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Monday, 28 September 2020
Markets & companies, Coatings market

Strong performance gives Hempel the momentum needed for the future

Thursday, 26 March 2015

Solid organic growth in the second half of the year ensured Hempel delivered a record net profit of EUR 71 million in 2014.

Hempel’s growth was driven by its three main segments Decorative, Protective and Marine. Source: Cybrian/Fotolia

Hempel’s growth was driven by its three main segments Decorative, Protective and Marine. Source: Cybrian/Fotolia

The Group’s growth and earnings were in the top tier of the coatings industry and give the company the momentum needed for future growth.

Highest EBITDA in the Group’s history

The Hempel Group has proven to be one of the fastest growing coatings companies over the last 10 years. This continued in 2014 when the Group delivered organic growth of five per cent. This growth was achieved despite a flat first six months of the year, with the Group registering growth of nine per cent in the second half of 2014. Hempel’s EBITDA of EUR 166 million was the highest in the Group’s history and slightly above 2013, which was itself a record year. This was partly due to favourable raw material prices, but also due to the efficiency measures the Group has taken over the last few years.

Pierre-Yves Jullien, Group President and CEO of Hempel A/S, comments: "Since we embarked on our growth strategy in 2010, turnover has increased by 46 per cent. More importantly, we have significantly improved efficiency and growth has been achieved without compromising our level of earnings. This has given us the momentum needed for continued growth in our three main segments and will ensure we can consolidate our position as a leading global coatings supplier.”

Hempel’s 2014 results
  • Revenues increased to EUR 1,298 million, up from EUR 1,239 million in 2013
  • EBITDA of EUR 166 million, highest in Group history
  • Operating profit rose by EUR 4 million to EUR 129 million
  • Net profit increased to EUR 71 million
Growth was driven by three segments

The Hempel Group’s organic growth in 2014 was driven by its three main segments. In the Decorative segment, the Group continued to benefit from the 2011 acquisition of Crown Paints both in terms of Crown Paints’ performance and knowledge sharing across the Group. The Protective segment continued the growth it has seen over recent years, and the Marine segment delivered good growth in China and Southern Europe. In addition, both the Container and Yacht segments saw slight improvements during 2014. The Group's ability to convert operational earnings to cash remains high, which has allowed the Group to further reduce its leverage ratio.

Kim Junge Andersen, Group Executive Vice President and CFO of Hempel A/S, comments: "Tight control of working capital, especially credit management, has allowed the Group to maintain a high cash generation level, which is important for the Group's ability to continue to invest in growing the business organically and fund new acquisitions.”

Carefully selected acquisitions

Despite strong organic growth, the acquisition of carefully selected companies remains an important part of Hempel’s growth strategy when and where appropriate. Hempel acquired Schaepman's Lakfabrieken B.V., a Dutch supplier of specialist industrial and protective coatings, in December 2014. "Schaepman is a very good company with excellent management and staff, and I am very pleased to be able to welcome them to our Group,” says Pierre-Yves Jullien. "Our two companies are a perfect fit, both culturally and business-wise. Our goal now is to work together to ensure that Schaepman continues to grow and that Hempel benefits from the unique skills, technologies and expertise that Schaepman brings to our company.”

In addition, Hempel acquired its former toll manufacturer in South Africa, The Coatings Manufacturing Company, in February 2015. In March 2015, it acquired Jones-Blair Company, a leading North American coatings supplier to the protective and waterproofing markets. Pierre-Yves Jullien comments: "These acquisitions add specialist products, technologies and manufacturing expertise to our organisation. We will work closely with our new colleagues to ensure the acquisitions further strengthen our presence, product portfolio, customer service and manufacturing capabilities in key segments and regions.”

Winning customers with value-adding solutions

Over the past few years, Hempel has increased its focus on developing solutions that translate customers’ business needs into value-adding solutions. This has enabled the company to release a number of leading technologies and products that performed strongly in 2014. This includes "Hempaguard", a  fouling defence product for ships’ hulls that reduces vessel fuel consumption and associated CO2 emissions by an average of six per cent compared to traditional antifoulings. Released at the end of 2013, the product passed both 100 and 200 full-ship applications in 2014, reinforcing its position as the industry’s leading fouling defence coating.

Hempel’s first products based on its proprietary "AvantGuard" technology also performed strongly in 2014. Launched at the end of 2013, the "Hempadur AvantGuard" range of zinc epoxy primers are proven to deliver better anti-corrosive performance than traditional zinc epoxies, without increasing zinc content. As a result, they meet customer demands for an easy-to-apply coating that can protect assets for longer in tough C4 and C5 corrosive conditions. In addition, Hempel launched "Contex Thermoguard" in the Middle East in 2014. An exterior coating for buildings that reflects solar energy in the infrared spectrum, Contex Thermoguard has proven to reduce a building’s air conditioning costs by an average of five per cent.

Preparing for a milestone year

Hempel’s performance in the second half of 2014 has given the company the momentum needed for the years ahead. 2015 is an extremely important year for Hempel. It marks the company’s 100th anniversary, as well as the end of its current One Hempel – One Ambition strategy period. Hempel is currently developing a new strategy that will take the company up to 2020.
Pierre-Yves Jullien comments: "Our performance in 2014 demonstrates that we are moving in the right direction and that the investments we made over recent years were the right ones. We will maintain the key values of quality and service that have formed the cornerstones of our success over the last 100 years, and I am confident that we can continue to generate strong organic growth in the future, which is our top priority worldwide.”

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