CEO of H.Essers
Thanks to its triple strategy, H.Essers has been growing robustly for two decades. The Genk-based logistics company has made a string of acquisitions and is increasingly generating revenue in Central and Eastern Europe. CEO Gert Bervoets explains why.
Almost EUR 410 million in revenue in 2013, more than 3,700 employees, 32 facilities in 11 countries: the figures fire the imagination. “Everything is relative” says Gert Bervoets, CEO of H.Essers since 1 April 2013. “In Limburg, we are the leader of the pack - we are the largest employer in the province - but at Belgian level we are only average-sized and at European level we certainly aren’t a major player. So let’s keep our feet firmly on the ground.”
Feet firmly on the ground, but high ambitions. Since the mid-1990s, the company has more than quadrupled its revenue. This is a family business - today’s managing director is Hilde Essers, granddaughter of Henri Essers, who founded the company in 1928, together with her father Noël Essers. The firm aims to expand further in the coming years via acquisitions as well as organic growth.
Annual growth of 10%
“Annual growth of 10% or more is vital to our strategy,” explains Gert Bervoets. “Our aim is to be an asset-based company: to invest all our profits in trucks, trailers, warehouses and IT. This will allow us to meet our goal of responding to the market quickly and flexibly. Things are not as easy when you lease warehouses. To pay back these loans, we must continue to grow. And to grow, we must continue to invest. For this reason, growth and investment are inextricably linked.”
EUR 56 million in investments
H.Essers makes sizeable investments each year. The company invested EUR 56 million in 2013: EUR 25 million in buildings, EUR 25 million in rolling stock and EUR 6 million in IT. In October 2013, the Limburg-based company proudly opened a new 30,000 m2 facility in Romania’s capital, Bucharest.
1 million m2 of storage space
Other recent investments: a 12,000-m2 warehouse opened in Wilrijk in September 2013, 10,000 m2 of extra storage space at the headquarters in Genk modified in January 2014 to handle pharmaceutical products, and a new 10,000 m2 distribution centre in Lommel specially built for the partnership with candle maker Spaas to open in May 2014. H.Essers is moving ever further up the supply chain with its services, until just after production. Logistics and warehousing in the meantime account for more than a quarter of total revenue. For the chocolatier Godiva, for example, the facility in Kampenhout handles not only its logistics and distribution, but also its packaging. For all sites combined, H.Essers will have almost one million m2 in storage space by the middle of 2014.
A new truck every day
A second tranche of EUR 25 million is being invested in trucks and trailers. The H.Essers fleet consists of 1,250 units that are replaced every four years. “This means we need to purchase 200 to 350 units each year. This comes down, as it were, to one new truck or trailer per day. For this we can count on ING Lease, a specialised division of ING.”
Air and rail as well
In addition to traditional transport by road, the company has other niche activities such as specialised transport between European airports, oversized loads, bulk transport and multimodal transport. One terminal is located at the headquarters in Genk, from which a train departs for Curtici in Romania five times per week.
Safes on wheels
While an asset-based approach may be the first strategic choice, the second choice is for specialisation in pharmaceutical products, chemicals and ‘high security’. ‘High security’ is high-value transport such as electronics, clothing and cigarettes. This requires still greater levels of investment. “For example, due to the nature of their cargo, our trucks must be monitored remotely. Our trailers must be able to keep their cargo cool and are equipped with extra protection. They are safes on wheels. To give an example: a number of trailers have seven different SIM cards built into them. The cargo section can only be opened if we in Genk push the button. In this context, we also invest approximately EUR 6 million in in-house IT development each year.”
Looking to Eastern Europe
The third strategic choice of H.Essers is its focus on Central and Eastern Europe. The logistics company believes that there are even more possibilities for growth in the region. Romania in the meantime has become a second homeland, with Turkey and Russia to follow. Traffic to Moscow, for example, increased strongly in the second half of 2013. The company’s ‘high security’ transport services certainly play a role here. “While this summer we still had 10 to 15 trucks leaving for Russia every week, now this number has already risen to 50 per week. They travel to Lithuania, where our Russian drivers take over. Russian customs is strict about whom it allows into the country,” explains Gert Bervoets.
Loans on competitive terms
Given the strong focus on growth and its asset-based strategy, H.Essers requires large investment loans each year. “ING has been an important partner for years in this area. I have the impression that ING goes to great lengths to give us competitive rates. This probably has something to do with our loan volume and our long-term relationship: H.Essers and ING have been working together for two decades.”
Expansion of cash pooling to Romania
In 2013, H.Essers received the ‘Export Lion’, a prize awarded by Flanders Investment & Trade for companies that score strongly in the area of export. It must be noted that 84% of H.Essers’s revenue comes from abroad. “Our group comprises many companies in various countries, each with their own accounts. In partnership with ING, we have set up a cash pooling scheme to optimise our available cash. The system works well, and we now wish to expand it to Romania. Tough regulations make this difficult, but I am convinced that ING can make it happen.”
In addition to leasing, loans and cash pooling, ING will soon also be helping H.Essers grow with factoring. “One sixth of our EUR 410 million in revenue is always in the form of receivables, since our customers are granted payment terms of 30 or even 60 days. Our goal now is to pass on this debt to the bank, while we ourselves continue to follow up payment on the invoices. This form of financing in principle follows revenue and thus can contribute to growth.”
Insight and advice
Finally, one ING service that H.Essers presently does not use enough, according to Gert Bervoets, is its advice and market studies department. Recently, ING Event Financing conducted a study at H.Essers to gain more insight into the current balance sheet and the possibilities for growth financing. “But macro-economic trends, new technologies and forecasts on the price of diesel, for example, could also be very useful. Our trucks consume 50 million litres of diesel per year. Knowledge that the price per litre will increase or decrease by 10 euro cents is very valuable when drawing up a budget. I am also wondering what the impact on H.Essers would be if shale gas, for example, were to become an important source of energy.”
Trust and transparency
“Words such as ‘trust’ and ‘transparency’ can sound hollow when applied to a banking relationship, but ING Relationship Manager Martine Vansweevelt, CFO Koenraad Rogiers, Hilde Essers and I all have the habit of communicating openly and clearly,” says Gert Bervoets. “We meet every quarter to review the results and present our plans. With our way of interacting, we all know where we stand with each other. When things go less well we don’t gloss over the facts, and we don’t continually shop around at other banks. In exchange, we receive good rates and comprehensive service. I believe this is the best foundation for a future-oriented partnership.”
Gert Bervoets: In-house CEO
Limburger Gert Bervoets (44) has been CEO of H.Essers since 1 April 2013. He had already been working at H.Essers for eleven years. He started as plant manager in Wilrijk in 2002, gradually received more responsibilities, including for Romania, and in recent years was General Manager Warehousing. Before he came to H.Essers, Gert worked eight years as Group Product Manager at Nestlé. He studied commercial engineering at the Hogeschool-Universiteit Brussel (HUB).