Worldwide trends

Europe

Our distribution companies in Europe developed very well in 2017. Especially the large distribution companies in the Netherlands, Belgium, France and the Czech Republic benefited from the increasing demand in various Industry segments. Stock volumes increased significantly in comparison to previous years, in part due to the sufficient width and depth of the stock portfolio.

Van Leeuwen Zwijndrecht, the Netherlands, experienced an excellent, profitable year. Following a reorganization in 2016, there was once again real growth. The volumes of specific customer groups, such as greenhouse building, construction and engineering companies, increased. In 2017, a special project warehouse was set up in Zwijndrecht to further improve the execution of larger projects in countries such as Turkey, Russia and Egypt. Specific project stocks are maintained in this project warehouse, and materials are provided for inspection and shipping.

Van Leeuwen Stainless, the Netherlands, recovered from a very difficult year in 2016 and strengthened its position on the Dutch market. Smaller projects, as well as increased demand in the food industry and the construction market had a positive effect on sales. Furthermore, a great deal of attention was given to expanding the product portfolio, in order to supply the customer a more comprehensive package of products and services. In 2017, Van Leeuwen Stainless expanded the product portfolio with various products, including Victaulic’s comprehensive package of StrengThin 100™ fittings and couplings. These products are primarily used for the piping of HVAC installations.

Our company Combulex, the Netherlands, which realizes a significant portion of its sales in the groundwork, road and construction sector, further expanded its market share. After moving a Combulex swaging machine in Vianen, the Netherlands, to Zwijndrecht, a new swaging line was commissioned at Van Leeuwen Zwijndrecht in mid-July. By performing all treatments in line, capacity increased by 40%.

Our companies in Belgium and France showed excellent results. In Belgium, our two companies Van Leeuwen Belgium and Wauters, were brought together under the same management in mid-2017, which has benefited mutual cooperation. In view of the major volumes handled by both distribution companies, there is a potential for large economies of scale, particularly in the area of transport. Wauters, which specializes in bar steel, was very successful in the further roll-out of its digital webshop. A large number of small and medium-sized customers has since started to make use of this webshop. Orders can be placed at any time of day and are delivered the next day. Van Leeuwen France experienced an exceptional year due to excellent stock sales and large project volumes.

The market in the United Kingdom was again challenging last year. In 2017, Van Leeuwen United Kingdom therefore underwent drastic (logistics) restructuring. We closed the Brierley Hill warehouse and all logistics activities are now more or less centralized in our large warehouse in Middlesbrough. In addition, Van Leeuwen United Kingdom was the first company within the Group to migrate to the new SAP ERP platform. Through the implemented measures and productivity improvements, but especially through the renewed focus on customer groups within the Equipment Manufacturing and Fluid Power segments, we expect a good start of the new year.

In the middle of 2017, we opened a small sales office in Moers, Germany, near Duisburg. Using our European stocks, the new branch focuses on customers in the Equipment Manufacturing and Fluid Power segments.

Van Leeuwen Czech Republic experienced significant growth in sales and volume. The demand for deliveries from stock to the local manufacturing industry once again increased. The central warehouse in Vyškov, near Brno, is perfectly situated and stocks, together with the large cutting capacity, meet customer requirements. Further investments in expanding cutting capacity were also made in 2017. Our activities in Poland, supported by the Czech team, once again grew steadily.

Middle East

With its sales offices in Saudi Arabia, Abu Dhabi, Qatar and our stock location in Dubai, Van Leeuwen focuses on the regional project market. However, in 2017 there were few projects, especially in Saudi Arabia. We therefore partially reduced our stocks in Dubai and implemented a reduction in staff. The market in Iran was an exception and provided a larger number of projects.

In 2017, with due consideration to the international economic sanctions, we supplied various materials for projects. In the fourth quarter there was a positive development in the number of larger projects in the region. At the end of the year, the order book was filled with orders for customers in Saudi Arabia and Kuwait.

Asia and Australia

The market in Singapore hardly recovered in comparison to previous years. The number of local projects was minimal and the traditional daily stock trade with shipyards and construction sites was under pressure. During the second half of 2017, activity grew and market price levels increased under the influence of longer delivery times and price increases by mills. The order book increased, in part due to a number of larger projects for ExxonMobil that were partially delivered in 2017.

Our companies in Thailand and Malaysia maintained their market position and Van Leeuwen China experienced an excellent year. In addition to supplying larger projects in China, our team in Shanghai is closely involved in sourcing materials for our project teams in Singapore, Dubai, Paris and Zwijndrecht. Van Leeuwen has been present on the Chinese market for more than ten years and has established very close contacts with a large number of suppliers. Cooperation, including in the area of quality, enables us to make just-in-time deliveries to large complex, overseas projects through our warehouse in Tianjin. With an increase in the construction of modules in China by, among others, North American engineering firms (EPCs), we are expecting further growth over the coming years.

At the end of 2017, we significantly reduced our presence in Jakarta to a small sales office. Conducting business locally has become difficult in Indonesia, in part due to the continuously changing regulations and import restrictions. For this reason, we will be supplying larger projects in Indonesia from Singapore in the future.

In Australia, Van Leeuwen has branches in Sydney, Melbourne, Adelaide, Perth and Brisbane. From these five stock locations, Van Leeuwen serves a large number of customers in the Fluid Power segment, as well as many customers in the construction, infrastructure and mining segments. Our market share in Australia is very strong. Due to the wave of consolidations in recent years, Van Leeuwen has grown into an important specialist in and distributor of welded and seamless pipes in the Australian market.

North America

Van Leeuwen’s project office in Houston works closely together with the project teams in Europe and our distribution company in Edmonton, Canada. The office primarily focuses on local engineering firms and fabricators for projects in the downstream segment. In 2017, we completed a number of ExxonMobil projects and supplied ExxonMobil refinery turnarounds.

At the end of 2017, after many years of cooperation with Lockwood International for daily deliveries to ExxonMobil’s refineries, we decided to enter into a partnership with DNOW, a large distributor of pipes, fittings and flanges. Together with DNOW, Van Leeuwen has since been supplying ExxonMobil MRO projects in the United States.

After a number of very difficult years, demand in Canada is increasing. While there is a lack of larger projects and there are as yet no further investments in the oil sands, a large number of companies is again investing in maintenance and minor adjustments to their facilities. Over time, we expect to be able to deliver materials for a number of planned LNG plants.

Van Leeuwen plays an important role in the global EPC project market. With our global network and our sourcing expertise we provide our customers with suitable purchasing and logistics solutions for the delivery of materials to project sites. To optimally manage this process, we have developed special software and standard working methods that we are continuously refining. The central management of our project organization enables us to operate optimally on the market.

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