The full effect of the global recession on the thermoplastics compounding industry is well documented in AMI's latest report, which shows that between 2008 and 2009 revenue dropped on average by over 20%. The combined production of the Top 50 companies is virtually unchanged on that recorded for the 2006 edition of the same report. During the 2009 downturn compounders were more interested in minimising credit risk than seeking to preserve volumes or gain market share. In general terms this means that compounders responded to the recession by seeking to maintain or grow margins rather than chasing volume. That the industry did not endure more pain in terms of bankruptcies and corporate change is testament to their success in achieving this. Even so few companies made much money during 2009. AMI's analysis reveals an average profit before tax ratio of just 2% for 2009 for the 50 groups profiled. Because of the downturn there has been relatively little M&A activity in the sector in recent years and most of what there has been has been more recent as the industry moves out recession. There also appears to have been relatively few casualties in terms of bankruptcy. Through a combination of short-time working and cost-cutting, most have managed to ride out the storm. As a result there has been relatively little change in the standing of the companies involved. The industry continues to be dominated by the compounding activities of Ravago, which is a leading toll compounder on behalf of the polymer majors and is also building a position as a supplier of proprietary compounds. The business supplies more than twice as much prime compounds as the next largest player (Polymer Chemie) and would be even more significant if its volumes of secondary grade and recycled polymer compounds were included. Ravago is a prime example of a business successfully developing a broad range of services for both polymer producers (as a toll compounder) and plastic processors (as merchant compounders) which has enabled it to survive the recession. Similar strategies have been followed by many other of the leading players in the supply of technical compounds although the balance of toll versus distribution versus proprietary products can vary and with it the value of the business. The combination of polymers compounded will also obviously impact on turnover although not necessarily on margins According to AMI's analysis, Albis and Schulman are the second and third largest businesses in value terms although on a volume basis they are rated 6th and 7th. Both produce and distribute a range of PP and technical engineering polymer compounds for direct sale to customers in addition to offering toll compounding services and being involved in distribution. Both operate mainly out of Germany. The strength of the German industry means that Polymer Chemie is rated the second largest in volume terms although in turnover terms it is much lower because the majority of its business is based on toll compounding. While the report focuses on 2009 data, AMI points out that output for all these companies is expected to have substantially improved in 2010.
17-Aug-11 
