TOTAL S.A. (TOT - Free Report) announced that it joined forces with Corbion, the global market leader in lactic acid, lactic acid derivatives and lactides, to develop bioplastics. The companies have entered into a 50/50 joint venture (JV) to produce and market polylactic (PLA) polymers.
TOTAL and Corbion plan to build a world-class PLA polymerization plant with a capacity of 75,000 tons per year at the latter’s Thailand site. The new company will be based in the Netherlands and will begin operations in the first quarter of 2017, subject to regulatory approvals.
Benefits for TOTAL
Polylactic is a biobased biodegradable polymer obtained by fermenting renewable resources (sugar or starch) to produce lactic acid. It is mainly used for food packaging, disposable tableware and textiles, as well as in numerous other industries such as oil and gas, electronics, automotive, and 3D printing.
The product is 100% renewable and biodegradable. As a result, demand has been on the rise and its average annual growth rate is estimated to touch 10–15% by 2025.
This makes the latest JV a strategic move, which has offer TOTAL ample growth opportunity in the coming years. In addition, gaining Corbion, a leader in the development of bioplastics, as a JV partner bodes well.
Expands Revenue Base
TOTAL has been focused on widening its revenue base through strategic acquisitions and partnerships.
The company forayed into the renewable energy space with the acquisition of a majority stake in SunPower Corporation (SPWR - Free Report) . Its clean energy business is expected to receive another major boost given its recently announced decision to acquire Saft Groupe SA.
In addition, this recent JV will broaden TOTAL’s top line and create additional sources of revenues.
Zacks Rank & Key Picks
TOTAL currently has a Zacks Rank #3 (Hold). A couple of better-ranked in the same space are Braskem S.A. (BAK - Free Report) sporting a Zacks Rank #1 (Strong Buy) and Royal Dutch Shell plc (RDS.A - Free Report) carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Braskem S.A and Royal Dutch Shell plc have each surpassed earnings estimates by a respective 107.79% and 29.6% in the last reported quarter.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>