Neo Performance Materials Inc. has acquired a magnet manufacturing plant near Shanghai for $9.7 million where it will produce compression molded magnets using its Magnequench Neodymium-Iron-Boron (NdFeB) powders. Separately, the company reports that it experienced an 8.8% drop in revenues for its first half of 2019 compared to last year.
The acquisition closed in August. The company’s subsidiary Neo Magnequench purchased the assets of Asia Magnets, known as Samag, a privately owned manufacturer in Chuzhou, China. Samag constructed a new production facility in 2016 and recently completed a $2.9 million capacity expansion, including the installation of new manufacturing equipment and additional production footprint. The acquisition will allow Neo Magnequench to accelerate its strategy to expand into compression molded magnet production, the company said.
Samag was founded by Gao Qingguo, a 20-year veteran of the bonded NdFeB magnet industry with an established reputation as a reliable and responsive supplier of high-quality compression molded magnets to multiple markets, said Magnequench, noting that Gao will continue with the company following the acquisition.
“As global demand for NdFeB magnets continues to expand across multiple industry segments, this strategic acquisition will enable Neo to work more closely with our magnetic powder customers and will help us expand direct sales of additional value-added engineered materials into multiple, high-growth markets,” said Geoff Bedford, president and CEO of Neo in July when the plans for the deal were announced.
“This acquisition is compelling for the Neo Magnequench business as it immediately expands our existing magnet manufacturing knowhow and enhances our production capability, and Samag’s production will benefit from Neo’s technical expertise, extensive global sales team and networks,” added Greg Kroll, executive vice president of Magnequench. “It will expand our ability to work more closely with magnet users from concept through the entire product lifecycle. It also helps us respond to a clear market demand for a compression molded magnet supplier that can both produce at competitive cost and deliver superior technical and development expertise for current and next-generation applications.”
The latest financial results were also announced in August. For the six months ended June 30, revenue was $210.3 million compared to $230.6 million for the same period in the prior year, an 8.8% decrease amounting to $20.4 million. Net income totaled $14.5 million.
The Magnequench segment led the decline in revenues in these periods as volumes were adversely affected by slower economic activity in various market segments globally, including in the automotive industry, and by customer inventory adjustments, said Bedford. “However, given that rare earth commodity prices in 2019 generally softened through May, and given that the Magnequench segment passes these variable input costs through to most of its customers, a significant portion of Neo’s lower year-over-year revenue in the quarter was attributable to this input cost pass-through mechanic.”
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