“2018 was a very satisfying year and marks the half-way point for Hempel’s major transformational journey. We delivered positive organic growth of four percent in the final quarter, turned around our business in Asia- Pacific and welcomed J.W. Ostendorf to the Hempel family,” said Henrik Andersen, group president and CEO of Hempel.
Hempel’s revenue grew by 1.5 percent in fixed currencies in 2018 and its EBITDA margin ended the year at 10.8 percent. When excluding J.W. Ostendorf, underlying organic growth was -1.4 percent and EBITDA margin was 11.8 percent. This is a satisfactory result in the challenging global market conditions.
Since the beginning of 2016, it has released €166 million in cash by optimizing its net working capital processes. When adjusting for the effect from the acquisition of J.W. Ostendorf, Hempel became debt free in 2018 and now has the freedom to pursue its ambitious growth targets through major acquisitions and strong organic growth.
In 2018, Hempel welcomed J.W. Ostendorf to the Hempel Group, a decorative coatings company with operations primarily in Germany and France. The acquisition doubled Hempel’s decorative business in Europe and contributed €39 million in sales in the fourth quarter of 2018.
Hempel completed a turn-around of its business in Asia-Pacific and a restructuring in North America in 2018 – and both regions ended the year in significantly better shape than they began.
“The turnaround in Asia-Pacific has been achieved by installing completely new leadership teams and working hard on the ground to instill the winning Hempel culture, one with strong ties to our customers and employees engaged in our customer-focused vision," Andersen said. "This is a testament to what a strong culture, vision and leadership can achieve.”
Hempel has resolved the SØIK case by paying a fine of DKK 220 million
Hempel has completed internal remediation, invested heavily, and established a robust compliance framework.
Hempel A/S and Hempel (Germany) GmbH have now been fined and agreed to a total settlement of DKK 220 million for these illegal practices. The fine is within the range of expectations and will be paid to SØIK and the Prosecution Authority in Kiel, Germany.
DKK 123 million was expensed in Hempel’s financial statements for 2016, with the remaining part in the financial year 2018.
“The unlawful activities were a direct attack on the integrity of Hempel’s customers, culture, values and all our colleagues,” said Andersen. “We are a global company with 6,500 employees and loyal custom- ers, who place their trust in us. We have made substantial investments internally and externally to prevent compliance issues from happening in the future and to re-establish that trust. That is the price we have had to pay for being non-compliant. We have cleaned up and moved on.”