In the year 2017 there was recovery in many areas. The effects of the crisis in prior years were still visible in 2016 with very moderate market demand and low price levels. Van Leeuwen implemented restructuring and cost reduction measures that year. However, demand and price levels recovered increasingly starting in the fourth quarter of 2016.
This trend continued during 2017. Due to the increase in market demand and prices, the total volume sold and sales increased, and consequently the gross margin on sales. In combination with lower cost levels, Van Leeuwen realized a significant improvement in the operating result and net profit.
For the first time since the start of the global financial crisis in 2008, many market segments experienced significant recovery in 2017. In contrast to previous minor market revivals, the recovery seems to be more permanent. However, the playing field has changed considerably in recent years. Many pipe mills have restructured their activities, resulting in the disappearance of significant production capacity. Many of our customers have also restructured their operations. Some parties closed operations, others combined forces, and new parties emerged. For distributors and trading companies, the crisis led to the reduction of stock levels. Distribution networks were frequently rationalized.
Demand recovered in the Industry market. Many customers have increased their order books, leading to a greater demand for our products. Apart from better volumes, price levels also increased in this market; a direct result of the increased demand and a shortage of supply.
Especially during the second half of 2017, there was a strong increase in demand in the Equipment Manufacturing and Fluid Power segments in Europe, resulting in increased material shortages and longer delivery times. On the basis of our stocks, we were regularly able to find suitable solutions for our regular customers. Demand considerably increased especially in the Steel Construction segment, varying from requests for larger steel structures up to greenhouse building in particular, a market in which we are traditionally strong. The increasing demand was also noticeable in the automotive segment.
Demand on the global Energy market experienced limited growth last year. The offshore activities in the North Sea area were at a low level and there was little growth in new greenfield projects in Europe, Asia and the United States. Many new projects continue to have a long start-up period. However, we realized significant improvement in volume in the Energy segment, primarily due to the supply of large volumes to midstream projects in Algeria.
In 2017, the contract for MRO and Projects that Van Leeuwen signed with ExxonMobil a few years ago, was in full operation. Through excellent delivery performance we achieved higher sales for daily MRO deliveries and turnarounds in Asia, as well as in Europe. The global contract with ExxonMobil was further expanded with Malaysia, Angola, Sakhalin, and for the Infinium sites, a joint venture between ExxonMobil and Shell for the production of various products, including lubricants. In 2017, the larger ongoing projects SCANFiner (Beaumont, USA) and RAHC (Rotterdam, the Netherlands) were successfully completed. During the close-out meeting of the Rotterdam Advanced Hydrocracker Project, the Van Leeuwen project team was pleasantly surprised with a recognition award presented by Fluor and ExxonMobil for excellent project execution.
At the end of 2017, there was increased activity in the downstream projects market, which resulted in an increased demand. It is expected that a number of these larger project tenders will result in a higher order book at the beginning of 2018.