Perstorp Chemicals
Total Page:16
File Type:pdf, Size:1020Kb
ANNUAL REPORT 19 9 7/ 98 PERSTORP’S DIVISIONS DIVISIONS STRENGTHS OPERATIONS 1997/98 OBJECTIVES Perstorp Chemicals is a leading global producer of • Leading market positions in important areas • Continued favorable earnings • Strengthen globalization efforts and position as a PERSTORP CHEMICALS specialized chemical products for industrial customers. • Efficient and modern process technology • Capacity expansion in all areas global leader The division includes the operations of the Specialty • Global production and sales • Joint venture concerning special chemicals in • Increase rate of growth Chemicals, Chemitec and Construction Chemicals • Close cooperation with key customers India • Strengthen focus on special chemical products business units. • Production start for Boltorn™ dendritic polymers with high customer value by increasing innova- For many years, the division has had the highest level • Structural transaction in phenolic resins and tion of profitability within the Group and maintained divestments within Chemitec • Increase efficiency and productivity strong positions in the global market. The development • Major agreement with DuPont regarding formalin • Play an active role in the structural transformation of new products and geographic expansion are of the chemicals industry by acquiring, or cooper- important components in the ating with, companies based on similar technolo- strategy established for polyols, formalin technology, gies or that focus on the same type of customers thermosets, resins, composites and construction chemicals. Perstorp Flooring is a world-leading producer of lami- • Pergo® – the laminate flooring market’s strongest • Earnings reduced by lower growth rate, combined • Global leadership for laminate flooring PERSTORP FLOORING nate flooring for residences and institutional environ- brand with higher costs • Extend the product range by strengthening Pergo® ments. • Trend in the international flooring markets • Strategy reviewed and comprehensive action in the high-quality flooring market, while also The bulk of sales are in Europe and the U.S., where the towards solid and environmentally compliant program initiated to strengthen growth and introducing complementary products Pergo® brand holds a strong position, and to a lesser flooring profitability • Intensify product development to become the degree, products are sold in parts of Asia and South • Strong technological base and broad market • New management, based in London industry leader in innovativeness America. expertise • Capacity expansion in the U.S. completed • Intensify cooperation with the leading distributors The laminate flooring concept was developed by the • Efficient production with high levels of produc- • Letter of intent with Hornitex Werke, Germany, in the market Group and is based on Perstorp’s many years of ex- tion capacity in both Europe and the U.S. regarding cooperation in the area of direct • Increase efficiency throughout the value chain by, perience with chemicals and surfaces. Since its launch, • Established distribution in some thirty countries laminate flooring for example, improving distribution, boosting laminate flooring has rapidly attained a not insignifi- in Europe, North and South America and Asia capacity utilization and increasing cooperation cant share of the flooring market on both sides of the with external customers Atlantic. Perstorp Surface Materials is one of the world’s leading • Strong positions in several markets in Europe, • Improvement in profits and unchanged sales • Develop and offer complete surface solutions PERSTORP SURFACE MATERIALS manufacturers of paper-based decorative surfaces. The Asia and South America despite decline in Asia using decorative surface materials as part of division produces a quality range of decorative lami- • Leading position in design development with • Continued weak construction market in general, well-defined applications for the construction and nates, decorative foils and printed paper and is being both international product programs and design but positive trend in the Nordic countries and furniture industries developed into a surface materials company that can solutions tailored to customer needs parts of Central Europe • Expand in growth markets in Asia, South America deliver complete surface solutions within well-defined • Global presence through production in Europe, • Positive effect of restructuring and rationalization and North America areas of application. Asia and South America measures • Play an active part in structural change to become The division’s customers mainly operate within the • Wholly owned printshops for decorative paper for • Launch of foils in Brazil – acquisition of foil a leading player in the global decorative surfaces furniture and construction-related industries in Europe, use in all paper-based surface materials operations in Brazil after the end of the fiscal year market South and North America and Asia. • Renewed product program and continued launch of international design range • Initiation of investment program for production in China Perstorp Life Science operates in the fields of biotech- • Strong strategic positions in the rapidly growing • Rapid organic growth and increased profitability • Investment in research and development and PERSTORP LIFE SCIENCE nology and medical devices – two areas characterized biotechnology industry for all operations strategic acquisitions to further strengthen posi- by strong growth and intensive research and develop- • Leading supplier in well-defined niches • Acquisition of molecular biology products and tions as a leading supplier in selected segments ment. • Several well-protected technologies production facilities • Launch of new products, for example, in the area The division is a leading supplier of media and instru- • High level of innovation and close cooperation • Purchase of serum production and technology for of gynecology ments for process optimization in biopharmaceutical with leading pharmaceuticals companies the handling of sterile fluids for cell cultivation • Greater geographic spread production, as well as biochemicals, reagents and • Established companies and trademarks • Acquisition of chemical luminescence technology methods to increase speed and safety in the area of bio- • Purchase of a complementary product line in the technology research. The division holds strong positions field of medical technology in the area of medical technology, particularly regarding aids and implants for ear-nose-throat treatment. Perstorp’s Board of Directors proposes that Perstorp Life Science be listed on the stock exchange and be spun off to Perstorp shareholders in autumn 1999. CONTENTS 2 Summary 1997/98 3 President's Comments 6 Report of the Board of Directors 20 Division Perstorp Chemicals 24 Division Perstorp Flooring 28 Division Perstorp Surface Materials 31 Division Perstorp Life Science 34 Safety, Health and Environment 37 Financial Report 56 Proposed Distribution of Profits 57 Auditors' Report 58 Board of Directors, Auditors 60 Corporate Management 61 Perstorp Shares 64 Ten-year Summary 65 Addresses 71 Glossary THE PERSTORP GROUP Perstorp is a shareholder-oriented, global group that focuses on growth, profitability and new business opportunities. It is a world leader in segments of the markets for specialty chemicals, biochemicals, laminate flooring and other surface materials. The Group has annual sales of about SEK 11 billion, with 6,000 employees. Perstorp shares are listed on the Stockholm and London stock exchanges. EXTENDED FISCAL YEAR To enable the switch to calendar-year accounting, as of 1999, the 1997/98 fiscal year was extended by four months to cover the period from September 1, 1997 through December 31, 1998. Accordingly, the annual report covers a period of 16 months. In all essential respects, however, comments on operations focus on the 1998 calendar year in relation to the 1997 calendar year, years that are also reported on a pro forma basis. SUMMARY 19 9 7/98 • Earnings before taxes amounted to SEK 804 m (16 months), which corresponds to SEK 553 m for the 1998 calendar year (1997 pro forma: 610). • Sales in existing operations rose by 3%. • Favorable earnings from Perstorp Chemicals despite weaker conditions in chemical sector. • Increased earnings from Perstorp Life Science and Perstorp Surface Materials. • Favorable performance by Perstorp Flooring in U.S., but weaker trend in Europe resulted in lower earnings. Comprehensive action program under way. • Sale of Perstorp Plastic Systems and other units. • Group’s productivity program maintains high tempo. • Incorporation of divisions and introduction of new management model to create added value. • Board proposes a cash dividend of SEK 4.00 (2.75) per share plus the flotation and spin-off to shareholders of Perstorp Life Science. • Application for reregistration of Perstorp shares on Stockholm Stock Exchange’s A List. Calendar year Fiscal year Group 1998 1997 1997/98 1996/97 Net sales, SEK m 10,742 11,308 14,418 11,152 Pretax earnings, SEK m 553 610 804 508 Return on total capital, % 8 9 9 8 Return on shareholders equity, % 8 10 9 8 Equity ratio, % 53 47 53 46 Interest-coverage ratio, times 5.1 3.9 4.9 3.4 Investments, SEK m 927 815 1,149 885 Number of employees (annual average) - - 6,747 7,499 of which, in Sweden - - 2,531 2,592 Key figures, shares Dividend, total payment, SEK m - - 197 179 SEK/ share -- - 4,001) 2,75 Dividend per share, after full conversion, SEK 4.65 5.43 6.86 4.47 Share price, year-end