Industry News

Annual Report 2008

Published on 2009-03-26. Author : SpecialChem

2008 was the biggest year of investment in Hempel's history, and results show that the company's strategy, One Hempel - Everywhere, is paying off despite the economic slowdown.

Hempel had a decent year in 2008, despite the downturn in the global economy that affected much of the coatings industry. Still, 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.

Hempel's 2008 results:

  • A total of 273 million litres of paint were sold, compared to 289 million litres in 2007
  • Group revenues fell by 1 per cent to EUR 916 million
  • Operating profit fell by 7 per cent to EUR 89 million (up by 7 per cent before non-recurring items)
  • Net profit fell by 18 per cent to EUR 57 million (up by 2 per cent before non-recurring items)

A year of expansion

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, which went through on 5 January 2009, gives Hempel full control of its operation in China, a country which 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 (both should come online in 2010).

Hempel Group President and CEO Pierre-Yves Jullien comments: "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."

Most business segments grow during 2008

Essentially, 2008 was divided into two sections for Hempel, especially its Container segment, which was strong at the beginning of 2008, before 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 (12 per cent), 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.

Operating profit affected by non-recurring items

Hempel's operating profit was EUR 89 million in 2008. This was strongly affected by non-recurring items, including the accrual for closing down the production facility in Denmark and the amortisation of the trademark of Lacor (acquired in 2007). Adjusted for non-recurring 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 US dollar and related currencies - and the weak US dollar had a negative effect on the 2008 results.

Source: Hempel

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