Notes
1/ *1,500 tonnes is based on anticipated annual nameplate
capacity
2/ The gross asset value of the joint-venture is approximately
GBP29.5m
3/ No profits are attributable to the assets of the
joint-venture and formation of the joint-venture is not anticipated
to materially affect expectations for the Group prior to
operational completion
4/ Victrex will hold three of the four Board seats as part of
the joint-venture, with Richard Armitage, Victrex Chief Financial
Officer, chairing the joint-venture
Enquiries:
Victrex plc:
Andrew Hanson, Director of Investor Relations & Corporate
Communications
+44 (0) 1253 898121
About Victrex:
Victrex is an innovative world leader in high performance
polymer solutions, focused on the strategic markets of automotive,
aerospace, energy (including manufacturing & engineering),
electronics and medical. Every day, millions of people use products
and applications which contain our materials - from smartphones,
aeroplanes and cars to oil and gas operations and medical devices.
With over 40 years' experience, we develop world leading solutions
in PEEK and PAEK based polymers, semi-finished and finished parts
which shape future performance for our customers and our markets,
and drive value for our shareholders. Find out more at
www.victrexplc.com or follow us on LinkedIn and Twitter
@victrexir
About Yingkou Xingfu:
Yingkou Xingfu is a well-established manufacturer of Speciality
Chemicals in China and has been a valued partner to Victrex for
nearly a decade in its monomer supply chain. They bring monomer
manufacturing capability as well as a proven track record of
building high quality chemical plants that meet international
quality, process and environmental standards.
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END
JVEFIFSTLEIVLII
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