Selena, a global leader and distributor of construction chemicals and one of the four largest global producers of mounting foam for construction, has once again posted a strong set of results. In 2022, the Group cemented its position as a major player in the industry, generating solid sales revenue of over PLN 1.96 billion, an increase of 13.6% compared to 2021, and operating profit (EBIT) of PLN 153.6 million, up 65.7% year on year.
Selena Group’s robust performance in 2022 shows that the company’s operating profitability is growing despite the challenging market environment and the volatile geopolitical situation. Gross profit margin increased from 27.8% in 2021 to 30.1% in 2022, i.e. by 2.3 p.p. year-on-year, driven by e.g. higher margins in some markets, the continued increase in the share of sales of innovative products and the optimization of product formulations. The pronounced EBIT improvement was due to higher gross profit (+23.1%) and effective management of operating costs. The bottom line was significantly affected by net financial income and income tax. At the end of Q4 2022, net profit was PLN 112.6 million, up 9.6% year-on-year.
“This is another year in a row when we have achieved high profits on our ordinary activities and solid sales revenue, which allows us to consolidate our position as a global player in the industry. The right decisions we made in 2021, such as diversifying our supply chains, expanding our activities to include research into innovative products and setting a new course for development in Western markets, allowed us to continue growth across the Group and generate strong performance in difficult times. However, the situation is so dynamic that it is difficult to make any reasonable forecasts about what developments – after the coronavirus pandemic or Russia’s attack on Ukraine – the world will see, and how they will affect the global economy, industry and business. We are witnessing a market slowdown, especially felt in the second half of 2022. For several years now, we have observed that the only constant is change, which is why adopting a flexible approach is the only strategy that actually works. The strong results recorded in 2022 only confirm that we have chosen the right strategy, adapted to individual markets, and that we are on track towards meeting our goals,” says Jacek Michalak, CEO of Selena Group.
Solid performance in a demanding environment
The global situation had an impact on the sector that Selena Group supports with its products. According to public data, the number of apartments in Poland for which construction permits or notifications were issued decreased in 2022. Also, the number of constructions started fell by 27.8% compared to the previous year. In turn, throughout last year, Europe observed a slight increase in the construction sector activity, but the market growth clearly subsided in the last quarter.
The reduced demand and market players’ decisions to reduce inventories across the value chain in Q4 2022 meant a price correction for most chemical raw materials. This was particularly evident in the category of silicones, whose prices fell in Q4 2022 to the level from the beginning of 2019. The cost of intercontinental transport declined in the second half of the year, stimulating the activity of Asian producers in Europe, which stimulated the competitive environment. However, there was a question mark above projected energy and gas costs, which slowed down the pace of price reductions. In the last quarter of 2022, the corrections in raw material prices benefited Selena Group, thanks to its flexible procurement policy based on multisourcing strategies and taking advantage of price differences between the regions of Europe, Asia and MEA. Higher prices of raw materials and finished products, as well as inflation which conditioned the market, helped Selena Group to increase turnover and led to a 13.6% rise in sales revenue in 2022 year-on-year.
“Amid high volatility of orders, it was also important to make ongoing, fast and appropriate adjustments to quantities, batch sizes and the regions in which we operate. Our flexibility is strengthened by the diversified offering and the growing portfolio. The proper distribution of production capacity across countries is also important. We have concentrated on technological development of our plants, e.g. in Dzierżoniów, in Bolu, Turkey and in Quer, Spain – investing in equipment and production lines, in automation and robotization, as well as in raising safety standards,” comments Roman Dziuba, Chief Operating Officer.
Group’ development and stable position
“The outbreak of the war in Ukraine had a big impact on doing business in the East. Due to the geopolitical situation, we reoriented our strategic growth direction from the East to the West. We see potential in, for example, Western countries of the European Union, NATO-protected countries, the United States and Brazil. Our revenues went up strongly in North and South America on the back of our business development. We hope that the armed conflict across the eastern border will end as soon as possible and we will be able to return to our traditional markets, although we are set to maintain our growth in the West,” says CEO Jacek Michalak.
Affected by the global crisis wrought by the coronavirus pandemic and by disrupted supply chains, already back in 2021 we made specific business decisions that generated good results also in 2022, a year which brought new challenges as well. We diversified and increased our supplier base to maintain production continuity and optimize raw material sourcing costs. Our formulations have been harmonized and standardized to a higher degree. We were helped by intensive R&D, also with regard to innovative products, and the focus on sustainable development goals. It was also important to constantly improve our personnel skills, especially through training, which will be continued in the coming years. We increased the reach of our distribution, with an increasing use of digital tools.
Despite its stable position on the markets where it operates, Selena is constantly looking for new solutions and areas of activity, especially those related to sustainable construction. In 2022, those efforts took the form of a strategic development direction. The Group is an active member of the Polish Green Building Council, the Romania Green Building Council and the Polish ESG Association. Working on new formulations and marketing innovative products is an opportunity for Selena Group to continue to grow organically. The company’s Sustainability Department helps supply the construction sector with products with a reduced carbon footprint while applying the highest standards of sustainable corporate development.
Recognized market leader
Selena’s strategic direction is also confirmed as right by numerous awards achieved in prestigious rankings in 2022. In the first Polish edition of the Best Managed Companies program (Deloitte’s awards program), Selena FM holding company was recognized among the 20 best managed private companies in Poland. The program evaluates companies in the areas of strategy, capability, commitment and financial performance. The company also won a distinction in the Forbes’s Diamonds ranking in the category of companies with revenues above PLN 250 million in the Lower-Silesia province. In the ESG Innovator 2022 competition, Selena received the title of “Visionary of the Polish ESG Association” for its role as an ESG precursor and leader, for responsible implementation of the ESG idea and for innovation contributing to sustainable transformation in the construction sector. In the “E-Innovation in Environment” category, Selena was recognized for its Selenoli project – a technology for the production of polyols based on bio-renewable raw materials Selena was also the winner of the Economic Awards of Polish Radio under the patronage of the Ministry of Economic Development and Technology – it ranked second in the “Good Executive Team” category.
Selena was established as a small company in Wrocław in 1992, and currently employs over 1,800 people around the world and achieves increasingly strong financial results year over year, both in terms of turnover and profits. Following the three decades of the company’s existence, the Group has 30 companies in 19 countries, on 4 continents. Selena’s manufacturing plants are located in Poland, South Korea, China, Romania, Turkey, Kazakhstan, Spain and Italy. The company’s product range includes e.g. foams, sealants, adhesives, waterproofing products, insulation systems, fastenings and complementary solutions. Selena’s products are available on nearly 100 markets. As one of the global leaders, the company sets the global course of development of zero-emission construction based on proprietary, key technologies.