Performance Coatings

Executive Committee responsible for Performance Coatings (photo)

We had a record year in 2015, achieving a significant improvement in our results while exceeding our expected outcomes for and . We put a clear focus on market strategies and operational initiatives and are delivering on our vision of leading market positions delivering leading performance.

We streamlined our organization with fewer management layers and a much stronger customer focus. The rationalization of our global manufacturing network has reduced the number of sites from 102 to 84 since 2012.

While we benefited from cost management, lower raw material prices and currency tailwinds, our volumes were challenged by headwinds in some of our key end-user segments. In the global oil and gas industry, ongoing capital spending declines and the slower growth in some markets – notably Brazil and China – affected our business. We offset some of these challenges by repositioning ourselves towards growing segments and delivering on our productivity improvements.

Examples of where we are repositioning to offset market challenges are in our Protective and Marine Coatings businesses. In Protective Coatings, we are increasing our focus on downstream oil and gas and in power generation. A particular area of focus is in offshore wind farms. In Marine Coatings, we launched the second generation of Intersleek coatings, which reduce fuel consumption and emissions. This was supported by our carbon credits initiative which allows our customers to collect carbon credits from switching to our biocide-free Intersleek coatings.

Our strong customer relationships and clear market strategies are helping us to gain new business. For example, in 2015 we became one of the approved suppliers of vehicle refinishes to Daimler dealerships and approved bodyshops worldwide. We extended our supplier relationship with McLaren Racing and McLaren Automotive.

We continued to invest in growth markets and announced a multi-business manufacturing site in Thailand. In China, construction is well underway on a large and efficient powder coatings plant.

Meanwhile, in North America, we opened a new research, development and innovation (RD&I) center in Strongsville, Ohio, and announced an investment in our RD&I capabilities in Houston, Texas. We also opened a new technical application center in Malmö, Sweden, which allows us to simulate customer specific conditions and deliver market leading solutions.

Our safety performance continued at the improved level of 2014, which was a record best year. The total rate of reportable injuries was 1.8. We will continue to rigorously embed the AkzoNobel Safety Common Platform for people and safety processes on our journey to zero injuries at work.

Going forward, we will continue to create value by delivering essential color and protection in all the markets we serve. Having exceeded our expected financial outcomes for 2015, we are now shifting our focus towards profitable, organic growth and continuous improvement. Our aim is to build on the strong foundation and achieve leading performance in all of our markets.

ROS (return on sales)

This is a key profitability measure and is calculated as operating income as a percentage of revenue.

ROI (return on investment)

This is a key profitability measure and is calculated as operating income as a percentage of average invested capital.