Annual Report 2013: strengthening financial capabilities
to support future growth

The Hempel Group delivered a record net profit in 2013, placing it in a strong position to achieve its targets through a combination of organic and external growth.

2 March 2014

The Hempel Group’s continued focus on efficiency and profitability ensured it delivered a net profit of EUR 65 million in 2013, despite volume growth of only two per cent. The Group also secured an EBITDA result of EUR 165 million, the highest in its history.

Pierre-Yves Jullien, Group President and CEO of Hempel A/S, comments: “Our strong financial performance in 2013 has given us the room needed to acquire new companies while also financing organic growth. This will enable us to grow faster than the market over the coming years, and I am confident it will allow us to reach our goal of becoming one of the world’s top-10 coatings manufacturers.”

Hempel’s 2013 results

• Revenues remained flat at EUR 1,239 million in 2013
• EBITDA of EUR 165 million, highest in Group history
• Operating profit rose from EUR 83 million to EUR 125 million
• Net profit increased by EUR 30 million to EUR 65 million

The Hempel Group’s revenue reached the same level as 2012 despite a two per cent increase in volume. This was partly due to the declining US dollar against the euro, as well as a sharp decline in the Marine Newbuilding segment. Hempel’s other key segments, however, performed well. The Protective and Marine Maintenance segments were the main growth drivers, while the Decorative segment was on par with 2012.

The Hempel Group’s strong net profit in 2013 was largely due to the efficiency and productivity measures implemented over the last few years. These measures, combined with stable raw material prices and a controlled change in the company’s product mix, led to a significantly improved gross margin, which increased by four percentage points to 41 per cent in 2013.

“The profitability we delivered in 2013 came without compromising the key investments we are making to ensure a sustainable future for the Group as part of our One Hempel – One Ambition strategy,” says Pierre-Yves Jullien. “We still have more work to do, but we have shown that we have the financial, business and organisational capabilities needed to grow faster than the market.”

Investing for the future
Hempel’s investments in recent years include new factories in Saudi Arabia, India and Russia, as well as factory expansion projects in the UK, Malaysia and Kuwait. By 2015, this work will give Hempel the capacity to produce approximately 230 million litres more per year compared to 2010, and will enable the company to ensure a steady and timely supply of high-quality coatings anywhere on the globe. The company also released a number of new products in 2013, including launching the Versiline® series – a range of high-performance coatings for the challenging environments encountered in many process industries – on the global market for the first time. In the Marine segment, Hempel launched HEMPAGUARD®, a new fouling defence product that reduces vessel fuel bills and associated CO2 emissions by six per cent compared to traditional antifouling products. Despite being launched late in the year, HEMPAGUARD® saw more than 60 full ship applications in 2013.

Driving growth organically and through acquisitions
The growth required in Hempel’s One Hempel – One Ambition strategy is expected to be achieved by growing its Decorative segment, mainly through acquisitions, and increasing its market presence in the Protective and Marine segments. These goals remain on track. Hempel’s Protective segment grew by nine per cent and its Marine Maintenance segment grew by three per cent in 2013, while Decorative was on par with 2012. Pierre-Yves Jullien comments: “We reviewed and adjusted our One Hempel – One Ambition strategy plans in 2013. Our goal remains to become one of the world’s top-10 coatings manufacturers, but we now expect more growth will come from acquisitions as long as we find the right company with the skills and experience needed to complement our Group. We still know that nothing is better than organic growth, and we will continue to prioritise organic growth in the future.”

Hempel Group press release