CJ CheilJedang investing $210 million in expansion in Brazil

CJ CheilJedang will invest an $210 million to expand manufacturing facilities at its amino acid plant in Brazil.

Employees work at CJ CheilJedang’s Piracicaba plant. [CJ CHEILJEDANG]

CJ CheilJedang will invest $210 million to expand manufacturing facilities at its amino acid plant in Brazil.

The investment will be used to expand manufacturing facilities of its plant in Piracicaba, Sao Paulo, which is operated by CJ DO Brasil, a subsidiary 99.99 percent owned by CJ CheilJedang.

The plant manufactures lysine, a type of amino acid used in animal feed to stimulate growth. But, CJ CheilJedang said Monday that the investment will add new facilities that allows it to make other types of non-lysine amino acids.

CJ CheilJedang did not mention when the construction is expected to be completed.

The expansion of the Piracicaba plant will help the company’s bio division grow, especially when demand for amino acid is high.

“The bio division will benefit from high grain prices and high demand for amino acids to be used in animal feed,” said Oh Ji-woo, an analyst at eBest Investment & Securities.

CJ CheilJedang’s bio division logged revenue of 1.08 trillion won ($829 million) in the first quarter, up 39 percent on year. Operating profit rose 128 percent on year to 175.8 billion won.

During its first quarter earnings call, the company mentioned amino acids are a bigger portion of its bio division sales.

“The specialty amino acid market is still small, but competition is less fierce due to high entry barriers,” said Cho Sang-hoon, analyst at Shinhan Investment. “Thus there is positive potential for growth and profitability.”

The company has been focusing on manufacturing amino acids for the past few years. In 2021, it developed cysteine, a type of amino acid used to strengthen hair and nails.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]