Trade and Industry Editor
THE new man at the controls of speciality chemicals group Chemserve is keeping it on the acquisition trail, to maintain the company's real annual growth target of 10%.
CE Frank Baker took over this week from Schalk Engelbrecht, who has moved on to head Chemserve's parent AECI.
Baker says that Chemserve's strategy is to grow the business organically, but also by acquisition.
As Chemserve is already the market leader or a major player in most of the markets that it serves, the acquisition element of growth remains vital, as there are limits to the growth potential of many of its businesses. "Acquisitions are a longterm necessity if we are to grow in real terms, to reach our 10% a year target," said Baker.
"Acquisitions will continue to be a focus for us. Our file remains dustfree and full, and new opportunities pop up all the time."
Chemserve is expecting the green light from the competition authorities in mid-April on its acquisition of Dow/Sentrachem's mining chemicals and alkylates businesses, and announced last week that it was buying out its US partner in a 50/50 water purification joint venture Ondeo Nalco.
"We still walk away from more deals than we make," Baker said. "We are seeking businesses with a broad chemical flavour and a strong service element.
"We are not interested in commodity chemical operations any business we look at must have a strong value-added element."
He says Chemserve's gearing is 15%, and while this will rise with the new acquisitions, additional purchases should be easily affordable.
Baker said that Chemserve did well during the period of the weak rand, as many of its customers were exporters and grew their overseas sales volumes. Now that the rand has strengthened again, it is tougher to maintain margins in export markets, but Baker says that he believes most SA exporters are holding on to their expanded export volumes, albeit without much growth.
"Our customer base started penetrating export markets with the weak rand, and so far they have stayed there we have not seen them fall back," he said.
"The falling rand was an increased market boost for SA manufacturers in general it gave producers the chance to get out there and secure a market share.
"Manufacturers are mostly holding on to these markets," Baker said.
Apr 03 2003 07:00:48:000AM John Fraser Business Day 1st Edition
Thursday
03 April 2003
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