H.C. Starck recently released 2014 financial results. The company increased its sales volume to €785.9 million (~ $832.9 million) in 2014, compared to €703.9 million (~ $746.0 million) in 2013. As of December 31, 2014, the company reported 2,678 employees worldwide.
“The increase in sales was also supported by our strategic growth projects in Asia: the tungsten joint ventures in China and Vietnam,” said Andreas Meier, CEO. “That helped us grow significantly our tungsten powder business, and gain large market shares especially in Asia. Overall, 2014 was shaped by the difficult economic situation in our global core markets, which hurt the profitability of the business.”
In particular, structural changes in the tungsten and tantalum market corresponded to negative price effects and increased competition, which in turn led to a decline in raw material prices. Sales results were also impacted by the weak Japanese yen and a notable drop in metal listings. In order to counteract these developments, H.C. Starck launched an extensive cost reduction program for all of its divisions in the spring of 2014. In addition, the company maintained its existing strict cost management initiatives.
Sales in the tungsten powder division increased by more than €75 million (~ $79 million) in 2014, bolstered by new customers and market share gains. In addition, the tungsten joint venture in China led to a significant sales volume increase. H.C. Starck’s tungsten powders are mainly used in manufacturing industrial tools and wear parts, in order to facilitate high-performance processes like metal drilling, turning and milling on an industrial scale. The tungsten component business also saw a clear increase in sales volume, in particular thanks to the competitive cost structure at the division’s Chinese manufacturing site.
In the tantalum and niobium powder business, H.C. Starck reported no increase in demand. Despite this difficult market environment, the company was able to gain market shares for tantalum powders and reinforce its competitive position. In addition, H.C. Starck used cost-effective raw materials to stabilize its results in the second half of the year.
Slower project business from the chemicals industry and price adjustments resulting from a decline in raw material prices caused a decline in sales for tantalum parts and components such as sputter targets. In the surface technology and ceramic powders division, H.C. Starck saw a double-digit percentage increase in sales. In particular, the thermal spray powder business benefited from increased demand in the U.S. and several new products and customers. The products sold under the names Amperit and Ampersint are reportedly important materials for energy production and medical technology, as well as the oil and gas industry. Increased demand for aluminum nitride, which is used as polymer filler in the electronics industry because of its outstanding thermal conductivity and electrical insulation properties, generated even more sales in this division.
Despite the difficult situation in 2014, H.C. Starck managed to increase its investments up to around €40 million (~ $42 million). The major part of the budget was spent for the construction of the production facilities of the new tungsten joint venture in Vietnam, into the German production sites and into the further expansion of the tungsten joint venture in China.
Research and development focused on projects to increase the yield in processing secondary materials and byproducts, to continuously improve the quality of high-capacity tantalum and niobium powders, and to develop special tungsten carbides for the Asian market. In addition, H.C. Starck launched several partnerships to use tantalum pastes in manufacturing ultra-thin capacitors with heights less than 0.3 mm. These capacitors can be used to make very thin electronic devices that will be used in many forward-looking trends (i.e., wearable electronics).
Another research focus was on developing high-purity tantalum and niobium oxides, which are the base material for SAW filters. Among other things, these are used in mobile phones and are essential for secure signal processing during data transfers, an area that is growing rapidly thanks to increasing mobile phone and internet usage. In addition, H.C. Starck signed a development contract with Rapid Prototype and Manufacturing (rp+m), a U.S. company specializing in 3D printing technologies. The contract includes developing innovative products from technology metals that are manufactured using 3D printing processes.
In 2015, H.C. Starck expects a gradual recovery for its core markets. “Our cautious business forecast is mainly based on the persistent weak growth of our target industries in Europe and Asia,” said Meier. “Oil and raw material prices as well as currencies will continue to be very volatile; growth in the emerging countries will be slower, and geopolitical conflicts will slow the global economy.”
Despite these uncertain framework conditions, H.C. Starck sees good opportunities ahead for 2015, due in part to low oil prices, which will stimulate the processing industry. The focus of the ongoing fiscal year is on optimizing the powder business.
“With the complete startup and maximum capacity utilization of our tungsten joint ventures in China and Vietnam, we are perfectly positioned to leverage Asia’s market potential and the demand for tungsten for our own growth,” said Meier. “Together with our existing tungsten powder production lines in Germany and Canada, that makes us the world’s largest independent tungsten manufacturer.”
H.C. Starck plans to grow its tantalum and niobium powder business during the 2015 fiscal year. “We will reinforce our leading market position with innovative products for new industries, along with a revised business model for capacitor powders,” said Meier. In addition, the company plans to position its tantalum and niobium powder business more broadly outside the electronics industry.
In the other divisions, the company will strengthen the regional expansion of its business activities. In addition, innovative technologies and market segments like additive manufacturing and the semiconductor industry offer attractive business opportunities. “Highly complex ceramic components and special sputter target materials are important products for the semiconductor industry,” said Meier.
A secure, competitive raw material supply, based on sustainable ethical and social policies and environmental principles, will remain an important part of H.C. Starck’s business strategy. In the spring, H.C. Starck was certified for the fourth consecutive year running as a conflict-free smelter for its tantalum business. The corresponding audit was performed by the independent Electronics Industry Citizenship Coalition (EICC) and the Global e-Sustainability Initiative (GeSI), as part of the Conflict-Free Smelter Program (CFSP). The CFSP audit of H.C. Starck’s tungsten processing line will be finished in the summer of 2015. In addition, the company plans to recycle even more secondary materials in the ongoing fiscal year.
“Our goal is to separate our raw material supply from the increasing volatility and speculation on the raw materials market,” said Meier. “That’s why we are not only processing conflict-free ore concentrates, but are also recycling more secondary materials—to secure our supply of cost-effective raw materials.”