| Arlington, VA September 11, 2007 |
FOR IMMEDIATE RELEASE
Contact: Kathee E. Baker 703//527-6223 kbaker@nacd.com |
Chemical Distribution Industry Profitability Higher In 2006
Recently released results from the National Association of Chemical Distributors’ (NACD) Company Productivity Report (CPR) for 2006 show that member firms achieved their highest overall profitability in at least five years.
In particular, the performance ratio “before tax return on net worth, i.e., owner’s equity,” for 2006 was 26.8% overall. Broken out by the three operating groups in chemical distribution, it was 28.8%, 35.9%, and 23.7% for the LIQ, FPP, and BPM groups respectively. (LIQ: firms with 75% or more of sales from Liquids [bulk/repackaged]; FPP: firms with 75% or more of sales from Factory Packaged Products [liquid and/or dry]; BPM: Balanced Product Mix [neither LIQ nor FPP].)
Not only was this the highest “overall” industry profitability in recent years, but this represented the highest performance for “each of the three industry segments” as well. Meanwhile, 2006 sales growth, when measured by actual physical throughput of pounds of chemicals moving through the warehouse (including 3rd party) was 1.67% higher in 2006 for all NACD CPR respondents overall (as compared to 2005). The three industry segments came in at .8% lower for the LIQ group, while the FPP and BPM groups showed 3.2% and 1.5% growth respectively.
“Our members reported a strong 2006 and this data certainly backs that up,” said NACD President Chris Jahn. “The economy had a lot to do with the industry’s profitability last year, but we also like to think that our members’ commitment to the Responsible Distribution Process (RDP), NACD’s management performance practice, contributes significantly to their good business results. Our member companies tell us that among the benefits they see in participating in RDP are reductions in insurance claims and costs, assistance with regulatory compliance, conservation of company resources, development of systematic employee training, and better documentation of company policies,” Jahn continued. “In RDP, the focus is on continuous improvement, which drives company management to look all aspects of how they run the business.”
The NACD Company Productivity Report (CPR) is an annual financial ratio benchmarking analysis tool for member firms to evaluate their company’s operating results in order to pinpoint strengths and weaknesses, and improvement opportunities. Participating firms receive an overall 150-page industry-wide report as well as an individual report containing the firm’s own ratios calculated alongside the appropriate industry comparatives.
In particular, the performance ratio “before tax return on net worth, i.e., owner’s equity,” for 2006 was 26.8% overall. Broken out by the three operating groups in chemical distribution, it was 28.8%, 35.9%, and 23.7% for the LIQ, FPP, and BPM groups respectively. (LIQ: firms with 75% or more of sales from Liquids [bulk/repackaged]; FPP: firms with 75% or more of sales from Factory Packaged Products [liquid and/or dry]; BPM: Balanced Product Mix [neither LIQ nor FPP].)
Not only was this the highest “overall” industry profitability in recent years, but this represented the highest performance for “each of the three industry segments” as well. Meanwhile, 2006 sales growth, when measured by actual physical throughput of pounds of chemicals moving through the warehouse (including 3rd party) was 1.67% higher in 2006 for all NACD CPR respondents overall (as compared to 2005). The three industry segments came in at .8% lower for the LIQ group, while the FPP and BPM groups showed 3.2% and 1.5% growth respectively.
“Our members reported a strong 2006 and this data certainly backs that up,” said NACD President Chris Jahn. “The economy had a lot to do with the industry’s profitability last year, but we also like to think that our members’ commitment to the Responsible Distribution Process (RDP), NACD’s management performance practice, contributes significantly to their good business results. Our member companies tell us that among the benefits they see in participating in RDP are reductions in insurance claims and costs, assistance with regulatory compliance, conservation of company resources, development of systematic employee training, and better documentation of company policies,” Jahn continued. “In RDP, the focus is on continuous improvement, which drives company management to look all aspects of how they run the business.”
The NACD Company Productivity Report (CPR) is an annual financial ratio benchmarking analysis tool for member firms to evaluate their company’s operating results in order to pinpoint strengths and weaknesses, and improvement opportunities. Participating firms receive an overall 150-page industry-wide report as well as an individual report containing the firm’s own ratios calculated alongside the appropriate industry comparatives.
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NACD and its nearly 250 chemical distribution member companies are vital to the chemical supply chain providing products to over 750,000 end users. They make a delivery every six seconds while maintaining a safety record that is more than twice as good as the safety standards set by DOT. NACD members are leaders in health, safety, security, and environmental performance through implementation of the Responsible Distribution ProcessSM (RDP), established in 1991 as a condition of membership and is a third-party verified management practice. For additional information on our members, their safety record or NACD, visit NACD’s website — http://www.nacd.com.
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