Halcyon Agri seeks to 'reboot' rubber industry

Halcyon Agri CEO Robert Meyer wants his company to be the "Wilmar of rubber", the go-to enterprise globally for natural rubber.
Halcyon Agri CEO Robert Meyer wants his company to be the "Wilmar of rubber", the go-to enterprise globally for natural rubber.PHOTO: HALCYON AGRI

Rubber - the stretchy, durable material made from milky-white latex and found in everything from condoms to car tyres - holds a particular magic for Mr Robert Meyer.

The chief executive officer of Singapore-listed Halcyon Agri Corporation grew up with rubber factories as his playground.

"My father was a rubber trader, and introduced me to the business when I was very young. For most of my childhood, rubber was always at the dinner table," recalled Germany-born Mr Meyer, whose family moved to Singapore just before he turned one.

"I remember sitting in the back of dad's car every second Saturday of the month, driving up and down the highways in Malaysia to visit rubber factories."

After graduating with a Bachelor of Arts degree from the European Business School in Oestrich-Winkel, Germany, in 1999, Mr Meyer returned to Singapore, and five years later, started Halcyon Group, a holding company with investments in several businesses.

That year, he acquired Hevea Global, which eventually became the group's tyre major merchandising arm. This was followed by the purchase of rubber factories in Indonesia between late 2010 and early 2011, all of which culminated in the founding of Halcyon Agri.

In 2013, Halcyon listed on the Singapore Exchange's Catalist board and continued its aggressive acquisition spree. Assets bought over the next two years included 12 rubber factories in Malaysia and Indonesia, plantations in Malaysia, and two distribution businesses. The group was upgraded to the mainboard in 2015.

Last year, Mr Meyer stitched together his most complex deal yet - a three-way merger of Halcyon, all the natural rubber assets of Chinese state-owned chemicals company Sinochem International, and Singapore-listed peer GMG Global - to create the world's largest natural rubber supply chain manager.

Now, Halcyon - 55 per cent owned by Sinochem - has 33 natural rubber-processing factories in Thailand, Indonesia, Malaysia, China and Africa, with an annual distribution capacity of about 2 million tonnes. It also owns 122,000ha of plantations in West Africa and Malaysia.

AGGREGATING THE INDUSTRY

Mr Meyer has made it his mission to "reboot" the natural rubber industry. He believes the dichotomy between how rubber is produced and how it is priced presents an opportunity for Halcyon to be an aggregator in the sector.

The marketplace for rubber remains archaic, dominated by a commodity-pricing system.

"You have a futures market which is subject to volatility on any given day and where the reference or closing price has nothing to do with the cost of producing rubber or the utility it creates for our customers," he added.

This dichotomy exists because the rubber barons of old were traders, playing an intermediary role between small farmers and the buying houses of tyre companies, Mr Meyer noted.

Other industries like semiconductors, grains, and palm oil have already been aggregated, but not rubber. "This is the business that time forgot. So I've decided to take on that task, and for that, I created Halcyon Agri," he added.

Mr Meyer's philosophy is simple: Round up talent in the industry, and marry this talent with the best assets that can be bought.

The next step? Create a franchise based on transfer of knowledge from incumbent industry specialists to next-generation management trainees, as well as upgrading assets purchased to an industrial standard.

For the six months ended June 30, the group swung to a net profit of US$13.1 million (S$17.9 million) from a net loss of US$14.3 million in the year-ago period.

And the end game? To be the "Wilmar of rubber", where Halcyon is the go-to enterprise globally for natural rubber, Mr Meyer said, referring to Singapore-listed Wilmar International, the world's largest palm oil trader.

DRIVING INVESTMENT RETURNS

In 2017, Halcyon aims to contribute 10 to 11 per cent of global supply, with this figure rising to 15 per cent next year. "Our ambition is to account for 20 per cent of world supply by the early 2020s," he added.

Halcyon has reorganised its businesses into a customer-centric structure comprising three market segments - global tyre makers, global non-tyre makers, and China. This, in turn, is sub-divided into three key divisions - upstream, midstream and downstream.

"China is the Wild West of the rubber market - it has grown so quickly in a relatively short span of time, and accounts for more than a third of global demand," he noted.

Another advantage of having an expanded footprint is the ability to monitor the cost of production globally.

"With our factory footprint, we're able to see the cost of raw materials across geographies, and this price discovery process allows us to allocate new investments into areas where we're most cost-competitive," he said.

REACH FOR THE STARS

While there are "truckloads" of stuff in Halcyon's day-to-day operations that keep Mr Meyer up late, he believes he is exactly where he is supposed to be.

"How many start-ups do you know have accomplished as much as we have? We were able to acquire businesses so much larger than ourselves, we've done almost every corporate transaction possible, and sailed as close to the wind as we wanted," he said.

"There's a manifest destiny in this business, and a certain wind beneath our wings."

The group's 15,000 employees, its strong management bench and superior assets also give him much comfort.

And in line with a love for rubber, Mr Meyer is fascinated with cars. "I am a chip off the old block. My father infected me with an enthusiasm for automobiles, which cost way too much time and money," he admitted with a wry grimace.

"I love driving, and I love cars - whether fast or slow, new or old - and it is this lifelong passion that has helped me understand and identify with rubber as a product," said Mr Meyer, who drives a Porsche 911, and recently bought a 1979 Volkswagen Beetle convertible.

"It's an affliction! I'm sad to say that the last thing I usually do before going to bed every night is surf car websites," he added, tongue firmly in cheek.

The father of a daughter, nine, and a son, 11, is a huge believer in the values of trust, loyalty, and integrity. "All of that, for me, is a no U-turn street."

• This is an excerpt from Singapore Exchange's Kopi-C: The Company brew, a regular column featuring C-level executives of SGX-listed companies. Previous editions can be found on SGX's My Gateway website www.sgx.com/mygateway

A version of this article appeared in the print edition of The Straits Times on October 30, 2017, with the headline 'Halcyon Agri seeks to 'reboot' rubber industry'. Print Edition | Subscribe