InterviewDSM Dyneema CEO predicts strong 2013 as JV decision looms

11 September 2013 16:29  [Source: ICIS news]

LONDON (ICIS)--DSM Dyneema is likely to post year-on-year growth for 2013 despite prevailing flat demand from certain key markets, as the Netherlands-headquartered high-strength fibre company draws closer to a decision on a joint venture in Russia, CEO Gerard de Reuver said on Wednesday.

“What we are expecting in the years to come is that we will continue to post in double-digit growth [excluding Dyneema’s life protection division], and we will also see stronger growth than we have seen in the last two years due to the attention we are giving to personal protection [division] products," de Reuver said.

The CEO told ICIS that he expects the company to post year-on-year sales growth from 2013 to 2015, although this is based in part on a more subdued performance in 2012 compared to preceding years on the back of lower sales from its life protection division.

He said: “We had strong demand in life protection [products] from 2006 to early 2011, which was based on an urgent operational request for troops moving into Iraq and Afghanistan, where we have been providing ballistic protection for vehicles. That dried up more or less after 2011.

“In other areas we have been and will be growing in double-digit rates,” he added.

Comprising personal and vehicle armour made with ultra-high-molecular-weight polyethylene (UHMWPE), de Reuver estimates that the life protection division accounts for roughly 40% of the DSM subsidiary’s revenues, but new orders have fallen from the peaks of 2006 to 2011.

The company is involved in various army programmes involving a shift to lighter-weight body armour, meaning that life protection sales are likely to improve from current levels, de Reuver added, and addressed the drop in life protection orders by developing new applications in the high-performance textiles sector, accounting for around 30% of its revenues.

Expanding its presence in high-growth markets is also a priority, which de Reuver says remain attractive despite slowing growth in China, Brazil and India.

Dyneema is also developing new lightweight applications for deep-sea offshore drilling to offset flat demand for shipping applications brought on by the global downturn. The marine sector accounts for around 30% of the company’s sales, de Reuver added.

The company is also looking to make a final decision on whether to pursue a joint venture with RT-Chemcomposite, a subsidiary of Russian industrial conglomerate Rostec.

DSM announced in April this year that Dyneema would investigate the joint venture, which involves the production and sale of products derived from UHMWPE fibres in Russia using DSM’s proprietary technology. If approved, the venture would focus around life protection applications, the company added.

“We have no conclusions yet... [but] we would expect at least to show some insight on that by the end of the year,” de Reuver said.

However, a decision to proceed with a venture would partially hinge on the geopolitical situation between China, the US and Russia, as the US is one of Dyneema’s key markets, and the company has been aggressively targeting China since acquiring a majority stake in local UHMWPE producer Shandong ICD High Performance Fibre Company in early 2011.

“It is much more about what kind of opportunities and drawbacks could be involved with having a joint venture in Russia,” de Reuver said:

“There has been a lot of interest outside of Russia in our technology, and we are evaluating [the proposed joint venture] before we jump into a market that could compromise our position with the rest of the world,” he added.

Dyneema has also expanded its footprint in Asia with the establishment of a research centre in Singapore earlier this year, adding to development capacity from two other facilities based in the Netherlands and the US.

The company is unlikely to open any other research centres in the near future, according to de Reuver, but is considering additional bolt-on acquisitions in areas perceived to have strong growth potential, including high-performance textiles and markets where a local presence is advantageous.

“We are investigating other application areas on a continuous basis to either buy a market position or to take a step forward in the value chain [through bolt-on acquisitions],” de Reuver said.

By: Tom Brown
+44 208 652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly