Worldwide trends

Europe
Most of the Van Leeuwen companies in Europe were affected by low and declining material prices during the year and low demand in the energy segment. In particular, the results of our Dutch companies were below the results of previous years. At the beginning of the year, the (project) order books were too low and there was little market activity. The volume supplied to various industry segments by contrast was at a higher level than in the previous year. The loss of sales in the energy segment experienced by the European distribution companies was more or less offset by higher sales in the industry segment.

The Van Leeuwen Zwijndrecht organization in the Netherlands was restructured in the second quarter. Mid-2015, important steps had already been taken to reduce costs, particularly within logistics. On the basis of the program Samen Beter (Better Together) initiated at the time, the internal logistics processes in particular were reviewed. By implementing productivity measurements (KPIs) and new ways of working, and by creating clearer, shorter lines of communication, the operating costs have since decreased considerably. In spite of the one-off costs associated with the reorganization, Van Leeuwen Zwijndrecht managed to close off the year with a positive result.

Van Leeuwen Stainless and Teuling (the Netherlands), experienced a very difficult year, in part due to low investments in projects, low material prices and the excessive stocks of these materials in Europe.
Our company Combulex in the Netherlands, realizing a significant portion of its sales in the groundwork, road and construction market, strengthened its market share. To deliver more added value, together with a customer Combulex developed a special micro piling tube, a new product for foundation repair applications, that can be screwed together without welding. The high-quality thread can withstand high pressures. To be even better positioned in this segment, significant investments will be made in 2017 to further increase the capacity and efficiency of our flare machines for these foundation piles.

Our two distribution companies in Belgium, Van Leeuwen Belgium in Vilvoorde and Wauters in Brussels, both strengthened their market position. Van Leeuwen Belgium in particular experienced a great deal of growth in welded materials within the construction segment. The profitability of Wauters, which specializes in the supply of bar steel to customers in the hydraulics, mechanical engineering and
equipment manufacturing sectors, improved significantly. Custom service concepts, reliable deliveries and fast cutting services played an important role.

Our distribution company in the United Kingdom, as well as a large number of competitors, experienced a great deal of difficulty due to the effects of Brexit. Brexit not only caused a drop in the English pound, but also created, and still creates, a lot of unrest and uncertainty. Due to the weakening of the currency, local prices increased significantly, which customers were not always ready to accept.

The distribution companies in France and the Czech Republic had an excellent year. A number of large deliveries for pipelines in North Africa resulted in very good results for Van Leeuwen in France.

Our earlier investment in a large logistics warehouse in Vyškov in the Czech Republic, with modern facilities and centrally located near Brno, is bearing fruit. Van Leeuwen has since developed a very strong position in the Czech Republic and in Slovakia. The Polish market is also supplied from this central logistics centre and our distribution operations in Poland are growing steadily.

Middle East
Our companies in the Middle East managed to further strengthen their position in 2016, despite the fact that the level of investment in the oil and gas industry in this region decreased considerably in recent
years. A number of large projects booked in the previous year were completed, while a number of new projects were added to the order book. Our offices in Dubai, Abu Dhabi, Saudi Arabia, Qatar and man
not only work closely together in the region, but also make use of other project teams in Europe and our procurement office in China.

Our warehousing site in Dubai benefited from the increased construction activities relating to the hotels and exhibition buildings required for Expo 2020 in Dubai. The level of activity in Qatar was also higher, due to the construction of football stadiums, hotels and new infrastructure for the 2022 World Cup football championship. 

Asia
There was less growth in Asia compared to previous years. Although our companies in Thailand, Malaysia, Indonesia and China strengthened their market position, market demand in Singapore in particular was very low in 2016. The investment level in Singapore was low while the number of active players in this market remained relatively high. On the basis of a strong network of offices in the region, together with commercial teams that are generally coordinated by the regional
office in Singapore, primarily projects in the Middle East were supplied via Korean and Japanese engineering firms. 

Our Chinese branch, with offices in Shanghai and Tianjin, played a key role in the sourcing in China for other Van Leeuwen branches. The local market in China remains difficult, in part due to the enormous overcapacity at local mills. The trend in which increasingly more Chinese engineering firms are focusing on large petrochemical projects outside China persisted. Due to our long-term presence in China we were able to also supply a number of these projects from our warehousing site in China and from our global stocks.

Australia
While growth in the Australian market was limited, our market position continued to be as strong as ever. While in past years there were good opportunities with regard to large LNG projects, there were very few new investments in 2016. Investments in mining were nowhere near the level of previous years.

Van Leeuwen is a market leader in Australia in the hydraulics and fluid power segment. However, this segment is showing little growth and is in fact consolidating. On the other hand, there were more
investments in infrastructural projects and our warehousing sites in Sydney and Brisbane in particular experienced positive growth. In Sydney, the warehousing site was further expanded to accommodate the storage of large diameter welded pipes. 

Brazil and North America
The situation on the Brazilian market, which had already deteriorated in 2015 under the influence of low oil prices and local political and economic conditions, did not improve in 2016. Unfortunately we
were therefore forced to halt operations in this country. We closed our branch in Brazil over the course of 2016, which involved significant one-off liquidation costs.

Project activity in the United States was at a low level during the first half of 2016. In addition, there was a major decrease in prices, and stocks held by major pipe distributors in Houston were excessive.
The market recovered somewhat later in the year because many scale gas producers had adjusted to an average oil price of approximately USD 50 per barrel. Other requests, for example for LNG (storage)
projects, are slowly coming onto the market. Our project office in Houston is well-positioned to further grow sales over the coming year.

In addition to the regular MRO activities for ExxonMobil in the United States, deliveries for scheduled turnarounds, as well as for a number of mid-size projects grew, including the SCANfining project for the ExxonMobil refinery in Beaumont, Texas. Daily deliveries from stock took place in cooperation with our local partner, Lockwood International, a key supplier of industrial valves in the United States.

The Van Leeuwen branch in Canada experienced a very difficult year. Our footprint in Canada was further reduced in 2016, and Van Leeuwen is now operating from a large warehousing site located in
Edmonton in the Province of Alberta. Our company in Canada remains highly dependent on developments related to the extraction of oil and gas from oil sands. Due to the low oil price, operations are at a low level. In addition, the market was negatively affected by the huge
forest fires that erupted in that area at the beginning of 2016. Towards the end of 2016, the situation was slowly moving in a more positive direction.