RM2 International SA Re Agreement
April 06 2016 - 10:22AM
RNS Non-Regulatory
TIDMRM2
RM2 International SA
06 April 2016
6 April 2016
RM2 International S.A.
RM2 enters into landmark alliance with Zhenshi for production of
game-changing pallet
RM2 (LSE-AIM: RM2), the sustainable composite pallet innovator,
is pleased to announce that it has entered into a strategic
cost-saving manufacturing agreement with Zhenshi Holding Group
Company Limited of China ("Zhenshi"). Zhenshi is a major
shareholder of China Jushi Co. Ltd. ("Jushi"), one of the largest
manufacturers of fibreglass in the world, producing over 1.1
million tonnes of glass fibre annually. Fibreglass is one of the
key raw materials used in the manufacture of RM2's BLOCKpal
pallet.
The agreement will allow for the mass production of the RM2
BLOCKpal pallet in Tongxiang, at a facility owned by Zhenshi Group
Huamei New Materials Co., Ltd, adjacent to the principal Jushi
glass fibre manufacturing plant. Initial production is expected to
be deployed in Q1 2017 and will target circa 1.5 million pallets
per annum, with projected growth to at least 5 million pallets per
annum in the medium term. Pallets produced at the facility will
initially be deployed with RM2's customers in North America and
Europe.
RM2 and Zhenshi believe that there is a significant strategic
opportunity for BLOCKpal deployment in the domestic Chinese and
other Asian markets as Chinese logistics develop and as China
palletizes its vast supply chain. The two companies will also
develop additional areas where their resources and expertise are
complementary, particularly in the area of logistics.
This agreement allows RM2 to address the volume demands of its
clients whilst significantly reducing Cost Per Unit (CPU). Some of
RM2's manufacturing assets will be transferred to China and, as a
consequence of reduced production in Canada, RM2 will fall well
short of its 2016 production target. Management analysis has
demonstrated that the CPU benefits support this decision. The
Company continues to seek to improve and optimise its manufacturing
processes and remains committed to volume production in North
America and will update the market on these plans over the coming
months.
President Zhang, Chairman of Zhenshi and President of Jushi,
commented: "We believe that large parts of the Chinese logistics
chain will become palletized over the coming years. We are
convinced, after our own extensive research, that the BLOCKpal is
the optimum product in the market. Partnering with RM2 allows us to
seize first mover advantage as China moves to palletize its economy
in a region of the world with limited forestry resources for the
manufacture of wooden pallets. Introducing the BLOCKPal pallet to
China will put us on a cleaner and more sustainable path. China
needs to reduce its logistics costs and we believe that the
widespread use of sustainable, reusable pallets will be a key
component of that. We will use all our resources to ensure maximum
penetration of the BLOCKpal pallet in China and the broader Asian
markets and we look forward to further developing our collaboration
with RM2."
John Walsh, CEO of RM2, commented: "This is a strategic, long
term agreement with Zhenshi which will allow us to offer even
greater savings to our existing and future customers in North
America and Europe due to the lower CPU, whilst also giving RM2
access to the vast Chinese market. This agreement will enable RM2
to produce pallets at a greater rate and at significantly lower
cost, while at the same time, Zhenshi's extensive corporate
holdings and relationships makes it uniquely positioned to open the
Asian market for the BLOCKpal pallet. RM2 has taken steps to ensure
we have the pallets available to service our customers during this
transition of our manufacturing assets."
For further information, please contact:
+44 (0)20 8820
RM2 International S.A. 1412
John Walsh, Chief Executive
Officer
Jean-Francois Blouvac, Chief
Financial Officer
+44 (0)20 7653
RBC Capital Markets 4000
Tristan Lovegrove
Pierre Schreuder
Ema Jakasovic
+44 (0)20 7638
Citigate Dewe Rogerson 9571
Simon Rigby
Kevin Smith
Rob Newman
Ellen Wilton
Notes to Editors
RM2 International S.A. specialises in pallet development,
manufacture, supply and management to establish a leading presence
in global pallet supply and improve the supply chain of
manufacturing and distribution businesses through the effective and
efficient use and management of composite pallets. It is quoted on
the AIM market of the London Stock Exchange under the symbol
RM2.L.
For further information, please visit www.rm2.com.
The Zhenshi Group principally engages in the business of
composite materials, special steel, mineral exploitation, real
estate, hotel and tourism, health care, logistics and financial
investments. As at the Latest Practicable Date, Zhenshi directly
held a 15.59% equity interest in China Jushi, a company listed on
the Shanghai Stock Exchange in China under the stock code "600176"
since April 1999, which is one of the world's leading fiberglass
manufacturers and the largest fiberglass manufacturer in China.
For further information, please visit www.zhenshigroup.com and
www.jushi.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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