Worldwide trends

Europe

Most of our European distribution companies showed positive results in 2019, but the total sales from stock were lower than previous year. Market activity during the first half of the year was at a good level, but demand in certain industry segments started to slow down later in the year.

In the Netherlands, Van Leeuwen Zwijndrecht and Van Leeuwen Precision benefited from their strong product portfolio in servicing a diverse customer portfolio. The project teams and export department of Van Leeuwen Zwijndrecht did particularly well and Van Leeuwen Zwijndrecht further strengthened its project capabilities with regard to the supply of large diameter pipes for the pipelines being installed by water companies. Van Leeuwen Stainless, a specialist in the distribution of stainless steel pipes, fittings and flanges, experienced increased distribution volumes throughout the year. Increased demand from food processing, chemical and petrochemical companies, combined with a focus on fast delivery from stock, had a positive effect on sales. Combulex, mainly active in the groundwork, road and construction segment, faced a significant decrease in demand, partly due to a number of environmental measures imposed by the Dutch government. In 2020, we will further integrate the operations of Combulex into the Van Leeuwen Zwijndrecht operations, thus creating a more cost efficient business model.

Our distribution companies in Belgium and France struggled as market demand dropped and material prices decreased. Large OEM’s and customers in the fluid power and equipment manufacturing segments reduced their call-offs and changed their order pattern. For some of our companies, export markets either closed or provided only limited access due to sanctions. However, the project office in Paris made a significant contribution to the overall profitability of Van Leeuwen France. This office, part of the Global Project Organization within the Van Leeuwen Pipe and Tube Group, focuses on large oil majors and engineering companies in France, Spain and North Africa.

Ferrostaal Piping Supply, our company in Essen, Germany made a major contribution to the overall result of our companies in Europe. Acquired in early 2018, Ferrostaal Piping Supply focuses on large projects in the chemical and petrochemical segments in Germany, Austria and Central Europe, and also exports to countries outside Europe. Working closely with the other project offices in the Global Project Organization (Zwijndrecht, Paris and Houston), the team in Essen is able to handle complex product specifications and specific project requirements.

Notwithstanding the lack of clarity on Brexit, our company in the United Kingdom performed well in 2019 and significantly increased its total sales. Van Leeuwen is one of the key distributors in the United Kingdom to customers in the fluid power and equipment manufacturing segments. Their stock range, product expertise and reliable delivery throughout the country are important success factors.

The Van Leeuwen companies in the Czech Republic, Slovakia and Poland showed stable distribution volumes, but the decreasing material prices had a negative effect on the bottom line. However, our customer base in the Czech Republic and Slovakia is still growing and the warehouse location in Vyškov plays a pivotal role in our distribution strategy for Central Europe. We will therefore further invest in warehouse and handling capacity to service an even larger group of customers.

Outside Europe

The companies outside Europe, mainly active in the energy segment, performed well and project volumes boosted total turnover and the total tonnage sold.

Notwithstanding the positive result of the Van Leeuwen companies in the region, the markets in the Middle East did not show a significant upswing in market activity in 2019. Large investments in new oil and gas facilities continued to be at a low level. Towards the end of the year we reduced our stock-keeping facility in Dubai and decided to further streamline our organization. Thanks to a well-stocked orderbook at the end of 2019 and with a lower cost base, we expect the Van Leeuwen companies in Dubai, Abu Dhabi and Saudi Arabia to also achieve a positive result in 2020.

The Van Leeuwen companies in Asia did exceptionally well. Market demand in Singapore may not have been significantly different from previous years, but thanks to our Global Supply Agreement with ExxonMobil we supplied material to a range of projects and for MRO activities. Van Leeuwen Malaysia and Van Leeuwen Thailand further strengthened their market position by signing additional supply contracts with local petrochemical and oil and gas customers. Van Leeuwen Thailand managed to secure a large CAPEX project during the second half of the year, which will further improve its profitability in 2020.

Van Leeuwen Australia had an excellent year, despite difficult market conditions and downward pressure on material prices. From the network of branches in Sydney, Melbourne, Brisbane, Adelaide and Perth, we are able to offer customers a reliable supply of imported pipe material. Early 2019 we decided to further expand our warehouse facility in Sydney to provide a wider product portfolio to our customers. The extra 2,000 m2 of warehouse space will be used to stock additional quantities of fluid power material and an extra range of carbon steel fittings and flanges.

The cooperation between our project office in Houston and the teams of the Global Project Organization in Europe proved extremely beneficial in 2019. Van Leeuwen USA showed excellent results and contributed greatly to the overall result of the Group. The office in Houston focuses primarily on local engineering firms and fabricators for projects in the downstream segment, but is also part of an interdisciplinary team executing large scale pipeline orders for ExxonMobil. In 2019, Van Leeuwen supplied large quantities of coated pipe material to various locations spread throughout the United States. Based on the Global Supply Agreement with ExxonMobil, Van Leeuwen will furthermore supply material to projects in Canada and the United Kingdom.

PII project ExxonMobil

At the end of 2018 the large-scale Pipeline Improvement Initiative (PII)-project was initiated in the United States under contract to ExxonMobil.

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