2022-07-18

Treating water all over Europe

Feralco manufactures inorganic coagulants. These are chemical compounds, mainly of aluminium and iron. These are added when treating water and, to put it simply, they bind  contaminants so that they can be separated. Watertreatment plants are the company’s main customers, but Feralco also deliver to paper, pulp and other industries. The company is a  leader in its sector in Europe and also sells to a number of other countries, particularly in Africa.

The water treatment market in Europe is mature and not growing to any significant extent. That said, it’s fragmented in a number of countries, with lots of smaller stakeholders. Feralco is one of the leading companies in Europe and has the opportunity to consolidate the market by means of acquisitions, thus strengthening its position further.

GROWING IN GERMANY AND FRANCE

Two acquisitions were made in 2021. Feralco acquired German company Venator Wasserchemie in June, which has production facilities in three German cities and a combined turnover of around SEK 200 million. Germany is the biggest market in Europe, and this acquisition more than doubles the size of Feralco in this country and expands its product portfolio as well. “Transporting our products over long distances isn’t profitable, because they’re dissolved in water. That’s why local production is important, and Wasserchemie’s three factories are a very welcome addition to the Group. This acquisition also means we expand our product portfolio, primarily in the field of chloride-based products,” says Stephen Childs. The second acquisition of the year was a transaction that involved buying out the French company Feracid from a previous joint venture. This means that Feracid is now wholly owned and integrated with Feralco’s French subsidiary. “The company focuses on iron chloride, a common feature of wastewater treatment. This transaction reinforces our position in the south of France,” says Ludovic Huitorel. Operating activities in 2021 went well, although the year presented a number of challenges. Firstly, commodity prices rose sharply at the end of 2021. Secondly, the COVID-19 pandemic continued to cause problems in the supply chain, leading to a major rise in transport prices. The task of adjusting prices to customers in this regard remains largely to be done in 2022.

Despite these challenges, profits were on a par with the previous year, a record year. Sales also rose by around 20 per cent, mainly thanks to the new acquisitions.

LOCAL PRODUCTION REDUCES TRANSPORT COSTS

“Changes in transport prices demonstrate the importance of local production, and hence short transport distances. The more local our production facilities are, the more competitive we can be. Last year’s acquisition means we now have 18 production facilities in Europe,” says Stephen Childs. “We’re continuing to have an interest in consolidation in our industry,” continues Ludovic Huitorel. “This may involve acquisitions of family businesses where the owner is looking for an exit, or related businesses in the chemical industry. Feralco is able to offer a long-term commitment in such cases, within a growing industrial platform.” Feralco is also looking beyond treatment plants and industries. Treatment of water directly in nature is one example thanks to the purchase of Vattenresurs of Sweden (see page 22). Feralco and Mellby Gård are also launching an investment initiative – the Circular Water Initiative. The purpose of this initiative is to invest in and contribute to more sustainable water management on a commercial basis and ensure that more people have access to clean water. “Clean drinking water is in short supply on a global level, and things will get worse unless we do something. That said, a lot of exciting innovation is in progress with regard to circular water management, and start-up companies are often involved. Feralco is able to contribute its expertise in chemistry, markets and regulations, while Mellby Gård has venture capital for long-term ownership,” says Ludovic Huitorel.