The year 2021 was a tumultuous year for the global economy and international trade straining by challenges on all fronts, including ever-changing variants of Covid-19, increasing inflationary pressures, the impacts of climate change, supply chain tensions, geopolitical risks and skyrocketing energy and commodity prices. Fearless of the capricious nature of our times, Far Eastern New Century Corporation (FENC), which has remained on a stable footing under its overarching principles of sincerity, diligence, thrift, prudence and innovation over the past 73 years, has managed to nimbly adjust in the face of adversity and has again delivered good results.
Following on the heels of the twists and turns of 2021, the year of 2022 isn’t short of major challenges. The pandemic still lingers, and the economic outlook is unpredictable. Politically, the war between Russia and Ukraine has sent oil and food prices soaring, exacerbating the global cost of living crisis. U.S. President Joe Biden has been experiencing a downward slide in approval ratings since he was sworn in, amidst recurring Covid waves and soaring inflation, whilst several recent and upcoming elections have increased political uncertainty in Europe. In Japan, in the midst of the fight against the pandemic, the new Prime Minister has introduced a new stimulus package aimed at reinvigorating the Japanese economy. In China, with emphasis placed on the importance of “Common Prosperity,” the authorities have also intensified oversight of industries, implementing a dual control mechanism under which targets for total energy consumption must be met, and strengthening its anti-monopoly supervision.
Financially, the global economy has been stuck in the quagmire of the pandemic for the past two years. A number of cities around the world have been in and out of lockdowns, and international borders have repeatedly closed and strict measures have been adopted to limit people’s movements. In Vietnam, for example, authorities ordered that factories comply with the “three on the spot” model, under which workers had to work, eat and sleep on the factory premises. As infections declined, control was slightly loosened with the introduction of “one route, two destinations” model, which restricted workers to their daily commute between home and work. Consequently, the shortages of labor and raw materials and a global port gridlock, which has caused long delays in supply chains causing corporations enormous challenges across the board. The U.S. consumer price index has soared to 10-year highs, increasing the risks of global inflation and giving rise to the U.S. Federal Reserve’s interest rate hikes. Oil and gas are being wielded as geostrategic tools, while energy and commodity markets have shown hyper-volatility. Meanwhile shipping costs have risen to their highest in history. In combination, the aforementioned factors are posing a grim challenge to business operations. Meanwhile, regional economic integration is taking on an increasingly important role in global economy and trade. The world’s largest trade deal, RCEP, went into effect in January 2022 and the CPTPP is intended to execute new strategies for regional economic integration (REI). As many countries scramble for membership, this regional market is growing exponentially in size with these developments underscoring the influence of REI on the future of global trade.
Environmentally, an international consensus has been reached on the need to curb global warming through carbon reduction. At the COP26 climate conference in the U.K., the attending parties agreed on a new deal to build upon the Paris Agreement. 130 plus economies around the world declared their ambitions to attain the goal of carbon neutrality. Action will be taken to mitigate the impacts of climate change with an EU carbon border adjustment mechanism implemented in 2023 and China’s cabinet releasing the “Action Plan for Carbon Dioxide Peaking” amid its efforts to accelerate energy transitions and reduce carbon emissions. However, China’s increasingly tightened power supply poses a great challenge to the country’s pursuit of energy transition and could also threaten to derail the revival of businesses and the global economy as a whole. The green economy and ESG investing continue to show great vitality. Energy conservation, carbon reduction and energy transition are not merely international trends, but what makes or breaks corporate competitiveness.
Digital technology, as it continues to advance, is bound to play a vital role in future development. Attention has been drawn to progress across a wide spectrum of areas, including AI, IoT, AR, VR, metaverse, 5G and EV. Businesses must harness the power of technological innovation and craft a future of intelligence and interconnection.
Political and economic uncertainty, along with degradation of the natural environment have brought a series of tests for businesses, accelerating the competition for survival. FENC has demonstrated its audacity in breaking the mold, shaping a new business model. Armed with a global mindset, an insightful vision, a repertoire of far-reaching and holistic strategies, and an insatiable desire for innovation and excellence, we will bring our A-game to the business landscape of tomorrow.
The Company focused on the production of polyester and textiles with its global competitive advantages in the industry, strengthened its operation with diversified investments, and enhanced the values of assets and shareholder returns with its pragmatic approach to property development. In 2021, the consolidated revenue reached NT$238.8 billion, a 15% growth from the previous year. The consolidated net income amounted to NT$14.84 billion with the net income attributable to shareholders of the Company NT$9.69 billion, an EPS of NT$1.94, 20% up on the previous year. The 24th term Board of Directors in the 3rd meeting proposed a cash dividend of NT$1.50 per share. The Company’s cash dividend yield is around 5%.
FENC has a streamlined system from production to sale and is thus able to reap the benefits brought about by the synergy of vertical integration. The Company’s upstream Petrochemical Business has acquired a strategic grip of feedstocks; midstream, the Polyester Business leads the global pack; downstream the Textile Business is a strategic partner of world-class brands. We have production sites around the world, building up regional supply chains across Asia and the Americas, including the U.S., China, Vietnam, Taiwan, Japan, and Southeast Asia. The diversity in geographic distribution enables the Company to respond to the market swiftly and make timely adjustments in capacity to seize upon business opportunities by closing gaps in supply across the region.
To maximize tariff advantages, FENC has been building facilities in Vietnam in addition to the existing production sites in Taiwan and China. They are currently in Phase II of expansion and expected to increase the capacities of polyester staple fiber, polyester filament and recycled polyester. In the U.S., the largest PTA-PET integrated plant in Americas - Corpus Christi Polymers - is under construction to consolidate the advantages of localized production.With products for a wide variety of industries which provide basic necessities of life, including food, clothing, housing, and transportation, FENC maintain a leadership position in international markets. It is the world’s second largest supplier of recycled polyester, third largest in PET resins and Asia’s largest in polyester sheets. Taking the lead in the industry of recycled polyester, we are the world’s No. 1 producer of recycled filaments, the leader in production of hygiene fibers and the third largest producer of nonwoven fibers. In the Asia-Pacific region, we are the largest producer of Nylon 6,6 filament for apparel.
The Company is attuned to new trends, fully committed to R&D of new materials and manufacturing processes. Its growth in profit has been driven by a series of innovative products of unmatched quality. We have focused on R&D of epidemic-fighting products, serving the medical and health industries with cutting-edge materials, including face shields made of recycled PET sheet, surgical gown fabric that meets the highest standards in protective apparel used in health care facilities, and PET blood collection tubes. FENC is the world’s largest supplier of medical-grade PE/PP and PE/PET composite fibers.
To penetrate the high-end market for vehicle materials, we have catered to the robust demand in the EV/AV market, holding an important place in the supply of safety airbags, tire cords and seatbelts, which puts the Company in the lead in this niche market.The Company has established a sustainable and vertically-integrated supply chain of Nylon 6,6 for our core apparel customer, Lululemon, the top brand in the yoga world. We also partner with the world’s leader in e-commerce, Amazon, in establishing a green supply chain supplying private label clothing. In addition, we have been selected to supply innovative, high-quality sportswear for international events, including the 2020 Tokyo Olympics and UEFA Euro 2020. Moreover, seven national teams will wear football strips made of TopGreen recycled ocean polyester filament while competing in the 2022 World Cup in Qatar, bringing another chance for FENC to shine on the world stage.
The Company has invested tremendous effort in the circular economy for more than 30 years. In 1988, it built Taiwan’s first recycled polyester plant, which collects and recycles more than half of the waste PET bottles in Taiwan every year. It dominates the global market with guaranteed quality through relentless effort to develop new environment friendly materials and manufacturing processes. FENC is the world’s top 2 recycled polyester supplier. In addition, it is the global leader in both food-grade PET resins and recycled ocean polyester filament. The Company has recycled polyester production sites in Taiwan, China, Japan and the U.S. The facilities in Japan are about to undergo Phase III expansion, and those in Southeast Asia and Americas also continue to increase their capacities.In recent years, FENC has not only collaborated with world-known brands in building a green supply chain but also engaged local enterprises in the implementation of a closed-loop business model. In 2021, FENC was acknowledged by Global Corporate Sustainability Awards as the only Best Practice Award‒World Class‒Outstanding Practice for its groundbreaking chemical PET recycling technology, which breathes new life into waste textile products.
To contribute to reduction in carbon emissions, the Company has undertaken a budget of around NT$5 billion that has been earmarked for energy conservation & carbon reduction and environmental protection in this year’s capital expenditure. We have keenly participated in energy transition, improving manufacturing processes, sourcing green energy or low-carbon energy as an alternative, and avoiding energy waste. Emphasis has been placed on recyclable, green, energy-efficient and zero-carbon emissions in our business operations.
In Taiwan, FENC is the first polyester producer that signed up to support the Task Force on Climate-related Financial Disclosures (TCFD) and also the first supporter in the manufacturing sector to issue a statement. To make our production sites more eco-friendly, solar panels have been installed and biomaterials utilized. The Company has developed a comprehensive GHG inventory to identify and estimate major sources of indirect emissions. In addition, it has applied to production a technology that reuses waste gas. In 2021, in collaboration with Lululemon and LanzaTech, a technology startup, FENC introduced to the market the world’s first-of-its-kind polyester fiber and fabric made from recycled waste gases emitted by steel factories, FENC®TOPGREEN®BIO3, which won the recognition of Best Product in the Accelerated Eco category by the 2022 ISPO Textrends Award for the fall/winter 23/24 season.In 2021, the Company contributes to waste reduction an equivalent of an estimated 20 billion PET bottles. Compared with conventional oil-derived PET resins, our recycled PET resins reduce GHG emissions by 63%, an equivalent of 580,000 tons CO2e every year. We will strive continuously to realize the sustainable goals of energy efficiency and carbon reduction with innovative technology.
The Company has established a thorough system to support the ESG dimensions of sustainable development. Aiming for continuity and stability in business operations, FENC has been ranked in the top 5% of the listed companies in the Corporate Governance Evaluation conducted by Taiwan Stock Exchange for several consecutive years. In 2021, it was awarded the title of Best Companies to Work for in Asia by HR Asia. Moreover, its outstanding performance in sustainability earned a total of eight titles in the Global Corporate Sustainability Awards (GCSA) and Taiwan Corporate Sustainability Awards (TCSA) hosted by the Taiwan Institute for Sustainable Energy, including The Most Prestigious Sustainability Awards‒Top Ten Domestic Corporates, Circular Economy Leadership Award, People Development Leadership Award, Growth through Innovation Leadership Award, Sustainability Report Award‒Platinum Award, Special Award for Pandemic Response, and Sustainability Reporting Award‒Sliver Award, and most of all this year’s one-and-only GCSA Best Practice Award‒World Class‒Outstanding Practice earned with the Total Solution to Polyester Recycling.The Company is so far the one and the first corporate issuer in Taiwan issuing green bond, sustainability bond, and social bond, setting milestones on the path of sustainable financing. The funds raised by social bonds will be invested in social interest projects intended to protect the disadvantaged, provide resources for pandemic control, and maintain employment during the pandemic, which exemplifies the Company’s innovative approach to fulfillment of its mission statements. With innovative thinking we will bring prosperity to society and improve well-being for all.
The Company’s diversified investment portfolio ranges from cement production, construction, department store retail chains, telecommunications, land and sea transport, to financial and banking services. Each subsidiary rises above competition in its own industry and has demonstrated solid growth. Far EasTone Telecom (FET) ended 2021 with a growth in net profit from the previous year thanks to a substantial increase in revenue resulting from increased sales in mobile phones, consumer electronics, and telecommunication service bundles, and in addition a jump in the monthly fee for subscribers upgrading to 5G services. In addition, the strategic cooperation with Asia Pacific Telecom will be developed into a share swap merger to create a mutually beneficial situation. Asia Cement’s (ACC) overall earnings grew due to the record-high profits of the ready-mixed concrete, transportation, and stainless steel businesses in Taiwan. In the China market, ACC(China) experienced a growth in revenue arising from increased sales volumes and prices driven by growing demand for cement as the Chinese government pressed ahead with ambitious infrastructure programs. Far Eastern Department Stores (FEDS) has a well-established retail system and has been expanding its presence by building several mega shopping centers. FEDS Zhubei Store emerged after grand opening as the largest shopping center in Hsinchu. Oriental Union Chemical Corp. (OUCC) also enjoyed a significant growth in revenue in 2021 as economic recovery and increasing oil prices pushed up product sales volume and selling prices. Far Eastern International Bank (FEIB) posted an increase in net profit against the backdrop of a rebounding economy and plans to build an even more solid cross-border financial platform. FENC will continue to manage its investment portfolio for selecting promising businesses to generate strong and consistent returns on shareholders’ investments.
To increase returns on land resources, Far Eastern Resources Development Corporation was set up and put in charge of land development, rental, and sale. The Company develops properties with the prospects of regional development in mind, and its construction projects include residences, office buildings, shopping malls, warehouses and logistics facilities, hospitals, and schools. They contribute significantly to FENC’s profit growth. The Company owns a total land area of 570,000 pings (1,884,306 m2) in Taiwan. Most of its properties are located in premium areas across the north of Taiwan, including Taipei Far Eastern Plaza and other lots with tremendous development potential scattered in the districts of Banqiao, Wugu and Taishan across New Taipei City. All the residential and commercial properties developed by the Company have delivered impressive results in sale or rental.
The Company’s signature project—Taipei Far Eastern Telecom Park (Tpark) is positioned as a hub for 5G and AI-related industries and is currently at Phase III of development. In addition to TPKA—the Park’s first office building for commercial rental, the R&D building TPKD and the Cloud Data Center TPKC have also been leased to, respectively, Google and Far EasTone Telecom, bringing in a stable rental income. The new residential complex is planned for completion for sale by the end of the year and is expected to create considerable profits. There is another development project for an old plant in Neili Taoyuan City with an area of 30,000 pings (99,173.7 m2). The first phase application for land rezoning has been approved by the local authorities. Land plans include residential, commercial, and medical districts and public facilities for various purposes. Thanks to the property’s proximity to schools and the train station, it is expected to revitalize the community as a whole and enhance the efficiency of land use, which in turn becomes a distinctive feature of this project.
The Company has built itself as an agile organization with holistic strategies. It has accelerated its digital transformation and trained personnel for global operations in conformity to worldwide trends. It will continue to strive towards the goal of sustainable development with a comprehensive blueprint for excellence in business management.
The Company has established the Office of IT Planning to accelerate digital transformation and put it in charge of strategic planning for future development of IT-related innovation. To transform into smart manufacturing, tremendous efforts have been devoted with automation and AI applied to an increasing number of production lines. Automation teams have been organized to establish comprehensive IoT systems based on big cloud data platforms and advanced robots. To perfect the management of supply chains, artificial intelligence has been widely applied to production, warehousing, and distribution. Furthermore, AI has also been utilized to monitor real time logistics flows at each site of operation and consolidate the data.To achieve smart management, digitization in the cloud has been rolled out across the board. In addition to the Smart Mobility Management Platform, some other platforms have been developed for various purposes, such as energy analysis, customer credit management, customer and product contribution analysis and Forex gain/loss forecast. As the digital economy dawns, FENC is proactive in seeking out effective measures to enhance production efficiency and lower operating costs.
To meet the robust demand from world-class brand customers that have pledged commitment to green growth, the Company has expanded the scope of application for green materials and upscaled their production through organic expansion and acquisitions, with the ambition of being the world’s largest recycled polyester producer. FENC actualizes its vision of circular economy with three actions—to replace with eco-friendly materials, to reduce reliance on fossil fuel energy and to recycle waste from land, sea and air, via mechanical recycling technology, chemical recycling technology, and carbon capture technology.Leveraging its technological capability, it has crafted a total solution with both PET waste bottles and waste fabrics recycled for fiber production for apparel. It has also taken on an even tougher challenge—using green fibers from the recycling of PET bottles to produce the tech textiles used in vehicle materials such as tires, seat belts and airbags. FENC has started to collaborate with world-class companies like Continental AG in achieving a common goal of circular economy. The Company will continue to improve the profitability of green products and expand its presence in the green economy.
Founded with the concept of “developing industry while engaging in social responsibility”, the Company has engaged in businesses of public interest for well over a half century. It has established three schools, two hospitals and four foundations that sponsor a variety of charitable causes, including innovation in medicine and healthcare, improvement of education quality, and promotion of research on high and new technology.
The Far Eastern Memorial Foundation sponsors artist and cultural activities; the Far Eastern Medical Foundation funds medical research and provides social aid. The Far Eastern Y. Z. Hsu Science and Technology Memorial Foundation hosts the Y. Z. Hsu Science Award and acknowledges recipients’ achievements in three categories, namely Y. Z. Hsu Science Chair Professor, Y. Z. Hsu Science Paper Award, and Y. Z. Hsu Technology Invention Award, to promote research and development of science and technology in Taiwan.
At the forefront of healthcare, the Far Eastern Memorial Hospital (FEMH) celebrates its 40th anniversary in 2021 with a multitude of notable achievements. It remains committed to continuous improvement in quality of medical attention and stands tall as an intelligent hospital and medical center equipped with state-of-the-art technology. It plans to set up a branch in neighboring Taoyuan City and build an intelligent healthcare system that will provide cutting-edge care for many years. At the worst of the Covid outbreak, FEMH spared no effort to safeguard the local community and contributed a great deal to pandemic control.
In the field of education, Yuan Ze University strives continuously to become a world-class institute in higher education. It has established a college of medicine and nursing to undertake innovative research in medicine and train more professionals for healthcare services. Oriental Institute of Technology has been upgraded and renamed Asia Eastern University of Science and Technology. It aims to develop itself as a vocational university that strikes a balance between technology and humanities education, valuing both theory and practice and preparing outstanding professionals for industry. The Company integrates the resources and technologies in industries and academic institutes, fostering cooperation between academia and the business sector and also promoting the exchange of talent. FENC has long devoted its corporate resources to cultivating talent essential for a prosperous future and will continue to deepen its involvement in businesses of public interest and give more back to society.
Facing an ever-changing competitive landscape, FENC responds dynamically to changes in the business environment and makes necessary adjustments in a timely manner. Moving forward, we will continue to maximize our core competencies, including agility, flexibility, endurance and sustainability, utilize AI technology flexibly and optimize our digital capabilities. FENC is poised to grasp opportunities in the new era and write another chapter of success as a prosperous and sustainable role model in the business world.