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Victor Taichung Machinery Has New Chairman

After 13 Years

Jan 02, 2014 | By Ken Liu

The Victor Taichung Machinery Works Co.'s board of directors has appointed Bert Huang, the current president, as the company's first chairman after 13 years of restructuring.

The company, which was founded in 1954, fell into financial difficulty in 1998 as creditor banks froze its line of credit because of the supposition that the firm was borrowing money to shore up its stock price instead of financing manufacturing projects.

In 2000 a court ordered the company to restructure and repay its borrowings of NT$6.7 billion (US$223 million at NT$30: US$1) by 2018. Following negotiations, the banks agreed for the company to pay off only half of its debt in installments.

Improving sales, however, allowed Victor Taichung to pay off the last of its loans in April 2013. In October of that year, the court decreed that the company had completed its restructuring and instructed it to re-elect its boards of directors and supervisors.

Huang was elected chairman and president, and seven directors and two supervisors were chosen, at a shareholders' meeting on Dec. 30, 2013.

At the meeting, Huang announced that his company would inaugurate an ambitious expansion project in both Taiwan and mainland China this year.

In Taiwan the firm will spend NT$3.2 billion (US$109.3 million) to build a new facility on 3.1 hectares of land in the Taichung City Precision Machinery Innovation Technology Park, with construction to begin in 2015 and be completed in 2017.

The new plant will serve as Victor Taichung's global operations headquarters, R&D center, and primary production base. Upon completion, it is expected to generate annual revenues of NT$6 billion (US$200 million) initially, and up to NT$10 billion (US$333 million) when it is in full operation.

Huang said that the plant will be built to high-precision and –cleanliness standards, and will be outfitted with the most sophisticated equipment from Europe, America, and Japan for the production of high-speed, high-precision, intelligent, heavy-duty, combo machines.

In China, the company will invest US$19 million in a brand-new factory on 60 acres of land in the Shanghai Qingpu Industrial Park. Volume production there is expected to begin in mid-2015, with an annual output of 2,500 machines and annual revenues of NT$6 billion (US$200 million).

The new chairman reported to his shareholders that the company has around NT$1 billion worth of orders in hand, enough to keep its production lines humming through the first quarter of this year. Anticipating a recovery in the American and Chinese markets, the company has set its target for non-consolidated revenue for the year at NT$5.1 billion and consolidated revenue at NT$9.1 billion (US$303 million).

Victor Taichung's non-consolidated revenue for 2013 was eroded by the weak business cycle, mainland China's tight monetary policy, and the devaluation of the Japanese yen and ended up 10% below the targeted NT$5 billion (US$166.6 million), at about NT$4.5 billion (US$150 million). Consolidated revenue for the year was an estimated NT$8.5 billion (US$283.3 billion), less than the target of NT$9 billion (US$300 million).

Huang lamented the damage done by the steep devaluation of the Japanese yen, which has all but wiped out Taiwan's price advantage, and China's tight monetary policy, which led to many of the Victor Taichung's Chinese customers being unable to get bank loans to pay for machinery on which they had already made down-payments. He does not expect the tight-money policy to be eased until at least the second quarter of this year. (KL)

Victor Taichung's Results for 2010 to First-half 2013                 Unit: NT$

Result
2010
2011
2012
First-half 2013
Revenue
5.7bn
6.2bn
4.8bn
2bn
Before-tax Earnings
617m
338m
-33m
1.5m
Profit
582m
238m
-61m
-13m
EPS
5.77
2.17
-0.56
0.12
Source: Victor Taichu


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