A WORD FROM THE CEO
2019 brought two different pictures of the business for AXEL. All units in Europe have done very well and further strengthened their positions and improved their financial results. The picture in USA is mixed with some improvement at AXEL Americas and a less favourable development at AXEL Royal.
The latter is heavily influenced by various issues arising from the acquisition in 2018 and several of them impact both product quality, productivity and profitability. Management took steps in late 2018 to ensure product quality but this further hampered the productivity, which in turn caused some business loss during the year. A substantial investment program has been identified and initiated to overcome these problems and when executed in 2020 we expect to be back at the desired capabilities.
Overall AXEL look back at a year with financial performance close to previous year. The demand of AXEL’s high quality products has been strong and we have also secured new business in both Europe and USA, leading to a positive momentum as we enter into 2020 with a healthy pipe-line of new business opportunities
Lubricating grease is a fascinating material that keeps the wheels turning in modern industry. Our industry has an important role to play in the society, offering high performance products that reduce friction, save energy and protect valuable equipment, thereby contribution to more efficient use of the global resources. AXEL offers a diversified range of high-quality lubricating greases for industries such as automotive, off-road, agriculture, food, steel, mining, pulp & paper, marine, railways and many more. Lubricating grease is a unique niche within the overall lubricants market with ever increasing performance requirements and dynamic sectors to benefit from, including environmentally adapted lubricants.
/Johan Stureson, CEO.
IMPORTANT EVENTS IN 2019
In early February AXEL filed a suit against the Royal sellers in Oklahoma federal court seeking damages for breaches of the representations and warranties in the asset purchase agreement, along with fraud in misrepresenting and failing to disclose certain material facts as part of the sale.
Late in 2019 AXEL initiated significant investments plans in USA to correct all major insufficiencies in the AXEL Royal operation. This is expected to continue throughout most of 2020.
AXEL received “Sweden Best Managed Companies 2019” award in a programme sponsored by Deloitte and Nasdaq.
Axel Group operates in a competitive niche within the petrochemical industry. Despite the fact that the lubricating grease industry is a flat or slightly decreasing market our view is that additional market shares can be attained both in existing markets where we are currently present as well as in new geographies. Fairford believes there is further value to be created through both organic growth, industry consolidation and improved operations and the latter is especially true for our newly acquired operations in the US.