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Annual Report

After strong progress on its transformation journey in 2017, Hempel is now ready to play a leading role in the consolidation of the global coatings industry.

Global coatings company Hempel’s financial performance was satisfactory in 2017 with organic growth of -0.7 per cent. This was in line with the global coatings market and the segments in which Hempel operates. Hempel maintained a stable EBITDA margin (12.4 per cent) in 2017, just below the 2016 level (13.2 per cent).

Furthermore, Hempel saw great results from its sharp focus on improving net working capital and reducing net debt. Net working capital days decreased from 89 days in 2016 to 59 days in 2017 – the strategic ambition for 2020 achieved three years early. Consequently, Hempel saw strong cash flows again in 2017, coming in at EUR 155 million from operating activities.

Hempel was, therefore, able to reduce its net interest-bearing debt from EUR 119 million in 2016 to a mere EUR 21 million in 2017, equalling a ratio of 0.1 to EBITDA (0.6 in 2016). This makes Hempel a virtually debt-free company and leaves the company in a strong position to take a leading part in the consolidation of the industry.

Ready for a leading global role
In 2017, Hempel focused successfully on optimising and investing in its functions, processes and leadership in order to continue the transformation of Hempel into a leading global coatings company and to accelerate the execution of its Journey to Excellence strategy.

Hempel Group President & CEO Henrik Andersen comments: “We took great strides in our transformational journey and made many important investments in building the foundation we need in order to accelerate growth. We are now ready to welcome new companies to join the Hempel family and expect acquisitions to happen in 2018. We want to play a leading global role in the consolidation of the industry and actively drive the industry forward through new customer-focused innovative products, support and services. We are also very proud that we managed to keep our focus on transforming this great company despite the serious issues with compliance in some operating units in Asia Pacific.”

Customer relations and trust

Hempel made use of 2017 to develop its relationships with customers. Hempel’s global organisation is now much more effective and agile when working with customers, no matter where in the world they operate. Listening to customers, understanding their businesses, gaining their trust and delivering value-adding products and services that meet their needs are key to continuous success and long-term partnerships.

“Customer focus and trust are key aspects of our values and the Hempel way of doing business. They are central to our identity and are now central to our brand, too. In 2017, we launched our first company-wide tagline: Trust is earned. We look forward to living up to that ambition in the years ahead,” Henrik Andersen says.

Hempel Sailing World Championships 2018

2017 was also the year when Hempel took action to become much more visible globally. In June, Hempel announced that it would be the title sponsor of the Sailing World Championships 2018 to be held in Aarhus, Denmark in July and August. The Championships are expected to draw around 1,500 sailors from 100 nations as well as over 400,000 visitors. 160 million TV-viewers worldwide will tune in from their homes.

Expectations for 2018

Hempel expects the global marine coatings market to continue to be challenging in 2018, especially the newbuilding segment where global overcapacity is adding to the already negative trends in the industry. Despite this, Hempel anticipates positive underlying organic growth across most segments and geographies. Hempel’s EBITDA margin is expected to remain at a strong level, in line with 2017. 

Key messages

  • Hempel’s financial performance was satisfactory in 2017 with organic growth of -0.7 per cent, in line with the global coatings market
  • Hempel maintained a stable EBITDA margin (12.4 per cent) in 2017
  • Net working capital days reduced to a historical low of 59 days by the end of 2017 – the strategic ambition for 2020 achieved 3 years early
  • EUR 177 million released from working capital during 2016 and 2017, which left Hempel virtually debt free by the end of 2017
  • The transformation of Hempel into a leading global coatings company continues
  • Hempel is now ready to welcome new companies to the Hempel family and to take a leading part in the consolidation of the global coatings industry

 



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