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USA chemical distribution showed slower growth in 2007

December 3, 2008

Recently released results from the National Association of Chemical Distributors' (NACD) Company Productivity Report (CPR) for 2007 show that member firms continued to achieve profitability, though at slower levels than past years.

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, it was 23.6%, 20.6 %, and 16.8% 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).

These statistics reflect a slowing in sales growth. Sales growth in 2007, when measured by actual physical throughput of pounds of chemicals moving through the warehouse (including 3rd party), was a flat 1.6% for all NACD CPR respondents overall (as compared to 2006). The three industry segments came in at 5.1% lower for the LIQ group, while the FPP and BPM groups showed .02% and 0.6% growth, respectively.

“Although our members reported a slower sales growth during 2007, their return on investment indicates a strong management culture backed up by a commitment to the Responsible Distribution Process (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.”

Source: National Association of Chemical Distributors (NACD) website

Further Information

Visit: http://www.nacd.com

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