Despite recession, U.S. chemical distributors continued to achieve profitability in 2008, though at slower levels than previous years, NACD shows
November 5, 2009
– Despite our nation’s economic recession, recently released results from the National Association of Chemical Distributors’ (NACD) Company Productivity Report (CPR) showed NACD member companies continued to achieve profitability in 2008, though at slower levels than previous years.
NACD members experienced a 16.7% nominal dollar sales increase, which translates into approximately 14.5% increase after adjusting for inflation.
In particular, the performance ratio “Return on investment before tax return on net worth,” (i.e., owner’s equity), for the three operating groups in chemical distribution, was 15.2%, 34.2 %, and 32.4% 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].)
While NACD members showed a positive sales changes over 2007, 2008 sales growth, when measured by actual physical throughput of pounds of chemicals moving through the warehouse was flat or negative: -1.6% for the LIQ group, while the FPP and BPM groups showed -4.0% and .03% growth, respectively.
“Although our members reported a slower sales growth during 2008 their return on investment indicates a strong management culture, backed-up by a commitment to the Responsible Distribution ProcessSM (RDP), NACD’s management performance practice,” said Chris Jahn, President of NACD. 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 145-page industry-wide report as well as an individual report containing the firm’s own ratios calculated alongside the appropriate industry comparatives.
NACD and its more than 250 members have established themselves as leaders in health, safety, security, and environmental performance through implementation of the Responsible Distribution Process (RDP), established in 1991 as a condition of membership in NACD. Incorporated as a condition of membership in January 1999, NACD members undergo third-party on-site RDPV – RDP Verification. For additional information, visit NACD’s Web site — http://www.nacd.com.