Let me start by emphasising: Hempel is indeed in business. We are taking care of our customers and their assets around the world despite the global COVID-19 situation. Our key priority right now is the health and safety of our employees, customers and partners. The situation has developed day by day and like many other companies we are facing a new normal, both internally and externally.
No one can predict the future or tell when the COVID-19 challenge will end. What I do know with certainty is that Hempel will get through this challenge. We are ready to – and will – set full sails again. We have a strong financial foundation and limited debt, dedicated managers and employees, valued customers and, not least, we are acting responsibly and taking the necessary measures.
We have launched an internal protection plan to ensure our profitability and in the long term, our ability to invest and grow.
Business is picking up
So, how is business? The short version: waters are rough, business is tough – but business is picking up – and to repeat myself: Hempel is in business. I would like to give you a status on our protective and marine businesses.
Protective is the largest of our segments. It is a growing business and it is going well despite the current extraordinary conditions. Our absolute main focus is to serve our valued customers – whatever it takes or costs We have avoided disruptions in our deliveries, but it has required us to fly in coatings to our customers in some cases. It has also required increased flexibility in our production. China is a great example of this. Currently, we cannot meet our Chinese customers’ increased demands as the authorities have put a cap on the amount of coatings we can produce in our three factories. As a consequence, we are producing some of the coatings for the Chinese market elsewhere, such as Malaysia and the Middle East. This is of course cost-intensive – but we are still able to keep serving our customers.
COVID-19 means that much large building and construction work around the world has been delayed or postponed. Obviously, this has a negative impact on our protective business. Nevertheless, the market is moving in the right direction – not least in China. We are also seeing ‘big wins’, especially in the passive fire protection market.
The situation looks more difficult in the marine industry. The global marine business has been challenging for years and the number of new buildings is limited. COVID-19 has slowed things further.. The order intake at shipyards is 70 per cent lower than last year which will impact the coatings business, not only this year but also the next. Fortunately, the maintenance market is still going and we expect dry docking to be at a higher level in 2020 compared to 2019. Due to temporary lockdowns in several dry dock locations, it is challenging to ensure dry docking can take place – but we manage to find solutions in close cooperation with our customers. The outlook for dry docking seems good for the rest of the year, but will require a high degree of flexibility. In the marine business our constant focus is on delivering, serving and creating value for our customers.
How about the future? COVID-19 is here and now. The future is ahead of us – and nothing has changed in that perspective. Our global growth strategy remains. We will continue to look for new companies to welcome into the Hempel family. This will further support our growth ambitions. Our goal is to double Hempel’s revenue in the next five years to EUR 3 billion and to take a leading position in our core segments: Protective, Marine and Decorative.
Focus on sustainability
Sustainability is not only an important part of our future; sustainability is the future. It starts with us and our customers. We are constantly focusing on how to move our business in a more sustainable direction across the world. The biggest impact we can make is by helping our customers to reach their sustainability goals. For example, in 2019 we launched Hempaguard MaX, a new hull coating solution that improves the hydrodynamics of ocean-going vessels to significantly reduce fuel consumption and associated emissions. Hempaguard MaX builds on our flagship hull coating Hempaguard X7. Since its launch in 2013, Hempaguard X7 has been applied to over 1,500 vessels, enabling the owners to collectively reduce their annual bunker bill by a staggering USD 500 million and cut annual CO2 emissions by over 10 million tonnes. We seek to contribute with even more solutions like this in the future in order to play a key role in helping our customers improve their profitability and environmental performance in the years to come.
Our revised strategy is coming up and we will start executing from January 2021. The crucial parts are set in stone: even more focus on our customers, making commercial success go hand-in-hand with sustainability and, of course, doubling Hempel’s revenue.
COVID-19 is now – the future is ahead of us. Meaning that tomorrow will be another challenging day, sailing and navigating through the storm – for us, for our customers and our colleagues in the coatings industry. I wish for all a safe journey and better conditions for the future.