HOUSTON — A change in ownership has not changed the outlook at Kraton Polymers.
The Houston-based thermoplastic elastomer maker expects to approach double-digit sales growth this year and plans to add more than 40 million pounds of capacity by 2003.
Royal Dutch/Shell Group sold Kraton last year to Ripplewood Holdings LLC, a New York-based private equity investment firm. The Kraton buy was Ripplewood's first chemicals-related acquisition.
"Ripplewood's strategy was very similar to ours," Kraton's Garret Davies said in a March 26 interview in Houston. "They liked the fact that we have above-average growth rates in our set of markets and that we're a technical leader in our field."
Kraton is a styrenic block copolymer used in products ranging from adhesives to footwear to soft-grip handles to asphalt modification. Sales in 2001 are expected to be about $650 million after hitting $600 million last year.
The firm also will add almost 42 million pounds of capacity by streamlining plants in Belpre, Ohio, and Berre, France, in 2002 and 2003. Worldwide Kraton capacity currently is about 700 million pounds.
Kraton operates six plants globally and licenses several compounders — including PolyOne Corp., Teknor Apex, Multibase Inc. and GLS Corp. — to make Kraton-based compounds.
Kraton's future plans call for internal growth rather than acquisitions. The firm also is satisfied with its current compounding licensees and has no plans to expand in that area, said Davies, Kraton's vice president-Americas.
The sale of Kraton to a financial firm rather than a competing plastics or chemicals business was the result of major chemical industry restructuring going on at the same time that financial buyers were looking for undervalued assets in the industry, Davies said. Royal Dutch/Shell is a major example of that movement; the oil and refining giant has shed $6 billion in chemical assets since late 1998.
"The chemical industry came around to restructuring later than a lot of other industries," he said. "Larger companies that owned smaller chemicals businesses had to decide what made sense for them. And when they did, they found successful financial buyers looking to add profits to their investment funds."
Productwise, Davies said the firm is excited about trends toward privatizing road repairs. As contractors and communities look to make roads last longer, Kraton's durability in asphalt modification could lead to new business.
Automotive market trends moving away from mechanical fastening systems and toward adhesives also could boost sales.
Kraton also plans to maintain its high level of research and development staffing. Some 150 of the firm's 950 employees — about 15 percent — are devoted to R&D.
"We're the only TPE maker with plants and research facilities and marketing support on all the major continents," Davies said. "We're going to continue with our global strategy."