Semperit restructuring extends to more units

VIENNA—Semperit A.G. Holding's restructuring and transformation project has been expanded to include all business segments within the company, particularly its Sempertrans and Semperform operations.

Previously the versatile firm had focused on its Sempermed business—which produces goods for the medical sector, including latex gloves—where the company is in the process of reorganizing the production processes.

In addition, the first alignment steps of the Sempermed operation's sales, production and procurement units along with the first steps to refurbish and upgrade most existing plants are being made, according to a company spokeswoman.

Lower earnings after taxes expected in 2017 spurred the restructuring and transformation phase, which is projected to be completed by the end of 2020. The decision to proceed further with the optimization plan was underlined by the single digit negative EBIT expected for the last quarter of 2017, the firm said.

Because of negative earnings and ongoing restructuring, the company does not expect to issue a dividend for 2017.

Complete analysis

All segments within Vienna-headquartered Semperit currently are being analyzed by the firm's management board. "It is our aim that every segment will contribute step-by-step based on their ability to (support) the about 10 percent EBITDA margin from the end of 2020" and beyond, the spokeswoman said.

Overall, the company said, the restructuring phase will focus on four measures:

• Creation of more efficient operational production and procurement processes;
• Improvement of pricing and price-setting processes;
• Reviewing and, if necessary, determining if changes within the portfolios of businesses are needed and if adaptations within the production sites are necessary; and
• Stabilization and sustainable improvement of operational earnings.

Semperit's first measures within the Sempertrans and Semperform businesses primarily will be focused on pricing and continuing to create world class manufacturing with more efficient production, the spokeswoman said.

That, she added, will ultimately help lead to both businesses becoming more profitable.

Sempertrans produces conveyor belts used in everything from mining to heavy industry. Semperform makes construction and industry profiles, handrails, ropeways, rubber foils and sheeting, pipe seals, membranes for expansion vessels, and a variety of other products.

In addition to the current optimization steps being made, the company will focus on accelerating the implementation of any necessary investment projects quickly and profitably within the firm's Semperflex and Mixing operations, the spokeswoman said.

The Semperflex segment manufactures and sells hydraulic hoses and industrial hoses, while the mixing business produces compounds that are then applied to machines to extrude an intermediary or final product. All of the company's mixing activities are based on secret recipes, she said.

Semperit already has said it will close its Sempertrans' belting plant in Argenteuil, France, and is in the process of moving the facility's production operation to its large complex in Belchatow, Poland, which has been expanding its capacity with the addition of new equipment, the spokeswoman said.

Its Belchatow plant, which produces belts for the North American market, has grown about 50 percent with the addition of new steel and textile presses and another calender, she said. Those additions were part of phase one of the project.

In addition to the facility in Poland, Sempertrans operates a textile belt factory in Roha, India, and a textile belting site in Taierzhuang, China.

Focus on growth

Since the start of the analysis and transformation process within the Sempermed business in the fall of 2017, "we have identified significant potentials for an increase in earnings and will initiate appropriate implementation measures from now on," according to Semperit CEO Martin Fullenbach.

"With substantial restructuring and complexity reduction we aim to find new strength and profitability by 2020," he said. "In addition, as soon as a successful outcome of the restructuring process materializes, the management board will also have to deal with growth opportunities around the core technology as well as the market expertise," which has experienced significant growth.

Throughout 2018, the firm said the management board will decide step-by-step whether there will be modifications in the portfolio of existing segments as well as further adaptations in the production operation after the closure of the Sempertrans factory in France.

Semperit's management board expects continuous one-off effects and restructuring costs in the upcoming quarters that might cause additional volatility in financial results, the company said, adding that 2018 will be considered a year of transition.

A publicly listed company, Semperit develops, produces and sells specialized rubber products for the medical and industrial sectors. Its portfolio includes examination and surgical gloves, hydraulic and industrial hoses, conveyor belts, escalator handrails, construction profiles, cable car rings, and products for railway superstructures.

It employs about 6,500 and operates 22 manufacturing facilities worldwide.