Finance
A mixed picture with positive overtones
Financially speaking, 2008 was a somewhat peculiar year. On the one hand production and turnover were lowered by a dropping demand; on the other hand the company succeeded in raising revenues faster than the cost increase, turning Proviron cash positive since August.
In the period before August 2008, costs were higher than revenues, which had everything to do with the serious investments in, among others, the biodiesel unit. That is not an unusual situation to be in, but it must not last for too long, certainly not in times of economic instability.
Investments
Sales, Operating profit & Operational cash flow
Proviron rediscovered
Mid 2008, the gross margin – turnover minus feedstock and energy cost – was adequate with a ten percent increase. Proviron successfully raised the profitability of several activities making it possible to charge higher costs more easily. Some customers rediscovered Proviron when they noticed that Asian competitors were not always able to offer the same quality, efficiency or service.
Quality customers
2008 saw feedstock prices drop, which in itself is a good thing. However, more important for the margins is price stability. Fixed costs went up only marginally. Positive also is the quality of our customers, which ensures that e.g. Proviron has few or no late payers. There are three reasons for that: the quality of our products, a proper invoice follow-up and the fact that our customers are mostly big and creditworthy companies.
Debt rate
Proviron’s debt rate is high and that needs seeing to. In this context, the fact that the new strategy holds the disinvestment of the phthalic activities is good news. What would also help is the prospect of an expanding biodiesel market later in 2009, which would enable full production in Ostend. Finally, the principal shareholders of the company anticipate a financial contribution in 2009.
Hard to predict
Order predictability has seriously declined. At the start of 2008 orders were passed on months beforehand, now a mere few days are not unusual. That being said, at this moment (second quarter of 2009), sales people notice that customers’ stocks are almost exhausted, forcing them to order soon.
Dollar
In 2008, the dollar-euro exchange rate evolved positively for our business. The US dollar went up vs. the euro, which makes things more difficult for American competitors on the European market. At the same time, Proviron is granted a bit more scope on the American market.