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The managing directors responsible for responsible for Performance Coatings (photo)

Our Performance Coatings portfolio delivered record results in 2012, even though we were operating under economically challenging circumstances. It wasn’t a year of large volume increases, so most of the momentum for the improvement across all key ratios was driven by careful operational management and our ability to capture the limited growth opportunities that arose.

Also significant was the fact that the balanced spread of our portfolio means we are not over-dependent on any particular segment or sector. Our activities span various cycles across all geographies. So when the economy becomes volatile, as it has been for some time, we are able to adjust and respond. From an operational perspective, we worked diligently to make our businesses more efficient and competitive, which meant we had to focus hard on cost control and keep a close eye on margin management, in line with the company’s performance improvement program. This disciplined approach ensured that all our key financials improved, including EBITDA, operating working capital and return on investment.

Looking at the businesses themselves, Marine and Protective Coatings had an excellent year, led by a strong sales increase at Protective Coatings. The main driver for this was the increasing global activity in the oil and gas industry, to which we are a major supplier. Our Chartek range of fire protection coatings in particular benefited significantly. This momentum is being supported by an ongoing investment program to upgrade our research facilities so that we can continue developing innovative products that are more sustainable, while increasing our competitive advantage. The Marine business, on the other hand, suffered from a major slowdown in new builds, although this was entirely expected and we were fully prepared in terms of reducing resources to reflect the development of the market. It was a similar story in the vehicle refinish sector, where reduced volumes – especially in Europe – put pressure on our Automotive and Aerospace Coatings business. But again, stringent value engineering, along with stronger activity in high growth markets, ensured that the business was able to make progress.

Industrial Coatings performed very well in 2012, boosted by the previous year’s acquisition of Schramm Holding AG and the coatings activities operated by Korean company SSCP. The deal gave us an important global leadership position in the consumer electronics industry and this was reflected in the first full year of results for the integrated business. Wood Finishes and Adhesives also bounced back after a difficult few years. Market conditions have been particularly unfavorable, but the business has undergone a period of restructuring and the benefits of that started to pay off with a marked improvement in results. Powder Coatings was another business to achieve a solid performance, led by stronger focused management and continued improvement in operational excellence.

We have also been very successful in better coordinating our “One AkzoNobel” commercial offer to end-user customer key accounts, particularly in the construction industry. We are building resources and now have a dedicated team who identify major projects that can benefit from our global scale and complete product offering.

Markets are still uncertain, however, and while it has been a strong year, we remain fully focused on continuous improvement and increasing profitability so that we can grow our businesses in line with our strategic agenda.

“While it has been a strong year, we remain focused on continuous improvement”

Leif Darner
Member of the Board of Management and the Executive Committee member responsible for Performance Coatings

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