Kilfrost Tests Resolve of Dow, Clariant in Niche De-Icing Market

Kilfrost Ltd., the largest independent supplier of de-icing chemicals, is in talks to sell alternatives to oil-based products to Finnair Oyj as it seeks to grab market share from Dow Chemical Co. and Clariant AG.

The U.K. company is incorporating a biodegradable glycol manufactured by a venture of DuPont Co. and Tate & Lyle Plc into more environmentally sound de-icers for planes, Chief Executive Officer Gary Lydiate said yesterday in a phone interview. The company may be poised for its best-ever year with fresh cold snaps spreading across Europe and the U.S. northeast, he said.

Kilfrost’s niche focus means it has been able to stave off competition from global chemical makers that have access to in-house ingredients, though their research is spread across diverse portfolios. The small number of de-icing materials manufacturers and high barriers to entry due to aviation regulations means the emphasis is on developing products rather than on consolidation, the CEO said.

“The big corporations do put the time and effort in, but not as much as we do in this niche market,” said Lydiate, who became CEO six years ago. The Halbert family founded the company in the 1930s to provide de-icing compounds for soccer fields. Kilfrost now probably has the industry’s biggest budget targeted to aircraft de-icers, he said.

Air New Zealand Ltd. is among airlines that have adopted Kilfrost’s “green” de-icer, derived from a corn sugar-based glycol, and Finnair is considering the product.

Clariant, BASF

Other companies are pushing the alternative de-icers, which replace toxic monoethylene glycol, for less regulated non-aircraft uses. BASF SE is expanding formic acid operations to help boost production of a salt that it says is an “ecologically compatible” de-icer for runways. Clariant's Safewing aircraft de-icer brand is of the traditional type.

Kilfrost ended licensing agreements with third parties in the U.S., bringing production in-house to boost profit. It spent three years getting approval for its products in China, becoming the only non-local de-icing supplier allowed to sell there.

The Chinese market has potential for growth as some airports now simply close if there is significant snowfall, Lydiate said.

“The volumes in China aren’t big enough yet, but probably within two years we will be manufacturing there.” Kilfrost is already manufacturing under license in Japan.

Suitors Knocking

Because the technology and safety approvals needed to make aircraft de-icers are high barriers to entry, Newcastle Upon Tyne-based Kilfrost has had substantial interest from potential suitors seeking an instant inroad to the market, the CEO said.

Kilfrost had 55 million pounds ($86 million) in sales in 2011 and its revenue this year will likely exceed de-icing sales at Dow and Clariant, the CEO said. He declined to reveal 2012 figures.

Kilfrost began reporting financial results in the manner of public companies three years ago to maximize its options, from attracting a buyer or partner to building the case for an initial public offering.

“We get sufficient calls, but I don’t take many of them,” said Lydiate.

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