Hempel delivers solid 2021 full-year results and embeds ambitious sustainability framework

Key messages

• Strong growth of 15.1%, with all customer segments reporting positive revenue growth
• Highest organic growth in 10 years of 5.9%, with 10 consecutive quarters of organic growth
• Satisfactory and stable EBITDA margin of 11.4% with EBITDA of €203M
• Two major strategic acquisitions in first full year of its Double Impact strategy
• Hempel embeds its ESG/Sustainability framework and launches CO2 reduction targets in line with the Science Based Targets initiative 1.5°C pathway
• Hempel coatings enable marine customers to reduce CO2 emissions by 4.5M tonnes, an increase of 25% since 2020.

Combining organic growth and two major strategic acquisitions, Hempel grew its revenue in 2021 to €1.8bn. The company also continued to build partnerships that deliver both financial and environmental value for customers as it aims to double its business by 2025.

Hempel continued its growth trajectory in 2021, ending the year with 5.9% organic growth, following 10 consecutive quarters of organic growth. Total growth was 15.1%, despite supply chain challenges across the coatings industry. The 5.9% organic growth was the highest in more than 10 years, driven by strong performance in the Marine and Infrastructure segments, and stronger than expected in the face of unprecedented raw material cost increases and shortages. EBITDA was €203M, resulting in a stable EBITDA margin of 11.4%, in line with outlook.

"Our performance in 2021 was very satisfactory and demonstrates that the decisive actions taken to refocus our ambitions and deliver on our strategy are paying off,” says Lars Petersson, Group President & CEO of Hempel. "Our ambition is to double our business by 2025 and to increase our positive impact in terms of sustainability – and we remain on track.”

Hempel made two major strategic acquisitions during 2021. In April, it acquired Wattyl, one of Australia and New Zealand’s leading manufacturers of coatings for the decorative and infrastructure segments. In September, it followed with the acquisition of UK-based Farrow & Ball, the world’s leading luxury decorative paint and wallpaper company. Together, the two companies added revenue of €162M in 2021, with expectations of an annualised full year impact in 2022 of around €275M.

The 2022 outlook is mid to high single-digit organic revenue growth. Further, despite the unpredictable circumstances affecting raw materials, Hempel foresees a slightly increasing EBITDA margin between 11 and 12%, leading to an EBITDA of €220-240M.

Securing a sustainable future with Futureproof
In February 2021, the company introduced Futureproof, a comprehensive framework and guide for embedding sustainability throughout the Hempel business, from its core operations to product development and investments.

Futureproof lays out measurable Environmental, Social & Governance (ESG) goals, including CO2 reduction targets. In November, Hempel submitted its CO2 reduction targets, in line with a 1.5°C pathway, to be independently verified by the Science Based Targets initiative and expects validation in 2022.

"Putting sustainability at the heart of how we do business is the right thing to do and the smart thing to do,” says Lars Petersson. "To win key customers, we must deliver solutions and develop partnerships that answer to their sustainability challenges. One such example is our new strategic partnership with GRI Renewable Industries, which will see us drive sustainability and cost improvements in wind tower production.”

Enabling our customers to reduce emissions
The company also saw increased demand for its more sustainable products, such as its advanced hull coatings. These deliver fuel savings, and thereby CO2 reductions, by improving a vessel’s hydrodynamics. In 2021, Hempel’s hull coatings helped marine customers reduce CO2 emissions by 4.5M tonnes, up from 3.6M tonnes in 2020. Hempel aims to increase this to 5.5M tonnes in 2022.

"As a company, we have a responsibility to act and make a difference. In 2021, we took great steps within our operations, commercial organisation, product development and sustainability work, laying the foundation for doubling our impact by 2025. Over the next few years, we will radically advance our environmental and social performance, while also expanding our business, so we can continue to create a brighter future with more sustainable solutions and fund the philanthropic work of our owner, the Hempel Foundation,” Lars Petersson concludes.