Decorative Paints

  • Volumes increased 5% due to positive developments in Asia
  • Revenue down 1%, with volume growth more than offset by currency effects and price/mix effects
  • EBIT was adversely impacted by continued higher raw material costs in the Paints and Coatings industry, not yet fully compensated, and geographical/product mix effects
  • ROS at 9.4% (2016: 12.0%); ROI at 12.4% (2016: 12.5%)
  • Measures being implemented to mitigate current market challenges
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Volumes were up 5% due to positive developments in Asia. Revenue was down 1%, with positive volume development more than offset by adverse currency and price/mix effects, mostly due to strong growth in Asia.

EBIT was adversely impacted by continued higher raw material costs in the Paints and Coatings industry, not yet fully compensated, and geographical/product mix effects. Appropriate measures are being taken to address higher raw material costs, including increased selling prices and additional cost control.

Operating income in the previous year was positively impacted by identified items.

Revenue

Third quarter

 

January-September

2016

2017

∆%

in € millions

2016

2017

∆%

*

ROS% = EBIT/Revenue. Moving average ROI (in %) = 12 months EBIT/12 months average invested capital

583

561

(4)

Decorative Paints Europe, Middle East and Africa

1,722

1,652

(4)

134

129

(4)

Decorative Paints Latin America

339

366

8

307

318

4

Decorative Paints Asia

880

961

9

(3)

(1)

 

Other/intragroup eliminations

(4)

(4)

 

1,021

1,007

(1)

Total

2,937

2,975

1

 

 

 

 

 

 

 

123

95

(23)

EBIT

306

293

(4)

132

95

(28)

Operating income

315

293

(7)

12.0

9.4

 

ROS% *

10.4

9.8

 

 

 

 

 

 

 

 

 

 

 

Average invested capital

2,820

2,771

 

 

 

 

Moving average ROI (in %) *

12.5

12.4

 

 

 

 

 

 

 

 

9

26

 

Capital expenditures

61

71

 

 

 

 

Number of employees

14,800

14,700

 

Revenue development Q3 2017

Decorative Paints – Revenue development Q3 2017 (bar chart)

Europe, Middle East and Africa (EMEA)

Revenue reduced 4%, mainly due to unfavorable currencies, most notably the pound sterling, and price/mix effects. Demand trends differed per country in the region and uncertainty continued in some markets. Growth was visible across much of EMEA, while the UK was affected by lower consumer confidence. In Q3, we opened a highly efficient plant at Ashington that will be the production center for Dulux.

Latin America

Revenue decreased 4%, mainly due to adverse currency effects and lower volumes, partly offset by improved price/mix. While some markets showed signs of slight recovery, overall volume and revenue was down. Growth continued for distribution and new product launches, including a premium product line in Brazil and Ultralavable (EasyCare) in Argentina.

Asia

Revenue increased 4%, despite adverse currency effects. Strong volume growth was partly offset by price/mix. Significant growth was realized in the premium and mass market segments. India recovered from the new goods and services tax implementation, while China growth was impacted by environment control in the entire supply chain. In Q3, there were new product launches for Dulux, including Forest Breath BioCare in China.