Market conditions
Economic trends in the first half of 2018 were very favorable across the world. As a result, market prices increased significantly. Growth slowed down at the beginning of the fourth quarter and demand in various countries decreased. By the end of 2018, economic conditions were significantly less favorable. Demand in the Industry market in Europe developed favorably.
Van Leeuwen achieved better results in all Industry market segments than in the previous year. In Western Europe this resulted in a small growth in sales volume. Our branch in Brno in the Czech Republic, which serves various countries in Central Europe, again experienced significant growth.
Developments in the Energy market were also positive. There was significant recovery in key markets, such as Asia and North America. Sanctions clearly had an impact, however. The new sanctions of the United States against Iran virtually preclude doing any business with this country. Van Leeuwen exports to Iran were consequently entirely halted. Ongoing orders were completed within six months. This means that a key sales area has been eliminated. Sanctions against other countries, including Russia, further limited our export opportunities.
Middle East
Our offices in Dubai, Abu Dhabi, Saudi Arabia, Qatar and Oman primarily focus on the larger oil and gas projects in the region. Cooperation with other project teams in Europe and Asia is of importance in this regard. In 2018, there was lower demand in the region, although we still achieved a positive result. The delivery, in cooperation with one of our Chinese partners, of a large quantity of piping materials for a pipeline project in Kuwait was a great success.
Asia and Australia
The results achieved in Asia were positive. A number of interesting projects was acquired in the recovering EPC project market. Project activity was at a higher level throughout the entire region. With our stock locations in Singapore, Malaysia (Kulai) and Thailand (Chonburi) we supply a multitude of customers in various energy segments. The larger projects are becoming more complex and the construction of modules, project components, sometimes takes place on multiple locations at the same time. Large project deliveries, straight from the mill to the customer, hereby are combined with custom logistics solutions and urgent deliveries from stock.
The branches in Australia performed extremely well and achieved record sales. With a network comprising five stock-keeping branches, we are in a position to perfectly serve this market. Customers benefit from our stocks that enable us to avoid often long and irregular delivery times.
North America
In North America, our branch in Canada performed better than in previous years. After the crisis years, the market, impacted by low oil prices, appears to have recovered. The level of investments was higher, and our sales, particularly in the pipeline segment, is once again growing.
In Houston, the United States, we moved the stocks that we specifically maintain for MRO services for ExxonMobil, to our new partner DNOW. We carried out a number of projects for ExxonMobil and acquired a large pipeline project in the second half of 2018. The market in the United States offers sufficient opportunities for further growth. Our project office in Houston, which is part of the Global Project Organization, is steadily growing and is increasingly supplying contractors.
Worldwide projects
We started up the new Global Project Organization in the second quarter of 2018. Through this organization we centrally manage our global project teams and combine the knowledge and expertise of our different teams. This way we provide added value to our customers and increase our opportunities on the international market. Previously, the Van Leeuwen project teams, spread over seven locations throughout the world, worked with their own team members on the acquisition and implementation of international projects in the Energy market. Managing international Energy projects is a dynamic process that is becoming increasingly more complex. The billions of dollars investments by large oil, gas, chemical and petrochemical producers demand close coordination and cooperation among all involved parties, such as the customer or EPC on the one hand and the supplier, treatment specialist or transporter on the other hand. Every customer has its own wishes and requirements that in turn are closely related to the project’s location, local laws and regulations and to political, social and market developments.
Managing our projects centrally, enables us to better share our expertise and therefore apply it more broadly and in smarter ways. This way we make even better use of our international network and our people’s competencies. We started with the project teams in Zwijndrecht, Paris, Shanghai and Houston. This will be followed by Dubai, Singapore and Essen. The further alignment of work processes, project procedures and proposals improves mutual cooperation and communication with customers. The relationships with suppliers, in particular, will also be strengthened with a specific focus on the material quality, reliability, capacity and price levels of mills.
In 2018, Van Leeuwen again delivered under the Global Contract with ExxonMobil. For over four years we have looked after the worldwide delivery of pipes, fittings and flanges for MRO, as well as projects. In Europe, the United States and Asia we supplied materials for many turnarounds. Teams stand ready at the various warehouse locations throughout the world to guarantee the required high service levels. With these teams we constantly work on improving the efficiency of cooperation and the implementation of innovations. An important step in this process is the creation of an electronic product catalogue. Europe and Asia will follow this year, after the completion of a pilot in the United States. The information exchange in support of purchase orders will ultimately be completely electronic. This innovation not only increases efficiency, it also significantly reduces the chance of errors.
In addition to MRO, Van Leeuwen also supplies ExxonMobil’s projects. In 2018, we supplied large projects in Singapore, the United Kingdom and Canada. A large project for the supply of pipes to various locations spread across America was acquired at the end of 2018. Van Leeuwen is responsible for the entire process, ranging from procurement, the audit and inspection of suppliers, and the transport and logistics to the project site. The largest part of the deliveries for this huge project will take place in 2019.
To also better carry out larger projects from a logistics perspective, a special project warehouse was set up at Van Leeuwen Zwijndrecht, the Netherlands. Specific project stocks are maintained in this project warehouse, which also provides materials for inspection and shipping purposes.