Nabaltec AG (DE:NTGG) has proved itself able to deliver revenue growth significantly ahead of the German chemical industry as a whole by concentrating on those applications benefiting from rising demand. Through a sustained programme of investment in capacity and product development and a reputation for quality, it has become the global leader in fine precipitated aluminium hydroxide used as environmentally friendly flame retardants.
FY16 profit dip a one-off
Nabaltec’s successful FY15 performance carried over into FY16 as both the Functional Filler division, which supplies materials used as flame retardants, and the Technical Ceramics division, which supplies raw materials used in high performance refractories, showed modest revenue growth. However, profitability was adversely affected by a one-off non-cash adjustment to pension reserves and the temporary closure of the US subsidiary, Nashtec, in August 2016. Since then Nabaltec has supplied its customers in North America with product manufactured in its main European facility, resulting in increased costs. As a result of these two factors, group EBIT reduced by 16% year-on-year.
Key applications to drive growth
The German chemical manufacturers association expects minimal growth in national chemical production during FY17. In contrast, Nabaltec is well positioned to benefit from faster growth in demand for eco-friendly flame retardants for cabling. This is being driven by the EU Construction Products Regulation, which is intended to limit the generation and spread of fire and smoke in buildings and other civil engineering works and comes into force in July 2017. Management expects low single-digit revenue growth in 2017 primarily achieved through price increases in the Functional Fillers segment, coupled with more modest growth in the Technical Ceramics segment and a high single-digit EBIT margin for the year.
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