Hempel Reports 2008 Results
March 31, 2009
CONROE, TX - Hempel had a decent year in 2008, despite the downturn in the global economy that affected much of the coatings industry. Revenues and profits were down on 2007, mainly due to lower sales in the Container segment, which accounted for EUR 80 million in lost revenue for the Group.
The company reported that Group revenues fell by 1 percent to EUR 916 million, and operating profit fell by 7 percent to EUR 89 million, up by 7 percent before nonrecurring items. Net profit fell by 18 percent to EUR 57 million, up by 2 per cent before nonrecurring items.
The biggest event for Hempel in 2008 was the EUR 150 million acquisition of Hempel-Hai Hong from joint venture partners China Merchants Holdings (International) Co. Ltd. The acquisition gives Hempel full control of its operation in China, a country that should show strong growth in the coming years.
Hempel also acquired overall control of its operations in Croatia and Morocco in 2008 and committed to new factories in Poland and China, which should both come online in 2010.
Hempel Group President and CEO Pierre-Yves Jullien commented, “The investments are key to ensuring we remain truly global in scope; but still, spending EUR 150 million in the present circumstances requires courage. There is no escaping the fact that 2009 and 2010 promise to pose some very real challenges. But if we maintain our focus on efficiency and continue to provide high-quality products and a high level of service, we will emerge as a stronger company.”
Hempel’s, Container segment was strong at the beginning of 2008, but sales declined considerably in the latter part of the year. However, net sales for all Hempel’s other segments increased. Largely driven by the Asia-Pacific region, Protective experienced the largest increase in volume, up 12 percent, demonstrating faster growth than the market. Marine also performed well, despite a slowdown in the second half of the year. Decorative grew, mainly driven by the construction industries of China and the Middle East. Yacht remained steady, as it has for a number of years, although the market is expected to drop slightly in 2009.
Hempel’s operating profit was EUR 89 million in 2008. This was strongly affected by nonrecurring items, including the accrual for closing down the production facility in Denmark and the amortization of the trademark of Lacor, acquired in 2007. Adjusted for nonrecurring items, underlying operating profit was just above EUR 100 million, compared to EUR 96 million in 2007. Much of Hempel’s business is conducted in the U.S. dollar and related currencies, and the weak U.S. dollar had a negative effect on the 2008 results.