Hempel Reports 2024 Earnings with 1.3% Revenue Decline and Strong Profitability Gains

Recently, Hempel released its annual report for 2024, showcasing a comprehensive overview of its operations, financial performance, sustainability efforts, and corporate governance. The report indicates that Hempel achieved a revenue of €2.185 billion (approximately ¥171 billion), reflecting a 1.3% decline compared to the previous year. However, the company reported an adjusted EBITDA of €392 million (around ¥307 million), with an EBITDA margin of 17.9%. This achievement, despite a decrease in organic growth, was driven by improved gross margins and disciplined cost management.

As of December 31, 2024, Hempel’s total assets reached €2.631 billion, up from €2.553 billion at the end of 2023, excluding the assets from J.W. Ostendorf and Renaulac. The net assets attributable to shareholders stood at €1.205 billion. Notably, the company recorded a 5% increase in gross profit, culminating in a year-end gross profit of €948 million and a rise in gross margin by 1.8 percentage points to 43.4%. This positive trend was primarily attributed to the heightened demand for high-value products, optimization of global production and storage networks—including new facilities in China—and a reduction in raw material costs.

In terms of cash flow, Hempel generated €139 million in free cash flow for 2024, a significant increase from €29 million in 2023, thanks to strong operational performance and minimal increases in net working capital. The cash outflow from investment activities was €86 million, mainly directed towards upgrading ERP systems and expanding the global production footprint.

The year 2024 was pivotal for Hempel, as it welcomed CVC as a minority investor and strategic partner, collaborating alongside the major shareholder, the Hempel Foundation. This partnership contributed to Hempel's strongest profitability performance to date.

Michael Hansen, Hempel's President and CEO, expressed satisfaction with the company's performance, stating, "We have achieved our best-ever profitability results with adjusted EBITDA reaching €392 million and free cash flow increasing over €100 million since 2023." He reaffirmed Hempel's commitment to long-term sustainable growth, aiming to operate a highly profitable company that reinvests in its brand and technology for societal benefit.

In 2025, Hempel anticipates modest single-digit organic revenue growth and expects to maintain an EBITDA margin above 17%.

Three Core Business Segments Perform Well

As a leading coatings giant with over 7,200 employees across more than 100 countries, and with 25 production sites and 14 innovation centers, Hempel operates through three main business segments: Decorative, Marine, and Energy & Infrastructure. In 2024, the company launched several new products and solutions across its core business areas.

In the Decorative Coatings segment, sales grew by 2.4% to €653 million (approximately ¥5.1 billion), driven by increased market share despite challenges like declining construction activity and rising living costs. The Crown and Wattyl brands, along with Hempel's decorative paint business in the Middle East, saw robust performance, supported by new product launches and retail expansion.

Marine coatings experienced a 5.8% decline in sales to €709 million (around ¥5.6 billion), though it remained the second-highest sales figure on record. Factors such as price adjustments and delays in ship docking impacted sales. Nevertheless, Hempel's premium solutions attracted new customers, with record sales of the Hempaguard solution, highlighting the company’s leadership in fuel efficiency and CO2 reduction.

In the Energy & Infrastructure segment, sales increased by 0.1% to €823 million (approximately ¥6.45 billion). Growth was primarily driven by the oil and gas sector, particularly in the Middle East, thanks to Hempel's leading insulation and corrosion protection solutions. However, the renewable energy sector faced challenges due to market contractions and fierce competition.

Sustainable Progress and ESG Goals

In 2024, Hempel made significant strides in sustainability, focusing on reducing its environmental footprint, enhancing social impact, and maintaining strong corporate governance standards. The company has achieved a 65% reduction in CO2 emissions compared to its updated 2019 baseline, advancing towards its ambitious goal of a 90% reduction in Scope 1 and 2 emissions by 2026. Additionally, waste sent to landfills decreased by 97%, working towards limiting landfill waste to less than 1% of total waste generated by its operations by 2025.

In terms of gender diversity, Hempel achieved its target of women holding 31% of leadership positions and 34% among general employees in 2024, aiming for a more balanced gender representation across the workforce.

Hempel also surpassed its goal of reducing the intensity of hazardous raw materials by 15% compared to the 2022 baseline, achieving a 59% reduction in hazardous content within its products. This effort is guided by Hempel's Hazardous Ra