Biodiesel to boost Chemrez earnings by 38% this year

Chemrez Technologies (formerly known Corro-Coat Inc.) is eyeing a net profit of P131.62 million this year, up by 38 percent from P95.54 million in 2005, mainly due to the consolidation of earnings from powder coating, resins and oleo-chemicals, as well as the full operation of its new biodiesel plant.

Revenues are likewise seen to grow to P2.67 billion this year from P2.37 billion a year ago.

For 2007, net profit is projected to increase further to P536.67 million while revenues are seen to rise to P4.72 billion.

Chemrez chief operating officer Dean Lao Jr. said biodiesel is expected to be a major revenue driver and profit generator for the firm as it is seen to account for half of its sales and over two-thirds of its profits by next year on the back of anticipated strong demand for the alternative fuel in the domestic and export markets.

Chemrez manufactures resins and oleo-chemicals, including international-grade biodiesel under the BioActiv brand.

The company’s biodiesel products are exported to Europe and Japan. Europe is a fast growing diesel market which currently mandates a 2.75 percent biodiesel blend and gradually increased to 5.75 percent by 2010. Japan is also a growing market but has little capacity to produce biodiesel.

BioActiv, the premium coco-biodiesel of Chemrez, enjoys an advantage in the export market because biodiesel made from coconut oil has unique qualities which helps clean fuel systems, boost engine power and reduces nitrous oxide emissions, Lao said.

Biodiesel made from other vegetable oils (such as palm oil, jathropa, soybean or rapeseed) does not give these added benefits to the consumer.

Chemrez currently sells BioActiv in the domestic market through local oil firms which sell them as bottled or pre-blended additive to regular petro-diesel.

Lao said domestic demand is expected to get a big boost once the Biofuel Bill is passed by the bicameral committee and enacted into law since it mandates a one percent blend of biodiesel for all petrodiesel sold in the country and up to a two percent blend two years after the law’s implementation.

The domestic demand for coco-biodiesel is estimated at 70 million liters a year based on the seven billion liters of petrodiesel consumed by the country last year.

The figure is seen to more than double to 160 million liters of biodiesel if the mandated blend is raised to two percent plus the annual growth in diesel consumption of three to four percent.

Chemrez is thus far the only firm in the country with an operational plant capable of supplying oil firms with a large volume of premium coco-biodiesel compliant with international standards.