Edited from annual report and “chairman’s message and company website
Tessenderlo states that it is faced with a “very difficult situation” due to the “prevailing economic conditions”.
“Things are not going to return to normal until these conditions improve. Today we can still see no tangible evidence of this happening. This is why the group is considering a selective reduction in its production capacity in the sectors most affected”, says chairman, Gerard Marchand.
On this basis, the company says it will carefully choose any further investments to maintain a low level of debt until the economic situation has settled.
“We are poised to seize the new growth opportunities which are certain to present themselves. However, the economic crisis has led us to be more selective, so as to get through this period of more expensive and harder-to-find credit with a balance sheet which is relatively unencumbered by debts”, says Marchand.
In addition, Tessenderlo says it will also continue in 2009 with its cost-cutting efforts.
Tessenderlo states that it will focus on the following three areas:
(1) Plastics converting, with special emphasis on development in Europe;
(2) Gelatin, with the aim of maintaining Tessenderlo's position among the leaders by reinforcing its international presence; and
(3) Disposing of businesses that are unable to meet the return on capital employed target by 2012.
Tessenderlo’s key strategy
(1) Strengthen the diversified and well-balanced line of activities;
(2) Leadership in niche markets;
(3) Continuous cost control;
(4) Increase the share of specialities to over 70 % of the revenue;
(5) Achieve and maintain leadership positions in niche markets;
(6) Focus on profitability;
(7) Obtain a return on capital employed (ROCE) of at least 12 % in all businesses by 2012; and
(8) Maintain a stable dividend growth.
Inorganic Chemicals strategy
(1) Reduce production costs throughout the value chain as much as possible; and
(2) Seek alliances in order to strengthen its competitive position.
Potassium sulphate
In 2009, the volumes for potassium sulphate are expected to fall below 2008 levels in Europe. Farmers are said to have had trouble obtaining credit from their banks and will not be able to place orders.
Animal feed phosphates
Tessenderlo states that demand for animal feed is declining fast due to falling meat consumption, the result of the worldwide economic crisis. Phosphate prices are expected to drop significantly compared to late 2008.
Volumes in 2009 will however be similar to 2008 levels, because more mineral calcium will again be used in animal feed instead of the phytase enzyme.
Polyvinyl chloride (PVC) strategy
(1) Keep costs throughout the value chain as low as possible;
(2) Offer maximum added value with existing products and resources; and
(3) Pursue maximum productivity.
Forecasts remain unfavourable as long as the general economic climate does not pick up. Tessenderlo says that this seems to be improbable for 2009.
Ethylene prices will probably be negotiated on a monthly basis instead of every quarter. This means PVC prices will fluctuate even more. Furthermore, imports from the US and Asia, where production costs are lower, also threaten prices.
The European PVC market has become a mature market with minimal growth potential. The current financial crisis has resulted in a sharp downturn of the construction industry in eastern Europe as well.
In the long term, PVC will continue to be a competitive commodity business. Therefore, Tessenderlo is continuing to focus on cost reduction, increased productivity and the improvement of quality and service.
Chlor-alkali strategy
(1) Reduce costs and offer maximum added value with existing products and resources;
(2) Maximise its competitive advantages; and
(3) Invest in specific projects with a high added-value potential.
Tessenderlo says that the cost price of electricity may rise once again. Currently, potassium chloride used for the production of caustic potash remains scarce and expensive. However, lower demand should soon restore the balance.
The prices of caustic soda continued to rise at the beginning of 2009, and a considerable price reduction is unlikely in 2009.
The margins for caustic potash are less predictable. They will mainly depend on the evolution of supply and the price of potassium chloride.
ICIS Chemical Business magazine has unveiled the ICIS Top 100 Chemical Companies, with rankings based on 2008 sales.
A PDF of the ICIS Top 100 Chemical Companies is available for download on ICIS connect.
See the article and analysis of the ICIS Top 100 on ICIS news.
Financial highlights: Tessenderlo, year ended 31 December
|
|
2008 |
2007 |
2006 |
2005 |
2004 |
|
Sales (€ m) |
2,765 |
2,406 |
2,238 |
2,150 |
2,063 |
|
Operating Profit (€ m) |
239 |
152 |
72 |
67 |
106 |
|
Net Profit (€ m) |
140.5 |
129 |
-24 |
35 |
54 |
|
Total Assets (€ m) |
1,813 |
1,683 |
1,706 |
1,712 |
1,607 |
|
Diluted earnings per share (€) |
5.08 |
4.68 |
-0.89 |
1.29 |
1.97 |
|
Number of Employees |
8,100 |
8,121 |
8,124 |
8,123 |
8,181 |
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Tessenderlo
Company Structure
Tessenderlo is an international chemicals company. Tessenderlo in 1892, the company says it is ranked first in Europe and second worldwide in the manufacture of animal feed phosphates and is the leading worldwide producer of benzyl alcohol and benzyl chloride, liquid sulphur fertilisers, and sodium hydrosulphide. It is a major European producer of glycine and is the fourth largest producer of PVC compounds and the sixth largest European producer of PVC.
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