Worldwide trends

Europe

To be close to our customers as a distribution partner, we are constantly working on strengthening and expanding our network. On May 1, 2018, Van Leeuwen acquired the operations of Ferrostaal Piping Supply, a German-Dutch pipe and tube trading company with 40 employees that primarily supplies the chemical, petrochemical, equipment and machine building, and trade segments. This company, with its head office in Essen, Germany, primarily focuses on markets in Germany and the Benelux. In addition, Ferrostaal Piping Supply exports products to various parts of the world.

The acquisition of Ferrostaal Piping Supply has further strengthened our network and gives us better access to the German and Central European market, in particular the chemical and petrochemical segments in which Van Leeuwen operates throughout the world. In addition, the acquisition enables us to further expand our services for the machine building segment, in which we are active in many European countries. The acquisition has also broadened our product

portfolio as a result of which the number of product combinations we provide in Western Europe has further grown.

In Europe, the Mechanical Engineering and Fluid Power segments developed significantly. The automotive sector also improved. The sales volume for our customer DAF increased. At the end of 2018, our Van Leeuwen Zwijndrecht branch acquired an excellent order from a water company. This prestigious order concerns the supply of huge 2,100 mm diameter pipes with a 22 and 25 mm wall thickness. The pipes, 12 and 17 meters in length, will be used for a project designed to increase the storage capacity for the production of drinking water for the Southwestern Holland region in the Netherlands. The pipes are spiral welded and coated with white polypropylene.

A new concept was introduced with the opening of a sales office in Ulft, in the eastern part of the Netherlands. A sales team that offers end-users the entire Van Leeuwen product range operates close to the customer. We combine the strength of the company’s stock with personal and local contact.

The combination of specialist knowledge and a stock portfolio focused on our customers this year once again proved to be a determining factor in the profitability of Van Leeuwen Precision, Teuling Staal and Van Leeuwen Stainless. The additional import limiting measures moreover had a price increasing effect on stainless steel products in Europe.

The sales of our branches in Belgium increased. The special bar steel product range of Wauters in Brussels is a valuable addition to our pipe and tube portfolio. Wauters’ webshop has attracted a great deal of interest from customers since it went live, particularly for the fast processing of small orders. Custom cut bar material can be ordered quickly and efficiently from the webshop. deliveries can take place as early as the next day. Our distribution company in Vilvoorde, Belgium, experienced an excellent year, in part due to a number of larger projects in the petrochemical industry in Antwerp. The sales from stock furthermore were at a high level and where necessary Vilvoorde made use of the more voluminous stocks of its sister company in Zwijndrecht in the Netherlands.

Van Leeuwen France had a challenging year. Due to the implementation of a new ERP system, the company was primarily focused inward during the first half of the year. The company has since fully shifted its focus back on its customers and delivery reliability – a key performance indicator – is back up to par. The project office in Paris now forms part of the Global Project Organization and focuses on larger projects in France, Spain and North Africa.

The sales of our branches in the United Kingdom also increased. Due to further efficiency measures in these branches and the optimization of the transport network, our position on the British market has been strengthened. The lack of clarity on Brexit is a major issue and appears to threaten market development in the long term. However, for the time being our basic position in the United Kingdom is good. The branches in Central Europe, with our central warehouse in Vyškov, Czech Republic, once again exhibited growth. Significant investments have been made in additional cutting capacity and the storage capacity will be further increased in 2019. The future logistics investments are primarily focused on continuing to optimally serve the growing customer base in the region.

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.