Global mega trends challenge the dynamics of our industry

Perstorp acts on a global market where a strong factor affecting demand is the world economy. Paired with some prominent global macro trends, market dynamics and what will be driving growth may however be redefined in the next coming years.

At Perstorp, we continually look to pair industry trends with mega trends. This is to discover, not only how we can boost our current business, but also how we can drive ourselves to improve our chemicals and the way they are used in order to make a positive difference for our business as well as for the major challenges of our modern world.

We have seen the longest economic upturn in modern time and the general outlook for 2018 looks mainly positive, predicting good growth in all our three regions; Europe, Americas and APAC. A lot is happening politically around the world with events like Brexit, US trade deliberations and the North Korean nuclear threats, all factoring in with a good deal of speculation and unknowns.

New winds are blowing in China concerning sustainability, creating new opportunities for global companies. It is predicted that Chinese consumers, as a growing, urban middle class emerges, will start driving a strong sustainability trend claiming things like safe food and non-toxic products. There will also be an increasing business potential in the feed area with a growing population that puts strains on the productivity of the food industry, a protein intake that increases and in addition high demand on the development of antibiotic-free solutions.

By 2050, seven out of ten people will live in urban areas with populations in the millions. This creates significant demands for infrastructure, which is an overall positive trend for the chemical industry. In new parts of the world, people will be able to afford more of the basic amenities many of us take for granted, like house paint. Yet it also stresses our responsibility for a more sustainable world, as urbanization places an enormous toll on surrounding ecosystems and raw materials.

From supply chains to production to customer experience, digitization is transforming the way our industry function, and it will potentially unleash new global opportunities for value creation. In the past few years, we have seen digitization bring its first benefits to the industrial sector, particularly in operations and supply chain, yet enormous untapped potential remains. Digital capabilities can significantly improve traditional customer-supplier experiences and relations. Additional advances in automation, big data and analytics, and the Internet of Things create exciting opportunities for substantial gains along the entire industry value chain.

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 going forward. 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. We at Perstorp are defining 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.

Profitable growth to give our customers a competitive edge

We are experts in specialty chemistry, driven by the belief that one molecule can change everything. For more than 135 years, we’ve aimed for just that: to use our knowledge of chemistry to create things that really matter. That make a difference for the better. Perstorp’s solutions can now be found almost everywhere, advancing everyday life in products in the pockets, homes, offices and communities of practically every human being on the planet.

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’re used in order to make a positive difference? At Perstorp, these questions inspire us every day, and as a leader in our industry, it’s 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 for the better” 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’s about our success, which equals being here for our customers and their success. It’s 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). Living and leading by our values.

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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 performance excellence model in order drive and support change in a lean and efficient way.

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  Who is about all our employees who make change happen based on a strong 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 becoming a manager, 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.

Since 2013/2014, we’ve worked hard to get new structures, teams and capabilities in place, all with the ambition build 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 early moving in the direction of becoming 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 is an important milestone; we have set new ambitious and challenging goals for ourselves including outgrowing the market and reaching a new sustainable earnings level.

2018 will be an exciting year and our strategic plan show great potential with many more interesting opportunities. The main EBITDA improvement in the coming years will come from the following Business Units: Penta, Oxo, Capa™ and Feed & Food. In order to increase capabilities to explore growth opportunities in Feed & Food, we’ve already recruited Roger Mann as Executive Vice President for our Feed & Food business, with vast international experience from the Agri-Business and Primary Food production sectors.

To be able to follow 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. We will continue our quest to lead change towards chemistry that advances everyday life for the better. Within our industry and within ourselves, we’ll seek to lead development in a positive direction for our customers, society and planet.

Main contributors to EBIDTA improvement

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  The Strategic Plan shows a great potential and ambitious plans on how to continue to drive towards profitable growth with a solid Base Plan and many interesting opportunities beyond

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  EBITDA margin to grow from around 16% to 20%

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  Perstorp will continue to be highly dependent on the European economy

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  Perstorp will increase the share of specialty products in its portfolio mainly through strategic projects in Feed

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  Main EBITDA improvement will come from the following BU’s:

Living and leading by our values

New performance research and common sense all point to dramatic growth in the value of values for global companies. We are, according to the Great Place to Work research team, in a “shift to an economy where essential human qualities such as passion, collaboration, and creativity are vital to business success. People are holding the companies in their lives to a higher standard as consumers, investors, and employees. In the wake of the Great Recession of 2008, consumers now seek ‘value and values.’”¹ The companies working more purposefully with values today are vastly out-performing previous Fortune-100 top lists.

At Perstorp, we poured significant energy during 2017 into evolving and strengthening our core purpose, vision and values as a company, and incorporating those into concrete initiatives. It’s a transformation that is tying our heart and soul tighter with our strategy and our outside-in perspective in order to reveal untapped potential for ourselves and our customers. In particular, our core values of Responsibility, Reliability and Focused Innovation are more tightly woven into everything we do as we seek to lead change towards chemistry that advances everyday life for the better. Simply put, at Perstorp we believe in doing right. We believe in keeping our promise. And we believe if it matters, make it better

Symbiosis of performance and care

We know there is a growth-driving correlation between hard financial performance and softer values. It is that magic formula of performance and caring we are after as we look to build an even stronger culture. Beyond hard numbers, we have created new targets for our caring culture, with a strong focus on leadership and how we support people in an ever changing and challenging environment while also nurturing cross-functional work. One shining example is our Care 365 program, launched in 2017. Integrating all three of our core values, Care 365 pushes us to look beyond statistics and numbers, getting to the heart of what matters to make it better, do right and keep the promise to put care first. Care 365 is rooted in the knowledge that health and safety are blind to work/life borders. We can’t leave stress, fatigue or injuries behind as we walk out the door at the end of the workday. We are committed to leading change towards a healthy and safe Perstorp every day, 365 days a year. We have created a comprehensive initiative to lift up not only the big things, but also 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. There is a slightly positive trend to be seen with e g 20% fewer accidents and incidents in 2017 compared to the previous year but we still have a lot of work to do. We are devoted to taking all the necessary steps, to paying attention to the little things that matter and to strengthening our culture of true Care.

Redefining competitive edge

This is just a small taste of our transformation to an inspiring new Perstorp, with much more underway. To really be driven by the people, purpose and values in the organization is how we drive “leading change” into the future. It is in this intersection of our inner strength and our outside-in market approach that can truly set ourselves apart – an edge no one else can match. We are convinced that this is what fuels our vision: To be the first choice for companies seeking a competitive edge to advance everyday life.

¹ Bush, M. C. (2018). A great place to work for all: better for business, better for people, better for the world. Oakland: Berrett-Koehler, pp35-36.