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AkzoNobel Functional Chemicals


“Recent investments mean we are well positioned to benefit from the next economic upturn”

Overview

It was a mixed year, with many of our product lines either on a par or performing better than 2011. Raw material prices were stable, but margins came under pressure when volumes started to weaken towards the end of the year.

Analysis

Our results benefited from an upturn in the North American chemical industry, which enjoyed something of a revival, with sales to the polymer market being particularly good. Asia continued to grow, but not as fast as expected, partly because of weaker demand for exports to Europe. The fact that the US became more competitive also impacted the market in Asia. In terms of business performance, many of our activities had a reasonably good year. Chelates and Micronutrients were strong in Asia, while Performance Additives improved on 2011, due mainly to the launch of several new cellulose-based products. The one exception was Ethylene Amines, which continued to find the going tough. The sluggish macro-economic market made it difficult to place new capacity into the market, but recent investments mean we are well positioned to benefit from the next economic upturn, particularly in high growth markets. In order to optimize our supply chain for ethylene amines, we realigned our operations, which involved discontinuing a long-term toll manufacturing agreement in Germany.

Highlights

The success of our growing range of biodegradable chelates caught the eye, in particular the launch of Dissolvine StimWell, a unique technology for the oil and gas industry which stimulates wells and makes them more productive. It has huge potential to revolutionize the industry and we have already secured a number of high profile customers. We also signed an agreement with Mexichem Resinas Vinilicas, S.A. de C.V., one of the world’s largest PVC manufacturers, to supply our pioneering Continuous Initiator Dosing (CiD) technology. It was our first CiD license outside Europe and involves three Mexichem plants, two in Mexico and one in Colombia. The technology was developed to help PVC manufacturers improve reactor output, product quality and operational safety. We also invested in our pharma salt activities in Denmark, which supplies high purity products and has trebled turnover in the last three years.

Developments

In China, we successfully started up a new organic peroxide plant at our Ningbo site, while the ongoing project at the same facility to add capacity for our Bermocoll cellulose derivatives is scheduled for completion in mid-2013. We are also investing €45 million in a new dicumyl peroxide (DCP) plant, which will be operational in 2014. These investments are part of a strategic plan to develop a strong cluster in Ningbo which will play a key role in our growth ambitions. Elsewhere, we made a number of changes to our organizational set-up, which involved realigning our High Polymers and XTP (Cross-linking Peroxides, Thermoset Chemicals and Polymer Additives) activities in order to create a more robust and simpler model. As a result, we formed two new sub-businesses – Organic Peroxides and Organometallic Specialties – which will enable us to achieve operational excellence and cost efficiencies, while retaining the focus on customers. This was in addition to the ongoing initiatives (such as Lean Six Sigma) being implemented as part of the company’s performance improvement program, which will enable us to operate our production facilities at lower cost.

Jan Svärd, Managing Director – Functional Chemicals (photo)

Jan Svärd
Managing Director

Revenue
in € millions

Functional Chemicals – Revenue in € millions (bar chart)

Geo-mix revenue by destination
in %

Functional Chemicals – Geo-mix revenue by destination in % (pie chart)

Main products

  • Cellulosic additives
  • Chelates
  • Additives for the mortar industry
  • Ethylene amines
  • Salt specialties
  • Sulfur derivatives
  • Polymer chemicals

Key end-user markets

  • Detergents
  • Personal care
  • Crop protection
  • Micronutrients
  • Building materials
  • Paint
  • Pharmaceutical
  • Food

Key brands

Functional Chemicals – Key brands (logos)
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