After the longest economic expansion in modern times, 2018 became a volatile year with a weakened demand. The general outlook for 2019 remains uncertain with e g a GDP growth in China that has slowed down from double digits to an anticipated level of 6.2% in 2019*. This, as well as the geopolitical uncertainty, has a big impact on the global market for chemicals. On the other hand, there are also global macro trends that directly impacts businesses, economy, society, cultures and personal lives, and hence also the chemical industry. The world economy together with a couple of the most significant global macro trends, market dynamics and what will be driving growth may however be redefined in the next coming years. Let’s have a brief look into the crystal ball.

At Perstorp, we continually develop our business to be aligned with the global macro trends. In fact, many of the application areas for our products are directly linked to and driven by one or more of the global macro trends or one of their sub trends. This makes Perstorp well positioned for the future, as making a contribution to how to solve the major challenges of our modern world.

By 2050, seven out of ten people will live in urban areas with populations in the millions**. The increasing pace of urbanization will lead to integration of core cities with daughter suburbs resulting in the expanding city limits having massive impact on the future of mobility, working life and societies. This significant demand for infrastructure as well as for affordable construction are overall positive trends for the chemical industry. With the advent of technology, there will also be a profound shift in how energy and transportation will be used. Examples of Perstorp’s response: High quality automotive fluid oils and low VOC technology for paint.

Around 50 billion devices will be connected by broadband in 2020** with innovative applications in healthcare, business, education and entertainment sectors. Evolving Artificial Intelligence and broadband technologies will lead to sophistication of major applications resulting in many new business opportunities. In the past few years, digitization has brought its first benefits to our industrial sector, particularly in operations and supply chain, yet enormous untapped potential remains. Digitization will continue to transform the way our industry will interact with our customers, and will potentially unleash new global opportunities for value creation. Additional advances in automation, big data and analytics, and the Internet of Things will create exciting opportunities for substantial gains along the entire value chain of the chemical industry. Examples of Perstorp’s response: Staying on top of digital trends to meet the demands from our customers.

A globally growing middle class, with over 1 billion coming from India and China alone in 2020**, will have the greatest impact on products and services, with an enormous purchasing power. Companies will specially align their products to match the interest, income, lifestyle and preferences of this target group, where one trend is likely to be sustainability, with people increasingly claiming e g safe food and non-toxic products. The demand for protein will further increase, and so will the demand for safe food. As a consequence the need to provide various solutions for antibiotic-free production. Examples of Perstorp’s response: Safe and approved food packaging, phthalate free plasticizer for PVC and improving gut health in animals without preventative antibiotics.

Sustainability could perhaps be called the “one trend to rule them all.” It is inseparable from every other trend, and influences a range of strategic decisions globally. The planet's average surface temperature has risen about 0.9 degrees Celsius since the late 19th century, a change driven largely by increased carbon dioxide and other human-made emissions into the atmosphere. Most of the warming occurred in the past 35 years, with the five warmest years on record taking place since 2010***. Technology will provide new solutions to address the emission issue, and with the adoption of the UN’s 17 Sustainable Development Goals in 2015, the world is finally moving in the same direction from discussions to concrete measures, as the urgency increases. We at Perstorp have defined our toughest ambition yet: to become Finite Material Neutral. Our commitment means switching to abundant and/or renewable resources, or recycling/reusing finite resources in a continuous loop. Examples of Perstorp’s response: A growing portfolio of certified Pro-Environment Products with renewable content.

Global macro trends are to a large degree connected, which suggests “synergetic” opportunities. For Perstorp as a company, it is important to understand the eco-system of the macro trends and where the best opportunities are in order to develop new business opportunities that will have a real impact.

*World Bank

**Frost and Sullivan

***NASA

Profitable growth to give our customers a competitive edge

We at Perstorp are experts in specialty chemistry, driven by the belief that one molecule can change everything. For more than 135 years, we have aimed for just that: to use our knowledge of chemistry to create things that really matter for people and society. In other words, Perstorp believes in improving everyday life – in making it safer, more convenient and more environmentally sound for billions of people all over the world.

As a world leading specialty chemicals company, our innovations provide essential properties for products used every day and everywhere. You’ll find us all the way from your car and mobile phone to towering wind turbines and the local dairy farm. Simply put, we work to make good products even better, with a clear sustainability agenda. So, how can our chemistry make a difference? How can we help our customers become more competitive? How can we improve our chemicals and the way they are used to be aligned with global macro trends and make our contribution to solve major challenges? At Perstorp, these questions inspire us every day, and as a leader in our industry, it is in our DNA to challenge ourselves, We believe every effort makes a difference.

It starts with our purpose, our “raison d’etre”, “to lead change towards chemistry that advances everyday life” and our strategic vision which springs naturally from that purpose: “Perstorp is the first choice for companies seeking a competitive edge to advance everyday life.” This is the beacon that sets our course for the future. It is about our success, which equals being here for our customers and their success. It is about advancing everyday life for the end-users of our products, but also for everyone interacting with us and ultimately for ourselves.

We have called our overarching strategy “The Perstorp Chemistry,” which mirrors our response to the four basic questions why, what, how and who:

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  Why is our purpose (why we exist), our vision (the aspirational guiding star) and our promise to our customers (what they should expect from us, every time).

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  What is what we will do to continually drive profitable growth for ourselves: we are the leader in our industry with a performance better than our peers, delivering profitable growth to enable long-term investments for the future.

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  How describes the way we will achieve our long-term goals, with a clear strategic direction, committed leadership and high degree of cross functional excellence.

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  Who is about all our employees who make change happen based on a strong and caring company culture founded in the three core values:

  Responsibility

  Do right

  Reliability

  Keep the promise

  Focused innovation

  Make it better

Strategic drivers for profitable growth

Perstorp’s success and long-term profitable growth are based on four strategic drivers:

Care 365

Perstorp is a caring company where all employees are given the opportunity to perform at their full potential in a healthy and safe environment. We make no compromises on health or safety to increase business performance. The capability to lead health and safety is an entrance ticket to any leading position, and Perstorp serves as a role model for other companies.

Customer centricity

Perstorp has different business processes for different customer’s needs, and develops and focuses its efforts on selected market segments. The customer’s experience with Perstorp should be as seamless as possible at every touchpoint, and we stand ready to transform new customer behaviors into new business opportunities. Our customers and stakeholders have strong positive brand associations based on real experiences.

Product and market leadership

We build and defend our leading global market positions and look for new development opportunities along the value chain. Innovation based on products and processes is primarily made in the intersection between customers’ needs and technology, and we continuously explore and develop more sustainable products and solutions.

Leverage integrated platforms

We work to debottleneck our production and expand capacity by developing the full potential of our selected technology platforms. Operations will become increasingly safe, lean, reliable and efficient due to efficiently executed technical development projects.

Perstorp fit for the future

Since 2013/2014, Perstorp has worked hard to get new structures, teams and capabilities in place, all with the ambition to our a strong foundation for profitable growth. This was a pre-requisite for where we are today, having created a more efficient and profitable company, better serving our customers’ needs and moving in the direction of thinking and acting more outside-in. In 2017, we fulfilled our financial plan to reach an EBITDA above 2 bn SEK, which made it a record year. This was an important milestone, which has enabled us to set new ambitious and challenging goals.

2018 became an exciting year when a new Perstorp was dawning. A new ownership structure came into place with Landmark as the new owner alongside PAI Partners, committing EUR 130 m SEK for additional investments. Furthermore, the portfolio structure changed with the divestments of BioProducts and Capa™ (the latter transaction was completed in February 2019), resulting in focus on the following future growth areas for 2019 and onwards;

To be able for us to deliver on our strategy and reach our new financial objectives, we need to continue to seek full potential in ourselves. Leadership will be the key to making a step-change going forward, in pure business performance as well as in care, health and safety. We will continue to invest into developing our leaders and their leadership.

A companywide restructuring program, Level Up, was launched in January 2019 with the objective to simplify structures and increase efficiency. A new operating model has been implemented with a re-organization and a reinforced management team as two examples of outcomes.

Research has shown that there is a clear performance correlation between hard financial measures and softer values, and at Perstorp it is that magic formula of performance and care we are after as we look to improve the way we work with health and safety.

Our “Care 365” program for increased focus on health and safety companywide was launched in 2017, with the intent to motivate us to look beyond statistics and numbers in order to put care first. The approach to Care 365 is deeply rooted in the knowledge that health and safety are blind to work/life borders, and that we can’t leave stress, fatigue or injuries behind as we walk out the door at the end of the workday. It means that Perstorp once and for all is committed to leading change towards a healthy and safe company every day, 365 days a year. The whole idea is to lift up, not only the big things, but also all the little things to ensure a little hazard doesn’t become a big problem, and to increase our maturity in terms of how we Care, both among our leaders but also among all employees.

To further reinforce the importance of health and safety, Care 365 has been expressed the most important future growth driver for Perstorp, with the following definition:

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  Perstorp is a caring company where all employees are given the opportunity to perform at their full potential in a healthy and safe environment

• •

  No compromises on health or safety to increase business performance

• •

  Perstorp is a role model for other companies

• •

  Capability to lead health and safety is an entrance ticket for any leading position in the company

Beyond hard numbers, we have created a new way of defining Care with a strong focus on leadership and how we support our employees in the ever changing and challenging work environment; the Perstorp Careway. The Careway defines the maturity level of an organization in terms of behavior, and our clear goal is to move the whole company to Level 3, Motivated/Independent, before end of 2020.

During 2018, a special project was initiated with support of DuPont Sustainable Solutions to accelerate the process towards a more mature safety culture, with the clear goal that everyone at Perstorp comes to work and goes home healthy and safe, every day. After a lot of activities, engagement, workshops and hard work, it became clear that safety basically is driven by good leadership, as most other transformations. The project delivered on what it had set out to do and a global integrated roadmap was developed covering eight global themes/focus areas such as Process Safety, Health and Leadership. In addition, internal capabilities have been developed and Careway Champions have been appointed and trained to carry out detailed safety assessments, develop future safety activities and support their own organizations to implement identified actions.

To further demonstrate focus and importance of health, safety and care all across Perstorp, in August 2018, “Let’s talk Care 365” was arranged in all geographical locations, sites as well as offices. All employees were invited to an event in their respective location, and there was a variety of topics on the agendas, everything from hands-on safety training to office yoga. The level of engagement was very high and the conclusion was that this day will become a yearly event.

The relentless determination for Perstorp to become world class in health and safety has paid off and there is now a profound and sustainable change in terms of safety. In the second half of 2018, performance was better than target every month. Management commitment is strong, we are convinced that every injury at work is preventable, and our focus is continuously on prevention. Real change is driven by the people, purpose and values and together with a strengthened leadership, this is how Perstorp will bring Care to the next level.