Profits boost on cards as firm steps up its presence in China

Jan 13 2010 by Andrew Mernin, The Journal

ONE of the region's oldest independent chemical firms is on target to record its first annual profit for a number of years as it steps up its presence in China.

Consett-based Thomas Swan has moved into the fourth quarter of its financial year having recorded a profit in each preceding quarter of the year.

The company believes it will move back into the black – after recording annual losses for the past two years – on turnover of more than £20m, compared to £18m in the year ending March 2009.

Meanwhile, five months of endeavour with authorities in the Far East has paid off as the group has finally won its hazardous goods licence.

Although this may not sound like a major breakthrough, it will enable the company to import, export, handle and store a broad range of its products, and the ingredients it relies on.

The firm will increase its presence from one man on the ground in China – who has been there since 2007 – to a warehouse from which to distribute its products across the vast country.

And in the long-term, it may even look to open a Far Eastern manufacturing plant.

However managing director Harry Swan is adamant this would not mean an end for the North East plant.

He also said the firm’s earnings had been boosted by the fact that 86% of its sales are generated through exports.

Mr Swan, the great-grandson of the 80-year-old company’s founder, said: “We have been profitable this year for every quarter. We are now in our fourth quarter and have had a strong year. It appears that we are bucking the trend of the rest of the economy.

“There may be opportunities to manufacture out in China, but my intention is to keep manufacturing in the UK. There are certain things that can be manufactured in the UK and finished in another country.”

James Zhao, managing director of Swan’s Shanghai-based company, said: “This is an important step in the expansion of Thomas Swan’s business into China.

“We are now able to offer a complete and competitive service to established customers and attract new business both locally in China and overseas.”

Early last year, the company cut back its workforce by 16 to 110 to ride out the downturn. However, its focus on overseas markets has helped it grow its team back up to 122.

The firm was founded in 1926 and supplies specialist chemicals used in ink resins, hair dyes, biocide products, rubber chemicals and powder coatings, which are alternatives to paint on certain surfaces such as fridge doors.