By: Steve Toloken
March 6, 2013
QUANZHOU, CHINA — Chinese polypropylene recycler Novarise Renewable Resources International Ltd. is looking to a new factory to improve its profit margins, after the company said revenue rose modestly in 2012 and profits remained basically flat.
The Quanzhou based company, which is traded in Australia, said in a Feb. 28 financial report that revenue rose 2.6 percent to A$82.4 million (524.6 million Chinese yuan), while after tax profits declined less than one-tenth of a percent to A$16.9 million (107.6 million yuan), mainly because of higher tax bills.
The company in November began operating the first of eight planned production lines at its new factory in Nan 'an, Fujian province, and said it expects to phase in the remaining lines by early 2014, giving it 200,000 tons of capacity for making products from recycled PP.
It said it expects the new facility to improve profits.
"Gross margins of Novarise's products are expected to improve with the introduction of new production from the Nan 'an facility in 2013," the company said. "This will include new finished products with higher margins and the lowering of costs through economies of scale, manufacturing and process improvements."
The company said it began last year manufacturing finished products from PP yarn and fiber, including computer bags, shopping bags and clothing, expanding from its traditional recycling business. It said it expects strong demand for its products.
"Overall demand for PP yarn expanded in China and internationally in 2012, driven by stronger global demands and rising consumer awareness for green products," it said. "Demand and market acceptance of Novarise's recycled products are expected to grow in China and internationally as governments and consumer behavior… encourage the wider use of green PP products such as green shopping bags."
The company said it also last year was named as a national manufacturing and research and development base for renewable polypropylene products in China. The company said its PP fibers are used to produce bags and other products for global brands including Dell, IBM and Samsonite.
The new facility had been scheduled to start operating in April 2011, but Novarise said it was delayed for two reasons: one, Nan 'an is in a "mountainous area where the rainy season is relatively long, for which the Group did not take into account" and two, construction companies involved in the project changed management frequently.