Hexagon Annual Report 2019

37 2019 AT A GLANCE FROM THE BOARD ROOM FINANCIAL STATEMENTS Hexagon Ragasco Hexagon Ragasco is the world’s leading manufacturer of composite LPG cylinders. As a pioneer in the industry, it has sold more than 17 million cylinders worldwide the last two decades, including 1.6 million in 2019. Hexagon Ragasco started operations in 2000 and has since developed a customer base composed mainly of LPG distributors in over 80 countries. Production is carried out in modern, highly automated facilities located in Raufoss, Norway. Hexagon Ragasco continues to build partnerships in new markets to help propane and butane distributors and marketers increase customer loyalty without compromising on safety. OPERATING RESULTS Hexagon Ragasco generated revenues of NOK 600.5 (644.7) million and EBITDA was NOK 91.9 (133.3) million in 2019. Revenues and margins where unfavorably impacted by lower demand from Europe as well as market develop- ment costs. Read more about the financial results in the Board of Directors’ Report. KEY DEVELOPMENTS AND IMPORTANT EVENTS IN 2019 • Reached 17 million cylinders sold worldwide • Continued to increase deliveries to Bangladesh, where it has established a strong position and recurring revenue base • Achieved satisfactory capacity utilization during the year • Received ISO 50001 Energy Management certification, which supports the use of energy more efficiently OBJECTIVES ACHIEVED IN 2019 • Expanded into new markets; Bulgaria, Gambia, Guyana, Jordan and Oman • Started compiling market studies from ongoing pilot programs in Florida and California, USA • New investments increased productivity OBJECTIVES FOR 2020-2021 • Leverage new technologies to increase value-adding product features • Explore business opportunities in other segments • Achieve continued recurring sales growth • Increase sales and capacity utilization for the second half of year • Improve the recycling properties of LPG composite cylinders MARKET Hexagon Ragasco’s customers are primarily leading national and international LPG distributors and marketers. These customers manage large quantities of cylinders through their own exchange operations or through dealers. Hexagon Ragasco has focused on developing the value proposition for LPG distributors and marketers. The com- posite LPG cylinders’ unique features enable distributors and marketers to increase market share and improve their competitive position. Furthermore, there are significant benefits related to safety and opportunities in reducing maintenance and logistics costs. The first half of the year is traditionally strong driven by recurring European leisure customers, while the second half of the year is seasonally slower in Europe. Meanwhile the company keeps growing its position in Asia Pacific, Latin America and Middle East, generating recurring revenues and balancing the seasonal impacts. Europe Deliveries to Europe were softer during 2019 due to delivery postponements and reduced investment appetite among some key customers. The composite cylinder was introduced to Bulgaria in 2019. The most important markets are European domestic and leisure customers, and these are mostly characterized by increased seasonal demand and sales volumes in the first half of the year. However, in France, Italy and Portugal bottled LPG is typically used year-round for cooking and heating. Markets outside Europe Hexagon Ragasco has maintained focus on several of the markets outside Europe, to secure growth and improve capacity utilization in the seasonally slower second half of year. Increasing market penetration in these regions continues to be a priority going forward. Asia Pacific Bangladesh is a growing market in the region for LPG, especially bottled LPG for domestic use. With a premium product offering considerable advantages over steel cylinders, Hexagon Ragasco is confident that the com- posite LPG cylinders will make domestic use of LPG in Bangladesh more user-friendly and safer. The company has established a strong position in the market and expects to receive solid recurring revenues.