A real game-changer for the chemical group Rolfes occurred last October when it diversified into the food business after acquiring Bragan Chemicals. That purchase expanded Rolfes’ extensive industrial, agricultural, and water and mining chemicals product range to include the bakery, cosmetics, pharmaceutical and food and beverage sectors – and speaks directly to the group’s focus on targeting food security and clean water needs, locally and internationally.

CEO Lizette Lynch says that while economic downturns – such as the current climate – provide the best opportunities to invest and make acquisitions, for Rolfes this is not the only motivator for its current aggressive acquisition path.

‘The group has always been an ever-evolving and growing entity, despite a slight downward turn on performance in 2009 and 2013,’ she says. ‘In the past year, we have elevated our BEE ownership to in excess of 50%, which we see as a great achievement. We have closed strategic partnerships and actioned minority buyouts in agri and water. Internally, we have improved performance by developing procurement efficiencies through proper utilisation of synergies existing in the industrial and food divisions to develop procurement efficiency levels in the downstream agri division.’

More recently, Rolfes has consolidated costs and restructured, all part of a well-considered strategy to ensure future growth. It has also been exploring international business opportunities, added new product lines, improved working capital management and has closed its lead chrome pigment plant, all of which has improved operating profit margins, overall performance and the group’s return on capital invested.

‘We undertake certain activities every year, judging where the economy is heading, and ensuring that we remain rightsized to enable continued and consistent growth,’ says Lynch.

Organic growth of on average 10% year-on-year in the past half-decade is evidence that the Rolfes formula is working. Most recently, in its interim results, it proudly announced a revenue increase of 6.2% and that gross profit margins increased to 23.2%, while operating profit margins jumped from 8.5% turnover to 9.6%, with an operating profit of R60 million.

‘Steady top-line increases for operations and consistent gross profit performance translates into growth. Hence – by ensuring that the fixed-cost base is properly utilised and consistently measured for appropriateness, while continuously driving market share growth by introducing new products, expanding the customer base and industry spread – growth is inevitable,’ says Lynch.

It’s quite a task, given the difficult economic environment including the weak rand, oil prices remaining low and volatile economic conditions in the various emerging markets the group trades in. In Lynch’s opinion, the chemical industry needs to also seriously start looking at current product lines and reconsider viability and suitability to pave the way for greener and safer next-generation product lines.

‘Businesses in the industry should continuously assess whether they are rightsized from a cost-basis perspective by looking at ways to improve efficiencies. I predict much activity around the consolidation of chemical businesses locally as with the global trend towards consolidation of international chemical groups. But most importantly, at the risk of repeating myself, focus has to also be on greener and safer chemistry – a subject that is close to my heart.’

Lynch has developed a deep passion for the chemical industry through Rolfes, where she has worked since 2008. From being appointed group financial director to becoming CEO, she describes it as ‘a journey that’s seen me in almost every executive role at board level’.

She has a hands-on management approach, is involved in all (and every aspect) of Rolfes’ acquisitions, and believes in being a fair and just executive with a strong work ethic. Lynch says she is uncompromising in her leadership style and believes she has built a great team with a strong value-added contribution and diverse skill set.

Lynch’s success reflects that of the group’s, attributable to being evolved, diversified and correctly proportioned to grow into the future. ‘The Rolfes group is on an appropriate and continuous repositioning path to ensure that it fits, as best possible, trading conditions existing at the time,’ she says. ‘This approach has ensured a successful and sustainable company since it was established in 1929.’

The organic and acquisition strategy of the group to ensure such sustainable growth will continue. This includes the identification of new agencies, customers and product lines to expand industry spread.

‘We want to remain focused on speciality product ranges that contribute higher margin at lower volume, rather than the opposite,’ says Lynch. ‘Adding our active and determined search for organic and greener product alternatives by way of product development, or a new acquisition, we will be prepared for any future legislative changes ensuring future sustainability.’

By Kerry Dimmer