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Hempel turnover higher due to strong Marine and Protective sales

Published on 2006-04-07. Author : SpecialChem

Key figures:

  • Group turnover up 12% to EUR 654.5m, up from EUR 583.7m in 2004
  • Total paint sales 225m litres versus 214m litres in 2004
  • Operating profit up 4.7% to EUR 44.7m from EUR 42.7m in 2004
  • Net profit was EUR 29.8m, marginally down from EUR 30m in 2004
  • Protective sales up 23%

Comment on business development

The continuing high activity level in the Marine segment and growth in the Protective segment has had a positive impact on Hempel's performance in 2005. Turnover is up 12% to EUR 654.5 million, up from EUR 583.7 million and the company has set a new volume sales record, supplying 225 million litres to customers around the world.

Activity in the Marine segment has been particularly positive because of a high activity level in Korea. The Protective segment in the North American market has had particularly good results, while in China, bridges and other infrastructure projects have also contributed to growth. Europe and parts of the Middle East have also performed well.

Raw material prices in 2005 have continued the drastic rises seen in 2004, which has put earnings under pressure. Consequently, profits have not kept pace with our growing sales. Operating profit was up 4.7% to EUR 44.7 million from EUR 42.7 million. Net profit was EUR 29.8 million, marginally down from EUR 30 million for the same period last year.

Development by segment

The high level of imports and exports to and from China has had a positive impact on the Marine segment.

Demand for shipping tonnage has meant full order books for our newbuilding customers in China and Korea, while European yards had another good year, especially in Germany, Poland and Croatia, thanks to their ability to achieve shorter delivery times for new ships.

Marine Maintenance has performed well as the higher level of shipping activity has increased demand for our products, especially antifoulings.

However, earnings in both Newbuilding and Maintenance have not risen at the same rate as volumes and have therefore not lived up to expectations.

The Protective segment grew strongly in 2005 and for the first time sold more litres of paint than Marine Maintenance - traditionally the largest segment. Sales rose by 23% in total. In the last 10 years the Protective segment has more than doubled.

The Container market grew strongly in the first half of 2005, but then slowed, affecting volumes in the last six months of the year. Hempel's strategy of remaining firm on pricing held, however.

The Yacht segment showed encouraging growth, especially in Southern and Northern Europe.

Expansion of the Decorative segment in the Middle East continued with the opening of more premium retail outlets, while in China several important contracts have consolidated Hempel's presence in the growing property market.

Record raw material prices

The 2005 financial year was marked by price increases for nearly all raw materials, particularly crude oil and metals and since the middle of 2004 raw material prices have increased on average by 40%.

Crude oil prices, which have a direct impact on raw material prices, reached record levels thanks to a combination of high demand and a shortage of refining capacity following the hurricanes that hit the US earlier in the year. Copper prices reached an all-time high towards the end of the year, while zinc prices recorded an eight-year high.

This situation made it necessary to implement further price increases for our products and these will continue in 2006. Alongside this, the company will continue its programme of efficiency improvements.

Source: Hempel

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