SERGI DOMINGUEZ

Spain 2021 | INDUSTRY | VIP INTERVIEW

TBY talks to Sergi Dominguez, General Manager of Hempel, about the company's history, COVID-19, and the year to come.

Hempel was founded in Denmark in 1915. Since then, it has become a coating industry leader, helping its customers minimize maintenance costs, improve aesthetics, and increase energy efficiency. How has the company evolved? What is Hempel's mission and vision?

In 1915, the coatings industry was switching from wood to iron naval material; however, iron oxidizes upon contact with water, so we came up with a solution to protect the hulls of vessels. After World War II, Hempel decided to sell all its shares to a foundation, which is currently the sole owner of the company. Hempel covers almost everything in the naval sector, but not only, so including protective coatings. Around 1970, decorative painting developed. Hempel is one of the largest company of its kind in Europe. We aim to be sustainable, focus on a specific number of sectors, and be innovative. The company's vision is to serve its customers sustainably and innovatively by protecting assets and maintaining service levels.

Hempel has been present in Spain for over 100 years. It has factories and offices in various parts of the country. How important is the Spanish market for Hempel?

In the last two years, and globally we have billed more than EUR1.5 billion. A third of this in the naval sector, another in the protective sector, and the final in the architectural sector. In the case of Europe, EUR450 million were billed. Europe is the largest regional entity and accounts for 30% of Hempel. In addition, Spain is the number-one market here, making up 13% of total European sales. In 1960, Hempel created an integrated company in Spain with a factory, R&D, logistics, and so on. The company grew substantially because it covered all segments, and all we have done is maintain and grow it. The importance of Hempel Paints is as big as it is profitable. In the case of Spain, half of returns come from the protective sector, and the other two quarters come from the decorative and naval sectors. Recreational sailing boat painting is an extremely niche market, which accounts for about 4%. That said, it is highly profitable.

The company has increased its revenues by 3.2% in the last year. What strategy did it employ to achieve this growth despite the pandemic?

First, we created crisis committees in each country, as well as a cash protection plan, so expenses were reduced. In addition, special care was taken to ensure that strategic clients were served. In Spain, the factory was closed for nine days, and we experienced tricky sector dynamics; however, no one was put out of work. We provided antigen testing for our employees at our own expense. We have done everything possible to stay one step ahead of the day-to-day reality. Our clients are quite large, so there have been no interruptions in terms of service requests.

Who are your main customers in Spain?

In the protective sector, green energies manufacturers are of great importance to us. Our main customers are global companies, while others come from the civil infrastructure sector. For example, one type of infrastructure that is being painted is Wanda Stadium, namely large iron structures. We have painted stadiums for the World Cup in Qatar. Apart from such infrastructure, we also paint AVE bridges. However, between 2009 and 2021, the Spanish market decreased around 40% of business in infrastructure. The private sector is easier because, at the end of the day, it is still about a company's willingness to invest. In the petroleum sector, Spain does not have much to offer, but it does have refineries. We also provide paint to customers from the chemical industry. Hempel has always been close to the applicator, namely the painter. There are strategic efforts underway to get closer to those who influence this process. Five years ago, we were looking for a place to build a new R&D center. Thanks to Acciò 10, we were able to set up a laboratory with 35 specialists working to innovate and develop. This is now a center of excellence in terms of R&D for the field of passive fire protection. A global campus was recently launched in Denmark with an investment of EUR35 million. Hempel is next door to the University of Denmark, and it has an agreement to build a campus that helps students studying chemistry to find a professional opportunity in the paint sector.

Next Generation Funds provide companies with funds to face the adverse effects of COVID-19. Does Hempel plan to apply for the Next Generation Funds?

There are now significant opportunities to obtain funding. It is a means of investing in digitalization and sustainability. Sustainability funding would go directly from our own muscle, but being always informed about the opportunities at a global scale.

What are the company's operational objectives for the rest of the year?

We want to grow the size of the company, become more sustainable, and embark on a path to digitalization. The idea is that the company grows on sales and the profitability maintained given that we have supply shortages in terms of raw materials. There are manufacturing and production units based on raw materials that are no longer being supplied. China has a tight grip on commodities, so if it closes, the world will collapse. Most importantly, in 2021, we must establish all the plans that will help us achieve this dual impact strategy in 2025. The Spanish market is limited in terms of number of customers. Hence, all these tactical plans must be decided in 2021. In summary, the objectives are to grow, remain profitable, and have tactical plans in place for this dual-impact strategy.