InterviewNovacyl unveils new project plan, seeks acquisitions

13 June 2012 16:07  [Source: ICIS news]

By Will Beacham

LONDON (ICIS)--French group Novacyl plans to start production at a new methyl salicylate plant in Roussillon, France, in November and is seeking external growth, the company’s managing director said on Wednesday.

The €9m ($11m) plant, with a capacity of 6,000 tonnes/year, will be targeted at pharmaceutical, cosmetic, food and flavour markets as well as being produced in technical grades, according to Gilles Grenier.

Novacyl decided to install production at the site because French group Rhodia is planning to cease production of the product nearby. Grenier said product quality would be very good because their site will be the only fully upstream integrated facility in the world.

“The quality of the product will be great because we can monitor the whole production process,” said Grenier.

Novacyl is a business unit of French group Novacap, which is majority owned by AXA Private Equity. Novacyl was formed in November 2011 when Novacap purchased the salicylic acid and acetaminophen pharmaceutical businesses of French producer Rhodia.

It generates revenues of €100m per year and employs around 360 people, with production sites in France, Thailand, China and Brazil.

“Novacyl is active in seeking external growth, especially in Europe and Asia,” said Grenier, though he declined to provide further details.

He added: “AXA has resources to invest and wants to use Novacap and especially Novacyl to integrate additional businesses.”

He said parent group Novacap has improved operating earnings (earnings before interest, tax, depreciation and amortisation) each year since the 2008 financial crisis “thanks to our investments in resilient markets.” Sales reached €665m in 2011.

“Towards the end of the second quarter and in the third quarter we have been feeling a bit of a slowdown, not dramatic, in products like phenol and soda ash. Our other products serving markets such as pharmaceuticals and food are still going okay in Europe and worldwide.”

He added: “We want to move to more and more resilient markets and be less reliant on cyclical markets such as automotive and construction. Novacyl gives us the ability to be a more global company as we can sell some of the Novacap portfolio through its sales channels.”

Grenier said these could include isopropanol, sodium bicarbonate or niche added-value products.

There is a large volume of phenol and acetone capacity due to come onstream in Asia over the next two years and some commentators suggest this will threaten export opportunities for producers in Europe.

Grenier disagrees: “There will also be a lot of additional downstream demand in Asia so the market will be more balanced than people anticipate. The European market is short or balanced in phenol and acetone."

Although phenol is a mature product in Europe, it will grow at around the same rate as GDP but there will also be export-driven demand for derivatives such as polycarbonate, he said.

All parts of the Novacap group have executed expansion plans over the past 3-4 years. In May cumene, phenol and acetone producer Novapex announced plans to double isopropanol (IPA) capacity at its 40,000 tonne/year plant in Roussillon, France.

($1 = 0.80)

By: Will Beacham
+44 20 8652 3214

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