OSAKA -- Industrial gas provider Iwatani will fire up a new Indonesian plant as soon as this month as part of an expansion aimed at the growing Southeast Asian market.
The roughly 1.1 billion yen ($10 million) facility is built on a site measuring 10,000 sq. meters and has an hourly output capacity of 4,000 cu. meters. The Japanese company aims to have the factory fully operational in five years.
The plant lies in the Karawang industrial park on the outskirts of Jakarta. The complex houses a number of Japanese-affiliated companies involved mainly in automobiles, metal processing and steelmaking. The Iwatani plant will produce and sell oxygen, nitrogen and argon -- gases used in welding and cutting -- to those businesses.
Osaka-based Iwatani sells and makes industrial gases in Malaysia, Thailand and four other Southeast Asian countries. Apart from Indonesia, the most populous nation in the region, the company plans to have another plant up and running even in Myanmar in spring 2018.
The company is expected to earn a 20.7 billion yen operating profit on 700 billion yen in group sales for the fiscal year ended last month. The energy business, focused largely on domestic wholesaling of liquefied petroleum gas, accounts for about half the earnings.
However, an expansion of that business is unlikely in the medium to long term due to Japan's shrinking market and other factors. On the other hand, the industrial gases and machinery business is gaining steam, with a projected 6.5 billion yen operating profit and sales of 175 billion yen last fiscal year. Iwatani is bolstering that growth through its Southeast Asian expansion.