Change

The managing directors responsible for responsible for Decorative Paints (photo)

Although 2012 was a year in which we faced challenges in markets across the world, our Decorative Paints business continued to make excellent progress on its journey to becoming a global business with a global mission, strategy, organization, brands, systems and processes.

Conditions were particularly tough in Europe, but other regions also experienced declining markets brought about by ongoing economic instability. Latin America, for example, had to deal with weakening currencies and high inflation, while there was also a downturn in Vietnam, reflecting the more general slowdown across much of Asia. China continued to do well, however, as did India, and we remain confident that we will continue to benefit from our strategic investments in high growth markets.

The mature markets are likely to remain challenging, which is why we have been paying close attention to our European activities for some time. The final phase of a major organizational change took place during the year when we restructured our operations in Europe to create four customer-facing units, which are supported by global functions. This will help us to focus on building our brands, increase market penetration and enable us to better use our scale to become more competitive and cost effective.

It was also the year when we decided that the time was right to divest our North American activities. We’ve been improving the business for several years in order to create the right value and put in place the right brands and customers. But given the market realities we face, we made a strategic decision to focus AkzoNobel’s Decorative Paints business on key markets in Europe and the strong positions we have in high growth regions. I’m pleased that we were able to find the right buyer in PPG Industries, Inc., who are well placed to take the North American business forward.

It was a major geographical portfolio choice which will help to shape our business as we continued to right-size, reduce complexity and simplify our global operations through various ongoing programs and initiatives. All of these projects moved forward during 2012, despite markets not being in our favor. Our brand mission in particular gathered momentum through the global Let’s Colour campaign, while the global brand identity roll-out and product portfolio rationalization made good progress. An exciting innovation roadmap has also been developed for every region and our commitment to investing in our people, brands and capabilities remains as strong as ever.

We realize that market conditions are likely to remain challenging, particularly in Europe, but we are strengthening our relative market share positions and have developed an effective organizational model which will allow us to make full use of our scale while continuing to inspire consumers to live more colorful lives.

“We continued to right-size, reduce complexity and simplify our global operations”

Tex Gunning
Member of the Board of Management and the Executive Committee member responsible for Decorative Paints

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