Getting unstuck from the middle
Plasticon Composites products are used in the transport, storage and processing of aggressive corrosive liquids and gasses. The company, with sales of EUR 120 million, produces glass fiber reinforced (“GRP”) pipes and fittings, storage tanks, vessels, reactors and chimney linings for the chemical, petro-chemical and power industry. Plasticon is based in the Netherlands and has 10 production facilities on three continents.
Plasticon is the result of a buy and build strategy. This strategy was successful in the sense that it established Plasticon as the market leader in GRP products. It was unsuccessful in the sense that results lagged and the acquisitions were to a large extent financed by debt. This led to the company requiring a new capital injection.
A solution had to be found in a very short time as without available financing the company could basically not accept new orders. Nimbus acquired Plasticon, together with the new CEO of the company, after a very condensed due diligence and contract drafting process. New equity was injected which fixed the financial problem. The lagging profit was in our view mostly due to the company being “stuck in the middle”; it was neither centralised nor decentralised. We chose to decentralize responsibility back to the operating companies. The cash pool was terminated and the local CEOs once again became fully responsible for their own P&L and balance sheets. Another immediate measure was to close or sell some “bleeders” in countries where there was no hope of recovery.
Plasticon is back on track with good results and a very bright outlook.