The establishment of construction chemicals specialist Chryso Southern Africa Group’s first subsidiary outside South Africa – Chryso Eastern Africa, headquartered in Nairobi, Kenya – is currently under way and is expected to be operational by June 2015.
This development is part of Chryso Group’s strategy to expand further into Africa. The group currently operates in 16 countries, with 16 subsidiaries globally, while its products are sold in 75 countries worldwide.
In south-western Africa, Chryso has a distributor in Angola and has had a presence in Ghana for ten years. Further, the group has established a platform for development in Nigeria. It also has a presence in all South Africa’s neighbouring countries – Namibia, Zambia, Mozambique, Botswana and Zimbabwe.
“Chryso Southern Africa has definite plans to establish manufacturing facilities in East and West Africa,” reveals Chryso Southern Africa Group CEO Norman Seymore.
Seymore, who is also global VP of Chryso Group, highlights that other growth and acquisition possibilities are also being studied in different parts of the world.
Chryso became a standalone business in September 2014, following the acquisition of Chryso from its parent, Materis, through the aquisition of Chryso and its management by French private-equity firm LBO France.
“Chryso was one of four companies under Lafarge Speciality Materials, which became Materis in 2000, following a leveraged buy-out deal with three private-equity funds. In 2006. Wendel Investments became the majority shareholder of Materis and, during 2014, decided to divest the Chryso, Kerneos and Parex activity, while keeping the Paints business in the Materis group,” explains Seymore.
In a press statement issued in Paris in September 2014, LBO France announced that it had completed the acquisition of Chryso from Materis for €285-million, along with the incumbent management team.
Seymore tells Engineering News that the new credit line that the LBO acquisition has provided will increase the pace at which Chryso Southern Africa is being developed, resulting in the group becoming a springboard into Africa.
While Chryso is France-based, it has been present in South Africa since 1996 and considers itself – through market share and product performance – to be the market leader in South Africa. Now an independent company subsidised by LBO France, Chryso has entered an “exciting phase of global growth”, notes Seymore.
In South Africa, Chryso Southern Africa Group comprises admixture producer Chryso SA and construction chemicals manufacturer a.b.e Construction Chemicals, which was acquired in 2010. Seymore is CEO of both companies.
Seymore notes that part of the reason for the acquisition of a.b.e was that Chryso had a large market share in the traditional market and wanted to broaden the range of products it had on offer, as well as expand into Africa.
Meanwhile, the group recently invested in new manufacturing facilities in South Africa to reduce its dependence on imported materials. Seymore says Chryso plans on manufacturing more locally to avoid foreign exchange risks.
a.b.e Construction Chemicals is also upgrading production facilities of its automated packaging and filling machines to reduce its market costs.
“When it comes to a.b.e, we feel we have room to grow through new products and market-share development. The company is not a new business, but is replacing a business we already have by introducing new products that enable us to stay at our current market-share level,” says Seymore.
Chryso’s product offering includes liquid chemicals to enhance the performance of concrete and cement. The company’s customer base includes the ready-mix and precast concrete industries, cement producers, major contractors and mining sectors.
With this in mind, the demand for Chryso products is strongly linked to that of the overall construction industry. Further, various factors, such as new cement entrants that have infiltrated the market, have resulted in very limited growth in the industry.
“This has presented a challenge to other cement producers, as the industry was already facing an oversupply, which means everyone will get a smaller piece of the pie,” says Seymore.
He adds that the concrete business in Africa also provides a relatively small base in terms of the number of projects currently under way on the continent.
“Going into Mozambique or into Angola with just cement and concrete additives is not a sustainable business, and we wanted to go in with a range of products. a.b.e brings the waterproofing, concrete-repair, flooring and sealant products, which make our export package significantly bigger. We realised that, to find the right distributors and to offer a comprehensive solution for construction sites, we needed to offer a combined package,” says Seymore.
He notes that, while the prospects for significant growth in the local cement and concrete industry are not immediate, Chryso is hopeful that, if government’s National Development Plan (NDP) is implemented and if it commits to supporting construction projects, the industry outlook will definitely change.
“The NDP has allocated billions of rands to infrastructural development and upgrading but Chryso does not see any evidence of this happening.
“This is why we are supporting our growth through expansion into Southern Africa. Locally, we cannot continue doing the same thing while expecting a different result. The demands of our customers are also changing, as they are in a flat market with rising costs and, therefore, have to be innovative in terms of reducing their costs,” adds Seymore.
Focusing on R&D
Chryso Group is investing 4% of its yearly turnover in research and development (R&D) to create new products that will perform better than the current generation of products.
Seymore highlights that one of the primary demands from customers is that company products must be ‘green’, something Chryso ensures. From an environmental and perfor- mance aspect, reducing the carbon footprint of cement requires the addition of extenders such as slagment and fly ash – by-products from the power stations and steel industry.
“We sell activators that enable cement and concrete producers to extend the amount of fly ash or slagment fed into cement. Chryso activators allow for increased use of such supplementary cementitious materials which help to reduce the percentage of clinker in cement. Reducing clinker content decreases carbon emissions as well as the costs associated with carbon tax,” says Seymore.
He adds that not all Chryso Group customers can afford R&D or their own laboratories, so they look to suppliers as their source of innovation and new business avenues, which is where Chryso and a.b.e play a significant role.
Chryso offers its clients technical support, with laboratories at the group’s head office in Jet Park, Ekurhuleni. Seymore notes that Chryso mostly sells to technical companies that have experience in distributing and using Chryso products, add-ing that the group’s sales push is more technical than commercial.