in millions of euros unless stated otherwise
Revenues 525.9 469.3 392.1 497.8 468.3
Operating result before amortisation (EBITA) 26.3 31.4 16.8 37.8 30.4
EBITA margin (%) 5.0 6.7 4.3 7.6 6.5
Operating result (EBIT) 20.8 27.7 13.8 34.8 28.3
Investments 12.2 9.9 9.0 29.0 44.9
Depreciation and amortisation 28.9 26.2 25.3 23.0 20.0
Net capital employed 429.5 380.8 332.7 427.4 354.8
Staff years at year-end 2,160 2,128 1,795 2,129 2,053
EBITA as percentage of average net capital employed 6.2 8.2 4.1 8.8 8.9
ACTIVITIES
The Geosynthetics & Grass sector consists of the following market groups:
◾ TenCate Geosynthetics
Fabrics, grids and non-wovens for solutions and applications for infrastructure projects and the environmental market, as well as industrial fabrics for various applications, such as agribusiness, sport and recreation.
◾ TenCate Grass
Synthetic turf components and systems for applications such as football, hockey and other sports pitches, as well as landscaping.
In addition to the companies engaged in the production of fibres and carpet backing (upstream activities), the Grass group
comprises a growing proportion of system development and marketing businesses (downstream activities).
REVENUES AND RESULTS
The Geosynthetics & Grass sector showed a 12% rise in revenues to
€ 525.9 million (2010: € 469.3 million).
The operating result before amortisation of intangible fixed assets fell by 16% to € 26.3 million (2010: € 31.4 million). EBITA fell partly as a result of rising raw material costs in TenCate Geosynthetics in the first half of the year (Middle East crisis) and the excessively low rate of capacity utilisation in the upstream activities of the Grass group.
The geosynthetics activities as a whole put in an excellent
GEOSYNTHETICS & GRASS
TenCate GeoDetect™ solutions Dewatering and filtration technology Biopolymers
BUSINESS MODEL OF THE GEOSYNTHETICS MARKET GROUP
Continuing development of new products (innovation awards)
Focus on water management, environment and infrastructure
Economies of scale (volume products) Cost leadership
END-USER MARKETING INNOVATION
PRODUCT DIFFERENTIATION COST LEADERSHIP Alliances with market participants
Local collaboration with partners in emerging markets
Geographic spread of distribution Positioning of sustainability (water
management, environmental solutions, low carbon footprint).
Development of relationships in the Chinese market
Alliances with market participants (downstream activities) Geographic spread of distribution Positioning and advantages of the
sustaina-bility aspect (water management, recycling) Increased quality awareness of end-markets Market positioning (GreenFields, Edel Grass,
TigerTurf)
Relationships with sports federations
System components ‘Powered by TenCate’
Optimum support from downstream activities for development of new system concepts
Reduction of total cost of ownership of sports pitches
Economies of scale Cost leadership
Fourth-generation developments Weaving technology
Biomechanical characteristics (research project with third parties)
Product and system warranties
BUSINESS MODEL OF THE GRASS MARKET GROUP
END-USER MARKETING INNOVATION
PRODUCT DIFFERENTIATION COST LEADERSHIP
Royal Ten Cate 48
> REPOR T OF THE E XECUTIVE BOARD > Geosynthetics & Grass
This also gives rise to logistical and pricing advantages. The market group has three business units: infrastructure, water & environment and industrial fabrics.
TenCate aims for a system approach focused on solutions.
Geosynthetics form part of the overall structure and deliver functional added value. The marketing of more complicated system solutions can often be accelerated with strategic partners. For example, TenCate has been co-operating technically and commercially since the beginning of 2010 with Roctest, the world’s largest manufacturer of fibre optic sensors for civil engineering. This enables customers to benefit from innovative solutions in real-time monitoring with geotextiles. It provides detailed information on possible deformations: displacements, soil erosion, settlement and other changes in features such as inclines, slopes, walls, roadways and railway and dyke bodies.
SUSTAINABILITY
The market is devoting increasing attention to the positive environmental aspects of geosynthetics. The use of environmental arguments and the reduction of negative environmental effects are therefore receiving greater emphasis in the promotion, design and specifications. TenCate Geosynthetics endeavours to convince civil engineering and water management customers of the positive impact of geotextiles on sustainability thanks to their limited CO2 footprint.
Alternatives to TenCate geosynthetics are usually traditional materials such as concrete, stone and steel, which often have to be transported over long distances. In the case of geosynthetics, by contrast, locally available materials (sand, sludge) are used. In the case of land reclamation (hydraulic filling with sand) there is usually considerably less need for dredging. That has positive environmental effects. The R&D department is working on future bio-based products. The first CO2 footprints for TenCate and competing products became available in 2011 following the introduction of a product ecotool. Customers are responding enthusiastically to this development.
GENERAL PERFORMANCE
TenCate Geosynthetics achieved strong organic revenue growth worldwide in 2011. This was partly due to the introduction of new products in markets for soil stabilisation and strengthening and growing demand for sustainable environmental concepts, water management and maritime solutions. The market share increased performance in 2011. The EBITA margin of the Geosynthetics & Grass
sector fell to 5.0% (2010: 6.7%). This margin is well below the required level (minimum 10%).
TENCATE GEOSYNTHETICS
MARKET POSITION AND STRATEGY
TenCate is the world’s largest producer of high-strength geosynthetics (grids, liners, fabrics and non-wovens) for infrastructure, the
construction industry and the environment. The portfolio also comprises materials (industrial fabrics) for applications in the agriculture, horticulture and leisure sectors. On the basis of the business model, TenCate operates close to the market with production sites in Europe, the United States and Asia.
TenCate Polyslope® system provides avalanche protection
An avalanche barrier has been built north of Innsbruck (Austria) made up of five parallel concrete discs flanked on both sides by reinforced slopes made of TenCate geosynthetics. This structure breaks the force of avalanches and regulates the large volume of meltwater in the spring. The avalanche barrier is 23 metres high and has a 22-metre-wide base. Traditional solutions are not cost-effective; the costs of such a structure and the transportation of building materials in this difficult terrain would be too high.
Moreover, a natural look is preferable. TenCate Polyslope® is an environmentally friendly and attractively priced system that allows rapid growth of vegetation.
economic developments during the reporting year. Activities are increasing in the major infrastructure project market (civil engineering) and the environmental market.
In China the production facilities in Zhuhai became fully operational in 2011, allowing the start-up of exports to the United States and providing a basis for the further development of the Chinese market.
New initiatives were taken to further develop the market in South America.
worldwide. Revenues trended positively across all continents, with increases in the relative share in South America and Asia. The detrimental impact of rising raw material costs in the first half of the year was absorbed by price rises.
The Geosynthetics group focuses actively on product development and a solution driven approach to the market. The TenCate Geotube® and TenCate GeoDetect™ systems in particular are gaining traction as end-users are now devoting increasing attention to CO2-friendly, sustainable environmental solutions and detection systems (leak, erosion and deformation control). This is a worldwide trend. Another important part of the strategy is the exchange of products and system solutions between the various geographic regions.
It was a positive year in many respects for the activities in the United States. Demand was higher than expected. Earnings therefore rose relatively strongly, as a result of cost measures in previous years.
On the basis of the strategy, the needs of new and existing markets were met proactively through an efficient organisation and with new products, solutions and systems. The market share grew further as a result.
TenCate Geosynthetics (Georgia, US) has been working on new materials for a number of years under the TenCate Mirafi® RS580i label. The geosynthetic material has a new weaving pattern, is even stronger and has an improved drainage function. The patented material is multifunctional.
The European market experienced positive growth. The TenCate Geosynthetics production site at Nijverdal entered service at the beginning of April, after which TenCate scaled down production at Almelo. These were important steps forward in terms of production efficiency and logistics.
As an integral part of the Asia strategy, TenCate’s position in the Asian markets was considerably strengthened when the acquisition of Emas Kiara Industries in Malaysia was completed in March 2011. Emas Kiara Industries is a major producer and supplier of a wide range of geosynthetic products and solutions. Its primary focus is on the Asian markets. Although the acquisition involved initial integration and other costs, the company was able to benefit immediately from the positive
TenCate Polyfelt® provides a solid base for railways
TenCate Polyfelt®, a geotextile separation material, was used in the renewal of the rail track near Bodegraven in October 2011. The rail network operator used the longest railway machine in Europe for this project. Over a length of one kilometre, the 1,200-metre-long train lifted the rails and immediately excavated the existing subsoil in three layers. The removed soil was immediately cleaned, sifted and deposited on the automatically laid TenCate Polyfelt®. This separation material has been certified by ProRail for use under the ballast bed. The result is a structural solution with minimal impact on the environment.
GEOSYNTHETICS
TenCate Geosynthetics has had a mathematical model developed which enables carbon footprints to be compared. The footprint of TenCate Geotube® systems for sludge dewatering or land reclamation is compared to competitive solutions.
A carbon footprint refl ects the emission of greenhouse gases by a product or system solution at each stage of its life. This includes the extraction and transportation of raw materials.
The production and distribution as well as the use and eventual removal or recycling are also included in the calculations. This product eco-tool uses the data from suppliers, production locations of TenCate Geosynthetics worldwide and installers of the products.
The tool offers project owners, architects and developers a specifi c indication of the use of TenCate solution compared to others. Together with the end-users and installers in the area concerned an assessment can be made of how to reduce the carbon footprint of a project already at the design stage by using alternatives. Through the smart combination of two local projects in Zutphen, the Netherlands, a high level of CO2 emissions from transport has been
prevented.
Connected through the value proposition
SUSTAINABILITY
• Product eco-tool reveals carbon footprint
• Project solutions can easily be compared
• Complete life cycle analysis helps to reduce carbon footprint
• TenCate Geotube® is a highly sustainable solution with a low carbon footprint
Asian markets. Further co-operation is being sought with international and large (regional) engineering firms and mining companies.
TENCATE GRASS
MARKET POSITION AND STRATEGY
The Grass group has a leading market position worldwide (fibres and backing) in synthetic turf systems. TenCate is almost at the beginning of the value chain. The strategy is being continuously reinforced in all cornerstones of the strategic framework (value chain management).
The industry is in a phase in which the demand and supply side of the market are developing strongly. Downstream consolidation is taking place in the sector as a result of higher quality requirements among various end-users, the greater importance of research and development, high certification costs, environmental and sustainability requirements and tight availability of bank financing.
TenCate conducts an active strategic policy in order to maintain a leading position in terms of market share and technology. With production sites in the Netherlands, Dubai and the United States, TenCate has deployed its production facilities cost-effectively, with the emphasis on volume production in the Middle East, and the logistical lines to the market are short. Within this strategic policy, TenCate also leads the way in entering into partnerships with key providers of synthetic turf systems. This allows optimum fulfilment of the end-user marketing cornerstones of TenCate’s business model.
Interests in downstream activities (marketing and installation companies) are increasingly being integrated and costs shared (chain integration). TenCate thereby combines expertise in the development and production of synthetic turf fibres and carpet backing, as well as research and development in the field of sport characteristics, with the knowledge of system developers and installation companies. The aim is to improve the quality, playing characteristics and durability of synthetic turf pitches. The alliances with market participants are giving rise to joint technological and other developments and reductions in the time to market. The acquisitions in 2011 of shareholdings in GreenFields and Hellas Construction fit in with this policy. In order to strengthen the quality image, co-branding takes place with the overarching TenCate® corporate brand.
The proactive exchange of products and system solutions between the various geographic regions leads to TenCate Geosynthetics being involved in highly attractive projects worldwide. The following are examples:
◾ Three types of geosynthetics, from TenCate’s production sites at Linz (Austria), Bezons (France) and Almelo (Netherlands) have been used in the extension of the runway at Ain Arnat airport in Sétif (Algeria). The work involved the delivery of a durable, cost-effective solution with technical support.
◾ The Volgermeer Polder in the Netherlands, which was once a landfill site for heavily polluted waste, has been cleaned up and turned into a nature reserve. This is the largest soil remediation operation in Dutch history. With the aid of TenCate Geotube®, clean sludge was converted into a natural cap (a layer of clean soil) on top of the seal. TenCate GeoDetect® is used to monitor the seal on the waste in one of the basins that were created on top of the natural cap.
◾ A large-scale project is being carried out at the former Kai Tak International Airport in Hong Kong. After two successful trials of TenCate Geotube®, work began in mid-December to remove and clear 140,000 m³ of polluted sludge with the aid of this technology.
TenCate is supplying a large volume of TenCate Geotube® containers for use in this project, which is due to be completed at the end of June 2012.
TenCate Geosynthetics North America received two IFAI Awards from the Industrial Fabrics Association International (IFAI) at IFAI Expo Americas in Baltimore (Maryland, USA) in October. TenCate Mirafi® H2Ri received the Innovation Award in 2011. A project in China with a supporting wall based on TenCate Mirafi® PET fabric received the Award of Excellence. TenCate Geosynthetics has received the Innovation Award six times in the past seven years.
OUTLOOK FOR TENCATE GEOSYNTHETICS
TenCate Geosynthetics expects further growth in activities in 2012.
At the beginning of January 2012, TenCate Geotube® technology was selected for the largest dredging project ever carried out in the United States. Growth is expected on all continents, however, in infrastructure projects and as a result of new products and applications for water management and the environmental market.
In particular, there are high expectations for the South American and