Deceuninck N.V.

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Deceuninck N.V.

Bruggesteenweg 164
Hooglede-Gits,
Belgium
Telephone: (32 051) 23 92 11
Fax: (32 051) 22 79 93
Web site: http://www.deceuninck.com

Public Company
Incorporated: 1937
Employees: 2,979
Sales: EUR 643.69 million ($824.30 million) (2005)
Stock Exchanges: Brussels
Ticker Symbol: DEC
NAIC: 326122 Plastics Pipe and Pipe Fitting Manufacturing; 326191 Plastics Plumbing Fixtures Manufacturing

Deceuninck N.V. is one of the world's leading producers of PVC-based window and door systems, profiles, sliding doors and windows, shutters, screens and other home protection fittings, flooring, and interior and exterior cladding. The company operates through two main product divisions. Fenestration includes one of the market's most extensive range of window and door profiles and systems, as well as sliding door and window fittings and systems, finishing profiles, and home protection fittings. The Non-Fenestration division includes the group's interior ceiling tiles and profiles, wall cladding, as well as molding, window sills, skirting boards, and the like. This division also produces exterior wall and roofing systems, and panels and planks for outdoor terraces and decks. The company also produces sound- and weather-proofing products. Acquisitions have enabled Deceuninck to expand rapidly in the early years of the 2000s. These include the 2003 purchase of Thyssen Polymer in Germany, which made the Belgium-based company the global leader in its market. Deceuninck operates 31 subsidiaries worldwide, including production facilities (compounding, tool manufacturing, extrusion) and sales and marketing and other support subsidiaries.

Southern, Western, and Northern Europe represents 42.6 percent of the group's sales. The United Kingdom adds 9.6 percent to Deceuninck's European sales, and the Central and Eastern Europe market, including Russia, adds 13 percent. The United States is the company's single largest market, generating more than 21 percent of sales. Asia, including Turkey, adds nearly 14 percent to the group's sales. In 2005, Deceuninck posted total turnover of EUR 643.5 million ($824 million). Listed on the Brussels Stock Exchange, the company remains controlled by the founding Deceuninck family, represented by Chairman Arnold Deceuninck and Vice-Chairman Willy Deceuninck. Day-to-day operations, however, are guided by CEO Clement Meersman.

PLASTIC PRODUCTS PIONEER IN 1937

Deceuninck N.V. evolved from a business founded in Beveren-Roeselare, Belgium, by Benari Deceuninck in 1937. The company was a pioneering producer of small plastic products for the Belgian market, including buttons, belt buckles, and similar items. The company's manufacturing technology was limited to products capable of being produced from plastic sheets. Into the early 1940s, the company added the manufacturing of plastic boxes as well as combs. By the end of World War II, however, Deceuninck had begun investing in equipment capable of using newly developing plastics materials such as polystyrene and acetate. This allowed the company to expand its range of items into new categories, such as toys and packaging materials. By then, the company had reincorporated as a limited company.

The next generation, led by Roger Deceuninck, and including his brothers Michel and Lionel, joined the family-owned company toward the end of the 1950s. The company continued to explore the new and fast-developing plastics technologies, and in 1960 the company added capacity for extrusion based on polyvinylchloride (PVC) pellets. This extension led the company to begin producing for the construction industry. Deceuninck's first PVC products, using technology acquired from Italy, included profiles for shutters. Then, in 1965, the company began producing its first window profiles. By the end of the 1960s, these had become the group's core product, while the company tightened its focus on the construction industry. Over the next decade, Deceuninck extended its range of fittings and profiles to include window frames, shutters, blinds, doors, and structural shapes, among others. Deceuninck soon began to explore international expansion. The company initially limited its operations to The Netherlands. By 1970, however, the company had fixed its expansion target on the neighboring French market, and established its first sales subsidiary there. Meanwhile, the company's growing success in the construction market led it to place greater emphasis on developing its profiles capacity. This direction became especially marked after Roger Deceuninck took over as head of the company in 1974. In that year, as well, the Deceuninck family opened the company's capital to outside investors for the first time, selling a large stake in the company to U.S.-based City Investing, one of the world's largest and most diversified investment groups at the time. Following the sale to City Investing, Deceuninck reincorporated as the limited liability company, Deceuninck N.V.

Over the next decade, Deceuninck transformed itself into an international player in the PVC profiles market, itself one of the fastest-growing segments of the European construction fittings sector. Deceuninck expanded into the United Kingdom in 1981, setting up subsidiary Deeplas Ltd. there. The company then broadened its international presence from sales and marketing operations to establish full-fledged manufacturing facilities in both the United Kingdom and France. By 1984, Deceuninck had added a subsidiary in Spain as well.

PUBLIC COMPANY IN 1985

City Investing decided to enter liquidation proceedings in 1984 in order to sell off its diversified holdings. In 1985, Roger Deceuninck and his brothers, backed by institutional investors, performed a management buyout of Deceuninck. Soon after, the company went public, listing its stock on the Brussels Stock Exchange.

By then, Deceuninck had succeeded in transforming itself into a truly international player in the European PVC profiles market. Into the second half of the decade, the company's foreign operations generated some two-thirds of its total sales. The United Kingdom alone represented nearly 37 percent of the company's turnover. The public listing enabled the company to expand strongly through the end of the decade, through the acquisition of an extrusion plant in France and acquisition of a stake in Plastibat S.A. The company also built a new headquarters and warehouse in the United Kingdom, based in Calne. By the end of the 1980s, Deceuninck had succeeded in more than doubling its sales, topping revenues of BEF 3,500 million in 1989.

Toward the end of the decade, Deceuninck made its first effort to break into the German PVC profiles market, which had established itself as the main European market for this product. As part of that effort, the company acquired an extrusion plant in Germany in 1989. Deceuninck GmbH, as the company became known, specialized in the production of window profiles, including colored window profiles using a co-extrusion process.

COMPANY PERSPECTIVES

In line with its passion for excellence, the Deceuninck Group wants to project itself as an integrated worldwide group, specialising in compounding, construction of dies, design, development, extrusion, finishing recycling and injection moulding of systems, profiles and TPE seals for the construction industry. Deceuninck aims to offer products and services of superior quality. In this respect, the company can count on the constant dedication of its entire staff in order to achieve excellence at operational, commercial, human and financial level.

At the same time, Deceuninck launched a strategy of developing vertically integrated operations, commissioning its own PVC compounds production facility that same year. The facility, which produced uPVC powders, was named Deceuninck Compound. In another effort to ensure its supply of raw materials, Deceuninck next acquired recycling company Rheo S.A., which had been part of Fabrique National. The purchase provided Deceuninck with a source of raw materials to be used in the production of a number of secondary products for the building market, including poles, beams, and boards.

Deceuninck also had continued its international expansion. In the late 1980s, the company had anticipated the collapse of the Soviet empire, opening pilot offices in a number of the countries in the Eastern Bloc, including Poland. This allowed the company to expand strongly throughout the region, starting in 1993. Also into the early 1990s, Deceuninck's sales reached markets such as Ireland, Canada, Greece, the Philippines, New Zealand, and elsewhere.

WORLD LEADER IN THE NEW CENTURY

Buoyed by its success in Europe, where Deceuninck ranked among the market's top players, Deceuninck decided to enter the U.S. market in the mid-1990s. This strategy came in part as a result of a change in management, when the company went outside the Deceuninck family for the first time, hiring Clement Meersman to serve as the company's chief executive officer.

Meersman helped steer the company's entry into the United States. Deceuninck's first move into that market came in 1995 with the purchase of Delaware-based Slocomb Industries and its extrusion subsidiary Acro Extrusion. Slocomb had been founded in the 1950s by Leon Slocomb, who started out as a window salesman, before launching production of his own window models. The company success in the windows market led it to extend its operation to include profile extrusion, with the creation of Acro in 1979.

Deceuninck sold Slocomb's window business back to the Slocomb family in 1997, keeping the extrusion operation. Although Acro remained a relatively small player in the U.S. market, the purchase had enabled Deceuninck to study the U.S. market firsthand and select its next acquisition target. This came in 1997, when the company acquired Dayton Technologies, a subsidiary of aluminum giant Alcoa. Based in Ohio, Dayton had established itself as one of the leaders in the U.S. profiles market. The purchase gave Deceuninck a 12 percent share of the U.S. market, and also established the United States as one of the company's largest geographic markets.

KEY DATES

1937:: Benari Deceuninck begins manufacturing buttons, belt buckles, and other products from plastic sheeting.
1941:: The company is restructured as a limited company and begins manufacturing boxes and plastic combs.
1945:: The company begins production based on polystyrene and acetate.
1960:: The company launches PVC extrusion, producing roller shutters.
1965:: The company starts production of extruded window profiles.
1970:: A sales subsidiary is opened in France.
1974:: A majority stake is sold to City Investing.
1981:: The company enters the United Kingdom, setting up Deeplas Ltd.
1984:: The company enters Spain with a sales subsidiary.
1985:: Roger Deceuninck leads a management buyout and the company is listed on the Brussels Stock Exchange.
1989:: The company enters Germany with the acquisition of an extrusion facility; recycling company Rhea S.A. in Belgium is acquired.
1993:: The company launches expansion into Eastern Europe.
1995:: The company enters the United States with the purchase of Slocomb Industries in Delaware.
1997:: The company becomes a U.S. leader with the purchase of Dayton Technologies.
1999:: The company acquires Status Systems in the United Kingdom, entering the top five in that market.
2003:: The company becomes a world leader with the purchase of Thyssen Polymer in Germany; 75 percent of Detajoint in Belgium is acquired.
2005:: A production facility is built in Russia near Moscow.
2006:: The company acquires full control of Detajoint; the Deceuninck family sells a 17.5 percent stake in the company to the Sofina private equity firm.

Deceuninck's strong growth in Eastern Europe was cut short by the economic crisis that swept the region in 1998. In response, Deceuninck moved to shore up its operations in Western Europe. As part of this effort, the company boosted its U.K. presence by buying that country's Status Systems in 1999. The purchase of the Oldham-based company enabled Deceuninck to break into the top five in the U.K. market, boosting its share past 6 percent.

Deceuninck also targeted expansion in another European growth market, buying a majority stake of Ege Profil, of Turkey, in 2000. The acquisition of 50.1 percent of Ege gave the company control of one of Turkey's top three profiles producers, with a 10 percent share of that market.

The company remained on the lookout for new acquisition targets. By 2003, the company had found its next opportunity, when it reached an agreement with Germany's ThyssenKrupp AG to acquire its profiles subsidiary, Thyssen Polymer GmbH. The purchase catapulted Deceuninck into the global lead. It also reinforced the company's U.S. presence, adding factories in New Jersey and Arkansas, as well as Thyssen's main facility in Bogen, Germany. In a smaller acquisition that year, the company acquired a 75 percent stake in Detajoint N.V., based in Dottignies, Belgium, a producer of weatherproof seals. The company grew again in 2004, boosting its Turkish operation through the acquisition of the window profiles unit of the Sabanci group.

Into the mid-decade, Deceuninck targeted further growth in Eastern Europe, announcing its plan to construct a factory in Moscow in 2005. The company also launched a new extension of its Calne, England headquarters, building a new 115,000-square-foot distribution facility, opened in October 2005. The expansion led to the company's announcement that it planned to merge its Status Systems subsidiary's operations into Deceuninck UK Ltd. By the end of that year, the company had brought its new Russian plant online, with a four-line facility in Serpuchov, near Moscow.

By the middle of the first decade of the 2000s, the Deceuninck family had more or less ceased to play an active role in the company's day-to-day operations, although Arnold Deceuninck, son of Roger Deceuninck, had been named company chairman in 2004. In July 2006, the family sold a 17.5 percent stake in the company to Brussels-based private equity group Sofina. By then, Deceuninck had completed its acquisition of Detajoint, taking full control of the seals subsidiary in January of that year. In just 30 years, Deceuninck had built itself into the world's leading PVC profiles producer.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Asia Profile Holding Co. Ltd. (Thailand); Deceuninck Beheer B.V. (Netherlands); Deceuninck Bulgaria Ltd.; Deceuninck Coordination Center N.V. (Belgium); Deceuninck Holding Germany GmbH; Deceuninck Holdings UK Ltd.; Deceuninck Ireland Unltd.; Deceuninck Kunststof B.V. (Netherlands); Deceuninck Ltd. (United Kingdom); Deceuninck North America Inc. (United States); Deceuninck Romania S.R.L.; Deceuninck Rus 000 (Russia); Deceuninck S.A.S. (France); Detajoint N.V. (Belgium); Ege Profil A.S. (Turkey); Fin-Tonic N.V. (Belgium); Plastics Deceuninck N.V. (Belgium); Thyssen Polymer (Thai) Co. Ltd.