Press Release: HELM Group – 2016 Results
HELM reports fall in revenues due to low oil prices. Losses at associated companies burden results.
Hamburg, 11 May 2017
Full financial year results 2016:
- Revenues: EUR 6.9 billion (minus 18%)
- Losses at production participations in Trinidad and Tobago
- Slight increase in traded volumes (plus 4%)
- Investment in North America’s largest methanol production facility
- Total investment for 2016-2018: EUR 500 million
- Equity: EUR 763 million
The very low crude oil price was once again a defining factor for the HELM Group in the 2016 financial year. As the year began, the price of a barrel was less than US $30 – around 40% lower than at the start of 2015. The fall in the crude oil price led to low prices for petrochemical products, which in turn caused revenues at the HELM Group to fall. Distribution volumes increased by 4% in comparison with the previous year. Thanks to a slight rise in the trading margin, the Company held gross profit on products steady despite the drop in revenues. The HELM Group’s result was affected by losses at associated companies. A small pre-tax profit of EUR 2.8 million (2015: EUR 57 million) was achieved. However, the consolidated annual financial statements show a loss after tax.
Hans-Christian Sievers, Chairman of the Executive Board of HELM AG, sums up the past year: “In our operative business we were able to hold our own in a challenging environment characterised by low prices and increasing political uncertainty. Nevertheless, we have to report a negative operating result for the previous financial year. Our minority participation in Methanol Holdings (Trinidad) Ltd. (MHTL) in Trinidad and Tobago reported losses. A difficult combination of very low methanol prices, limited gas supply for the operation of our production facilities, and major maintenance works restricted capacity and resulted in a loss. Since then, the methanol price has recovered and the gas supply has improved.”
Global revenues before consolidation and including agency sales revenues declined due to generalised price falls by 18% to EUR 6.935 billion (2015: EUR 8.498 billion).
External revenues fell by 15% to EUR 3.867 billion (2015: EUR 4.540 billion).
EBITDA dropped by EUR 50.4 million in 2016 to EUR 20.2 million (2015: EUR 70.6 million).
The consolidated result before tax was EUR 2.8 million (2015: EUR 57 million).
The consolidated result after tax was EUR -15.6 million (2015: EUR 35.5 million).
The HELM Group’s main sales market in 2016 was Europe with a share of 57%, followed by America with 29% and Asia with 13%.
In 2016, HELM took a number of strategic decisions for the future direction of the Group:
Investment in North America’s largest methanol production facility in Beaumont, Texas
Together with our long-term partner PROMAN, HELM invested US $680 million (HELM share: US $170 million) in the largest methanol production facility in North America, Natgasoline LLC. The production facility is currently under construction and will be completed by the end of 2017. The new plant will have a capacity of 1.75 million mt per year, further enhancing the HELM Group’s leading position as a methanol distributor.
Final step towards marketing authorisation for osteoporosis medication
The Richter-Helm BioTec GmbH & Co. KG joint venture gained the European Commission’s recommendation for the approval of a new teriparatide-based medicinal product, Terrosa. It is used for the treatment of osteoporosis, reducing the risk of bone fractures in certain patient groups. The medication was granted final marketing authorisation in early 2017.
Successful acquisition of thyroid medication
HELM Pharma focuses on strategically appropriate acquisitions. The thyroid medication we purchased in 2016 has been used to treat thyroid disorders for more than 100 years. What is new is the patented liquid dosage form, which facilitates an accurate, low dose of the active ingredients and makes delivery of the medication easier for the patient.
Hans-Christian Sievers: “These investments show that at HELM we act for the long term and with an eye to the future. Being a family company enables us to act over longer time frames. By making the most of the opportunities this presents, we have positioned ourselves well in 2016 to safeguard the business for the years ahead. In total, we have earmarked around EUR 500 million for the period 2016 – 2018 to drive forward the expansion of our Chemicals, Fertilizer, Crop Protection and Pharma businesses.”
Consolidated result: business development key figures
|- All figures in million EUR -||2016||2015||2014|
|- Global revenues||6,935||8,498||9,764|
|- External revenues||3,867||4,540||5,054|
|- Earnings before taxes||2.8||57.0||170.8|
|- Consolidated net income||-15.6||35.5||141.6|
Overview of developments in the business areas
Chemicals: Feedstocks and Derivatives
The Chemicals business segment, which comprises the Feedstocks and Derivatives business units, markets base industrial chemicals. As in 2015, the halving of the crude-oil price compared versus its long-term level of around US $100 per barrel adversely affected business performance in the 2016 financial year. In addition, pressure on margins rose due to overcapacity. Despite a modest rise in volumes of 7%, the business segment recorded a decline in revenues of 14.6%. Overall, the Chemicals business segment achieved external revenues of EUR 2,313.5 million.
In an environment of falling energy prices, world market prices for fertilizer also took a downturn. Fertilizer prices fell due to the impact of the crude oil price, compounded by a surplus in nitrogen products and phosphates. A record harvest in the US exacerbated the price situation. HELM succeeded in keeping distributed volumes at the previous year’s level. The Fertilizer business area achieved external revenues of EUR 972.8 million, a decline of 21.5% in comparison with the previous year. This drop can largely be attributed to the overall price situation.
2016 saw investment in the expansion of the distribution business. New terminals were leased in Bilbao and Barcelona, Spain, as well as in Koper, Slovenia, while in the USA we enlarged our terminals in Memphis, Tennessee, and Helena, Arkansas.
Commodity prices remained low throughout 2016, therefore farm incomes were poor. High stocks of crop-protection products for all important crops worldwide led to heavy pressure on prices, and the market contracted slightly as a result. Despite this difficult market environment, the business area succeeded in increasing revenue by 11.2% in comparison with the previous year, to reach EUR 260 million. The main sales market for the Crop Protection business area’s products is Latin America, followed by North America and Europe.
The Pharma business area’s product portfolio, which is geared towards individual target markets and customers, was expanded further in 2016. In addition to the focus on the therapy areas oncology, hormones, anti-infectives, central nervous system (CNS) and cardiovascular, HELM now also provides development and laboratory activities in the individual markets. This ensures that finished products are manufactured efficiently and to high quality standards. The Pharma area unit achieved external revenues of EUR 205.7 million.
With over 100 subsidiaries in more than 30 countries, HELM is internationally structured. In the past financial year, the subsidiaries managed by the HELM International business unit generated excellent, stable income. A further subsidiary, HELM Suisse, was established in 2016 in Zurich, Switzerland, while in early 2017 we opened a new Sales Office in Busan, Korea.
In 2016, the total number of employees in the global HELM organisation remained virtually unchanged. As at 31 December 2016, HELM employed 623 (631) staff in Hamburg, 684 (694) in Germany and 1,495 (1,489) in total worldwide, including participations.
Outlook for 2017:
HELM has made a good start to the 2017 financial year. In the first quarter, the price of crude oil appears to have recovered, while gas prices are also rising. Since the beginning of 2017 chemical products have increased in price, with several product prices rising significantly.
Hans-Christian Sievers: “We look forward to a good first half-year and anticipate an increase in revenue of 14% in comparison with the same period last year.”
HELM AG is a family-owned company based in Hamburg, Germany, with a business tradition over 116 years old. As a multifunctional sales and distribution organisation, HELM is active in the chemicals industry through its Feedstocks and Derivatives business units, in the crop protection industry, in active pharmaceutical ingredients, pharmaceuticals and medical products, and in the fertilizer industry. HELM is one of the world’s largest chemicals marketing companies and secures access to the world’s key markets through its specific regional knowledge and over 100 branches, Sales Offices and participations in over 30 countries.