Octal targets $1 billion sales by 2011
Muscat, July 12, 2009
Octal, an Oman-based packaging leader, aims to achieve sales of $1 billion by 2011 as its exports to global markets are expected to triple over the next two years.
Octal chairman Sheikh Saad Suhail Bahwan said total sales of polyethylene terephthalate (PET) were $25 million in June and would reach $100 million per month by the middle of 2011.
Octal ships more than 1,200 containers per month from Oman and now accounts for 85 per cent of import-export traffic through the port of Salalah.
Sheikh Saad said: “Despite the downturn, our business is growing on the strength of scale, reliability of supply and product quality offered by our advanced manufacturing operation in Salalah Free Zone. In two years we will be a $1 billion company. We are winning new customers while the competition cuts back or closes down and making steady progress in converting the market to PET.”
Octal, which opened the world’s first integrated PET resin and sheet complex in January, exports to more than 60 customers in 33 markets. It has also substituted 90 per cent of PET resin imports into Oman, valued at nearly $42 million a year.
June was Octal’s busiest month to date, with 22,000 metric tons (m/t) of PET resin and sheet sold to local, regional and international customers, a statement said.
Eng Awadh bin Salim Al Shanfari, CEO of Salalah Free Zone, said: “Salalah Free Zone’s competitive advantages and its prime location in the West Central Asia region provide a platform for a variety of business and downstream industries. Octal’s dramatic growth shows what can be achieved and underlines the fact that Salalah Free Zone is the ideal location from which to expand.”
Octal exports 66 per cent of its products to Europe, 30 per cent to North America, and the remainder to Middle East and Asian markets.
Octal produces PET resin for soft drink, water and edible oil packaging, and PET sheet, the world’s fastest growing material in clear rigid plastics, which is used for food, dairy and consumer product packaging.
Built at an initial cost of $350 million, Octal’s integrated PET complex has a production capacity of 330,000 tons. Total PET capacity will increase to 830,000 tons following the completion of a second phase of expansion in 2011. At that point, Octal will be the world’s largest PET producer on one site.
“Octal is a growing business and is reinvesting resources in the development of local talent, creating new jobs and training for young Omanis. We are proud that a third of our workforce of more than 350 employees is made up of Omani nationals,” Sheikh Saad said.
He said: “In 2008, total exports for the year were $48 million. After five months of operations at our new complex in Salalah Free Zone, monthly sales are $25 million. By 2011, as one of the largest producers worldwide of PET packaging materials, Octal will have annual exports of $1 billion.”
Octal has already closed on the equity and mezzanine financing it needs to complete phase two of its expansion. It has raised $100 million in equity from its existing Oman- and GCC-based investors and aims to secure $130 million in additional debt from local and regional banks, maintaining a high ratio of equity to debt (55 per cent versus 45 per cent).
Sheikh Saad said: “Our annual running rate of exports now stands at around $300 million and will increase to $400 million by December. Despite being a new company, the financial community recognises our impressive track record and ability to become a world leader in PET based out of Oman.”
Commenting on Octal’s phase two expansion, Bill Urquhart, senior vice president of Townsend Solutions, the US-based plastics consultancy and market research firm, said: “Octal’s world-scale site, technical advantages, and its ready access to feedstock chemicals save costs and offer unique integration. This is the new model for global competitiven