Semperit adds hose production in Europe

VIENNA, Austria—Semperit A.G. has completed the latest expansion at its manufacturing plant in Odry, Czech Republic, which significantly will boost the firm's capability to produce industrial and hydraulic hose at the factory.

It expects to begin producing products at the site in the first half of 2019, a company spokeswoman said.

Production capacity at the facility, which is operated by the company's Semperflex business, will be increased to 100 million meters of hose, which the company said is equivalent to roughly twice the length of the Earth's equator. The company did not release the size of the expansion.

Semperit—which is in the midst of a major companywide reorganization and transformation project that was launched in 2017 and won't be concluded until 2020—invested about $30.4 million in the overall expansion.

Growing work force

Semperit plans to create additional jobs in the high double-digit range at the site, which currently has a work force of about 900, the spokeswoman said. Hose produced in Odry is used in the construction and transport industries, in mines and in agricultural machinery.

Construction of the latest addition began in 2017, immediately after the previous expansion at the plant, the spokeswoman said.

Since Semperit purchased Czech competitor Optimit and the facility 20 years ago, it has continuously expanded and modernized the complex. Production capacity at the site has quintupled during that time span while revenue has increased six fold, the company said.

During that time frame, the Vienna-headquartered firm has invested about $170 million at the facility.

The spokeswoman said the expansions were needed to create the necessary capabilities to fully meet customers' needs and help the company continue on its growth path. The plant primarily serves the European market.

Martin Fullenbach, chairman of Semperit A.G. Holding's management board, said the plant "is not only a model factory within the whole (Semperit) Group, but also an example of how we purposefully and continuously strengthen our competitiveness in a dynamically growing market."

He indicated further expansion projects at the factory were likely to be undertaken in the coming years.

"Due to the strong demand for our hydraulic hoses, we have always been able to start the next expansion step immediately after putting an expansion stage into operation," as a result of a companywide, multi-step investment program launched in 2015, Fullenbach said.

Within the Semperflex operation, which accounts for about 23 percent of the company's total revenue, hydraulic and industrial hoses also are produced at factories in Austria, Italy, China and Thailand. Semperflex is part of the firm's Industrial Sector, which also includes Sempertrans and Semperform.

Mixed results

In its recently released financial results for the first nine months of 2018, Semperit recorded stable sales of $756.4 million for the year, about even with 2017's nine-month revenues.

The Industrial Sector achieved an increase of 5.6 percent to $488.2 million in the period but that was offset by a decrease of 8.7 percent to $268 million in the company's Medical Sector.

Reported earnings for the first three quarters rose significantly to $82.2 million from $5.5 million in the same span last year.

In the Industrial Sector, sales for the Semperflex business increased during 2018's first nine months while they remained flat for Semperform and were down for Sempertrans. Despite the Sempertrans decrease, which was partially due to plant closings in France and China, Sempertrans achieved its best quarterly results of the last two years, the firm said.

"We see a clear progress, which manifests itself particularly in the Industrial Sector," Fullenbach said. "More than 600 initiatives, which we have introduced within the scope of our restructuring and transformation process, contributed significantly to the improvement of operating results.

"On the personnel side, we have also made considerable changes … in recent months and restructured the first and second management levels in the Sempertrans segment."

Looking ahead, the company said that as the restructuring and transformation process continues, the firm is determining whether there will be changes in the portfolios of existing segments as well as further changes in the firm's manufacturing operation.

Semperit said that continuous and potentially new measures to increase profitability remain at the top of the management board's agenda. It said that 2018 and 2019 will initially continue to be viewed as transition years because of the restructuring and transformation project, especially in the Sempermed operation. Semperit will focus on organic growth, particularly in the Industrial Sector.

In addition to the reorganization of the Sempermed business, transformation of the Sempertrans and Semperform operations is well underway.

Semperflex also is part of the project but, like the mixing end of the business, the focus remains on accelerating organic growth following the completion of investment projects, including the expansion at the Odry factory, the company said.