President’s comments

Four years ago, we began an ambitious transformation of Perstorp towards becoming a truly GREAT company. We’ve differentiated in how we go to market, making big changes in synchronizing our operative model from production to market reality. 2016 brought us another significant step forward in that journey. We clearly showed improved results from all our dedicated work. Yet more than that, 2016 marked our full shift past the mid-way point. A year when we began moving our focus from tools, processes, and what we call the production apparatus to developing our future leadership model. If there is one phrase that signifies this new wave we’re navigating now, it’s Leadership for Full Potential.

Leadership for Full Potential

The energy building in the organization for driving Perstorp forward is tangible. We started already in early March with our annual top-management meeting, where we discussed our needs and natural next steps. We worked meticulously on this during the year, and in the fourth quarter, 90 of our top managers and select talents went through an energizing development program. Empowering our people for full potential is a key characteristic of who we are as a company moving forward. It’s about developing resilience. If we’re only rigged for one type of situation, changes in the world around us could collapse everything. By diversifying and equipping resilient leaders, we’re much less affected by external factors. With an empowered leadership, our foundation holds.

Focused innovation

Central to reaching full potential is one of our three core values: Focused Innovation. We made great progress in many of the products we’ve taken from development to market. One that stands as a role model is in our Feed area: ProPhorce™ SR. Launched a little more than a year ago, we’ve seen high volume growth. Other highlights include:

  • 11 new patent families filed, a record for Perstorp in one year – a sign of the high quality in our innovation and the solidity of the pipeline we’ve developed over several years
  • signed largest innovation cooperation with an external partner ever, developing renewable-based adhesives using Capa™ lactides together with Corbion in The Netherlands
  • new record in externally financed development work: 80 million SEK

Our leadership development is also a significant element of our Focused Innovation. For us, it’s not just a matter of literal molecule development, but also development of every molecule of talent within our company. Because when it comes to making things better, every individual makes a difference.

Solid financial progress

In terms of financial results, we’re proud to have achieved an 11% volume-based sales growth. We also saw healthy development on our bottom line, adding 200 million SEK to our EBITDA result to reach 1.865 million SEK. This 16% EBITDA margin is a strong benchmark in our industry. The successful refinancing of our balance sheet also gives us a five-year runway of stable financing.

Sound markets

2016 showed overall harmony in terms of our market situation between the Americas, Europe and Asia. Despite geopolitical uncertainty, pure economic facts indicate the regions have found an equilibrium within their different situations. Demand is solid, with no one industry or region sticking out to form an unhealthy dependency for us. We did have some troubled areas in early 2016 with supply/demand balance, putting pressure on pricing. However, we saw strong momentum towards the second half. Raw material prices are increasing, which was not unexpected. We have completed the hard work to establish trending and pricing tools, and it’s now up to us to use them to build further resilience.

Differentiating success

We have been purposefully moving away from a one-size-fits-all to a more differentiated way of going to market to meet customer needs. 2016 proved we are becoming better and better at serving our customers and their needs, understanding the true value we can bring with a more application-oriented solution when they need it and where it’s justified. We’re providing enhanced service, carefully measured in terms of on-time-in-full delivery, how we handle complaints and the complaint rate, etc.

Setting the production bar high

We put increasingly high expectations on availability from our plants in 2016 and will continue to do so going forward. A lot of our focus over the previous couple of years was on the Oxo platform, in particular Stenungsund. Last year we started to shift our investment focus more over to the polyol side, expanding both our Penta and TMP capacity.

Safety step-up

As we increase expectations, we must ensure that safety is the priority. Our performance in 2016 saw our KPIs going in the wrong direction. That is alarming and is something we are addressing with a clear safety step-up plan. Most incidents are human at their root so we’re working on attention and action – starting with myself and the Perstorp leadership team, and taking responsibility for following through with an aim at reaching 100% of our tough safety targets for 2017. We are putting processes in place to make safety the instinctive, everyday habit in all actions. We’ve already implemented regular safety walks with an aim to see and act immediately.  

With safety hinging in large part on behavior, our focus on Leadership for Full Potential will deliver essential positive effects in this area as well. I’m confident the momentum we have in the organization, and specifically in our operations, will lead to results. I will not take my eye off this ball, to ensure we provide a safe working environment for our employees, contractors and all who interact with Perstorp.

Forward momentum for 2017

Momentum is building in our organization from many angles. There’s solid demand for our products in the market. Energy is clearly also building among our people here in Perstorp as we focus on empowering their full potential. Each person is capable of extraordinary things, and I’m excited to see how much they will achieve. Last but absolutely not least, there’s the building awareness and eagerness to change our safety record to become something we can be as equally proud of as the many other things we have achieved so far.  Altogether, we are positioned for sustainable momentum. And for resilience. Ready to ride out any waves and stay on top.