Strategy & Management

Perstorp Enters Next Development Phase

After a Period of Intensive Investments, Perstorp is ready to Reap the Fruits, says CEO Jan Secher

05.06.2015 -

Perstorp has been a well-known name in chemistry for over 130 years. Founded in 1881 as a producer of acetic acid and later formalin, the Swedish company went through an eventful 20th century. In the past two decades, Perstorp has gone through some ownership and portfolio changes and, today, is focusing on specialty chemicals for the coatings & resins, plastics, feed & food, fuels and synthetic lubricants markets. Having joined Perstorp as President and CEO in September 2013, Jan Secher is leading the company, which reported 2014 revenues of € 1.2 billion, through its next stage of development. Michael Reubold spoke with him about the most recent developments and his future growth strategy for Perstorp, his experiences from prior engagements, and his views about sustainability and the chemical industry’s public image.

CHEManager International: The most recent period at Perstorp is characterized by significant investments and the development of sustainable products. Could you briefly update us on the current situation of the company?

J. Secher: We are currently concluding a very interesting phase in which we have been investing quite heavily in certain areas of our technology portfolio. During this four- to five-year period we have invested in round numbers 200 million euros – firstly into our caprolactones capacity and product development, secondly into a new plant for neopentyl glycol in China that we started up a year and a half ago, and thirdly into our new butene-based oxo platform in Stenungsund in Sweden with significantly increased capacity for high-performance cost-effective plasticizers, but also other products like 2-propylheptanol or valeric acid for other key application areas such as surfactants and synthetic lubricants. This investment into oxo chemicals is the single-largest investment in the history of Perstorp and opens up a new platform for us, in parallel with the others that we have.

So, we are concluding this quite intensive investment period and moving on into a period of reaping the fruits from those investments. So from a CAPEX point of view we sort of passed the peak and are entering into more of a cash-generative period going forward.

The new state-of-the-art oxo plant at Stenungsund, Sweden, has been inaugurated only a couple of weeks ago. What about the project has been special and how can you guarantee a competitive cost basis for the facility?

J. Secher: Our internal project name for this investment is Valerox and it represents a milestone for us that we have passed three months ahead of schedule and under budget. So it has really been a very successful and well-managed project as such. Regarding the cost basis, I think it is important that we are operating this plant in close collaboration with our raw material feedstock supplier Borealis. We are basically over the fence from their naphtha cracker in Stenungsund, which is a strategically advantaged cracker to be a cracker in Europe. As you know, the cracker market in Europe is quite difficult at this point in time, in particular with the low-cost competition from North America right now. But Borealis is now actually bringing in ethane from the US that makes them a strategically well positioned raw material supplier for us. Thus, we are quite convinced that becoming a fully integrated supplier as well as moving to butene-based plasticizers will position Perstorp cost-competitive-wise quite well in the global perspective and we feel definitely that we can be competitive with the products produced in the new plant.

You said that you are now entering into a cash-generative period. What is your strategy to lead Perstorp through this next phase?

J. Secher: Given that we have invested as much as we have over this four-, five-year period, the focus now is definitely on organic growth. In parallel with these investments we have done smaller bolt-on acquisitions. For instance, in 2011, we bought the pentaerythritol business from Ashland in the US, and last year we acquired the penta and calcium formate businesses from Chemko in Europe. Both acquisitions have been part of our investment campaign to increase the polyol capacity. And there might be a few additional bolt-on acquisitions of that nature also in the future, but the fundamental strategy is to now really reap the benefits from the investments that we have made.

For such bolt-on acquisitions, do you rather look at certain geographies or at opportunities where to add something to your portfolio?

J. Secher: There are three dimensions to that. The first dimension is technology; the second one is geography; and the third one is market position. We always look for interesting opportunities as additions to our current technology platform. There our focus would be more on the specialties side rather than on the intermediates volume products. In terms of geography, our strategic direction is that we want to grow outside of Europe what currently accounts for about 60% of our business. And thirdly, you know, we have very strong market positions and the penta deals are a good example of our intention to always look for opportunities to maintain and even strengthen those leadership positions. In 80% of our businesses we are amongst the three leading players. I truly believe that one should really make sure to nurture leading market positions because they are difficult to reach, and once you are there you got to make sure that you defend them.

Before taking the helm at Perstorp you had been CEO of Clariant, SIPCA and Ferrostaal and held leading positions at ABB. What experiences and skills you acquired during your career in the chemical and engineering industry are helpful in your current position?

J. Secher: There are quite a few experiences that I can apply and use. I did not grow up in the chemical industry and I find that the chemical industry tends to have quite an inside-out mentality. You have your technology, you have your plants, and you optimize around that. But there is too little thinking of where is my market, who are my customers, what issues do they deal with today and what demands do they receive from their customers further down the value chain.

The chemical industry is often situated far up in the value chain, therefore you need to constantly look forward and try to understand what the end user requirements are coming at us through this value chain. Because eventually it will reach us. And to be driven from the outside-in rather than from the inside-out is something that we are today applying to Perstorp quite successfully, I would say. And it is my experience from the previous positions that led me to that understanding quicker than I would have gotten there without that experience.

Would you say that the chemical industry needs to become more customer-centric?

J. Secher: One should be careful of generalizing and so this needs to be put into context. But generally speaking I find still today there are situations where we understand the chemistry and we have figured out what the molecules do and don’t do, and we are very proud of that, but we have not necessarily understood the full extent of how it can be used. And far too often I see that it is the inside drive that leads us to a new development rather than the demand and the problem. I sometimes use the analogy: ‘we have the perfect solution; the only thing missing is the problem’. There are still examples of that.

And at Perstorp you have implemented the outside-in look?

J. Secher: What I just said is a bit black or white, but at Perstorp we are trying to create a more healthy balance between the two drivers. I am the first to underline that there is a need to properly optimize the utilization of your assets. We are an asset-heavy industry compared to a true service industry which is very asset-light. So for sure, we got to always look at how we can make better use of the assets that we have. But staring yourself blind of that, there are many opportunities going by out there and you will not see them.

How do you make sure that Perstorp will not miss too many of these opportunities?

J. Secher: When I arrived, we did first of all a rather thorough data-driven analysis of where are we in terms of competitive positions, and really try to understand the markets and the go-to-market strategies that we had. And we came to the conclusion that we have two types of businesses. One is a supply-demand-driven type of business that we call Intermediates & Derivatives. Very advanced products as such, but we don’t differentiate substantially by means of our product. The other type of business is much more specialized. This business is called Specialties & Solutions. We have a true differentiation there, we have something unique.

So, we have two business areas. One is Intermediates & Derivatives, and one is Specialties & Solutions. And that is part of the strategy how to make ourselves more outside-in and market-driven, so to speak. We also have to make sure that our innovation organization that is working very closely with the two business areas gets really closely linked to the customers, but still in a structured way.

Next, we are going through a commercial excellence program that we run with our entire sales force, which we have separated into the two business areas. So there is a lot of work going on right now to really reach commercial excellence in the organization.

Perstorp’s mission – according to your website – is to provide sustainable solutions through innovative chemistry. Does sustainability mean more to you than being a buzzword?

J. Secher: For us as a company it does, and for me personally it does, too. I don’t think we are going to see a step change but I think that sustainability is something where we see an increasing interest up to a point where it is slowly starting to develop into a demand. But the real change will only come when further down the value chain customers are starting to demand products that are more and more made from renewable resources, and also be prepared to take the renewable alternative even if that cost them 3% more. Today it is questionable if the purchaser would pay extra. And until that actually happens you are going to have the pace of the change as you see today. It is driven more by convictions than by economics. But at some point in time those two drivers need to come together. And then we will see an accelerated change.

I am personally very engaged in this. We are taking steps in that direction, for instance, we have started a taskforce to establish our future direction with this. And we have a lot of good examples already. It is a matter of bringing them under one umbrella and making this more of a corporate visible strategy. And that is something that we are working on.

Sustainability is not just about the feedstock, renewable resources, but it is also about what your products are doing in the applications they are meant for.

J. Secher: Yes, take for instance our Capa products that help coatings manufacturers to reduce energy consumption and emissions. There are so many examples where chemical products directly influence the downstream use of energy and ultimately CO2 footprint. And actually, I think that if you were to look at what is the carbon footprint of the chemical industry versus what we help other industries save as a result of the products we manufacture, it is a factor of 1 to 2. This means that – speaking about the European chemical industry as a whole – our products help other industries reduce their footprint double the size of our own. This fact needs to be put out there a bit more visibly.

Being that far up the value chain is also a reason why the solutions chemical products are enabling in industry or consumer goods – for instance in improving performance, energy efficiency or environmental impact – usually don’t get mentioned. Do you think that the chemical industry is actually rewarded by the customers or by the public?

J. Secher: Definitely not. I think as an industry we are a poor communicator. Actually, we are all ‘engineers’, so, sometimes, not always, we take too much of a factual approach in our communication, because that is what we think is right. We are sending messages about all these numbers and how good we are and how we decreased our footprint and how much investments we made. And you can come with how many rational arguments as you like, but you are not communicating, you are not connecting. Because this is an emotional discussion and we need to meet it with emotional arguments – not always, but sometimes – in order to create the connection.


Perstorp Holding AB

Neptunigatan 1
SE-211 20 Malmö Perstorp

+46 435 380 00
+46 435 348 33