Textile maker Far Eastern New Century Corp (FENC, 遠東新世紀) yesterday said it expects Vietnam to become its third-largest production base after a capacity expansion project is completed in 2020.“Revenue generated at the Vietnamese plant is likely to take up 30 percent of the firm’s total sales over the next three years, up from less than 5 percent at present,” a company official who declined to be named said by telephone.
The forecast is in line with the company’s business strategy to reduce reliance on its two major production bases, Taiwan and China, the official said. Taipei-headquartered FENC reported NT$132.4 billion (US$4.36 billion) in revenue last year, down 0.4 percent from 2015. Revenue from Taiwanese plants takes up nearly 60 percent of the firm’s total sales, while the Chinese plants contributes 40 percent, company data showed.
Aided by expanded capacity in Vietnam, revenue generated in Taiwan is expected to account for 40 percent of total sales in 2020, with sales from China taking up 30 percent, FENC said. The capacity expansion is aimed at creating a complete supply chain for fabrics and garments in Southeast Asia, and is projected to cost more than US$700 million, it said.
The company, which manufactures a wide range of petrochemical and textile products, has an annual production capacity of nearly 2 million dozen garments in Vietnam, company’s data showed. As part of the expansion plan, a new plant that makes knitted fabrics began operations this quarter, while several new factories making polyester garments are set to start production by the end of next year, it said.
The 66-year-old company also expects that the launch of several high-end products could drive sales growth in the near term. FENC is considering expanding production capacity of several nylon products used to manufacture car airbags and seatbelts as it eyes the growing automotive safety components market, the company official said. It is also planning to raise the capacity of polyester staple fiber for diapers and sanitary products at its Taiwanese and Chinese plants.
Shareholders on Wednesday approved the firm’s proposal to pay cash dividends of NT$0.8, based on last year’s earnings of NT$6.3 billion, or earnings of NT$1.26 per share. The company is a subsidiary of Far Eastern Group (遠東集團), which also operates department stores and mobile services businesses in Taiwan, including Far EasTone Telecommunications Co (遠傳電信). FENC’s assets total nearly NT$520 billion, including reinvestments in other affiliated units within the group. The polyester and textiles businesses accounted for 28 percent of the firm’s total assets last year, while reinvestments and its real-estate sector contributed 42 percent and 30 percent respectively, data showed.
