“Having already restructured over the last few years, we were well prepared for the recession. Subsequently, we fared better than some of our competitors, gaining market share in Europe and South America.”
After a difficult start to the year, which was dominated by a dramatic drop in market demand, our shipments began to improve by the third quarter as de-stocking ended and demand started to slowly recover. The sales volume shortfall was partially offset by declining raw material prices and a stringent cost control program. We ended the year close to our 2008 results, a very good performance given the severe economic climate.
Our key challenge was to balance cost and cash initiatives by planting the seeds for future growth. Having already restructured over the last few years – which included the successful integration of AkzoNobel’s surfactants business with the specialty polymer activities from National Starch – we were well prepared for the recession. Subsequently, we fared better than some of our competitors, gaining market share in Europe and South America.
Our Asian activities were the first to be affected by the recession in mid-2008 and then led the recovery in the second quarter of 2009. The situation was similar but less dramatic in the US, while the recovery in Europe was much slower. A number of the market segments we serve were severely impacted by the recession, including the mining industry, which suffered from lack of infrastructure spending (iron ore). Paper production (calcite) and fertilizer use (potash) were also affected. Oil and gas drilling dropped by half, while agrochemical sales fell during the first half year when there was de-stocking throughout the value chain. Asphalt road paving had a slow start due to weather conditions, but picked up later in the year thanks to government stimulus spending. Consumer-based markets, such as personal care, fabric care and home care, were less impacted and even grew during the year.
Operating costs were lowered further with a salary and hiring freeze, along with staffing level adjustments to align capacities with demand. Inventories and receivables were also trimmed to reduce working capital.
In the middle of the economic storm we developed a new winning strategy for the future based on three technology platforms – surfactants, synthetic polymers and biopolymers – and a consumer intimacy business model. We aim to drive growth by promoting sustainable solutions, investing in high growth regions and pursuing bolt-on acquisitions and alliances. Sustainability is a growth driver as well as differentiator, with nearly 50 percent of our product sales based on renewable feedstocks.
During 2009, we introduced several new products, including asphalt additives that enable road paving at lower temperatures, thus saving energy and reducing VOC emissions. We commercialized biopolymer hair gels and developed starch-based oil and gas well fracturing fluids. In the meantime, our operations have improved by obtaining third party verification of the Responsible Care® management systems at all our manufacturing sites. Emissions were reduced beyond regulatory requirements through the use of enhanced vapor recovery systems and high efficiency thermal oxidizers. Diligent implementation of behavior-based safety processes also resulted in a significant improvement in safety performance, with a record low total recordable injury rate of less than 1.0 injury per million work hours. Our people are passionate about our business and excited about the future.
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Geo-mix revenue by destination