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AkzoNobel Decorative Paints Performance

For AkzoNobel Decorative Paints, 2008 was an historic and exciting year. Following the completion of the ICI acquisition, we embarked on a complex yet exciting journey. This journey involves integrating the deco organizations of both companies and becoming the world’s biggest supplier of decorative paints with winning businesses in all regions.

Within three months we had established a new organizational model, appointed the key management and developed a comprehensive plan for the total integration of the business. We followed a “best-of-both” approach, looking for best talent/management, the best processes and the best products and brands.

The restructuring of the business according to this integration plan is now in full swing. It is much easier for our employees to become mobilized and cope with change when they are part of a cohesive community, which is why we have started a program of leadership and internal community development to provide stability, meaning and inspiration, and to create the right high performance culture.

We also carried out a review of our operations in all three regions (Europe, Asia and the Americas) to identify opportunities for future growth and to set our priorities. As a result of this process, we have started to significantly reduce the complexity of our operations, including the number of brands, formulations and stock keeping units. In addition, we have started to adapt our manufacturing footprint to the necessary size for the integrated business.

The expected savings within Decorative Paints resulting from the synergies associated with the ICI acquisition were announced very early on – €180 million by the end of 2010, adding up to total synergies of €340 million, upgraded from the original €280 million. But we are ahead of schedule and have committed to delivering these annual savings by the end of 2010. This reflects how effectively the integration has been handled. The results we were able to achieve in 2008 also clearly show that our teams have managed the process successfully, despite the economic crisis which affected our businesses, particularly during the second half of the year.

We were helped by a continuous stream of innovations, which is an important pillar of our growth strategy. We are targeting an innovation rate of more than 30 percent (products in our portfolio introduced less than three years ago). This innovation process involves focusing on a clearly defined key innovation platform which corresponds to the different customer segments we serve. An important theme throughout our innovation – and our operations in general – is sustainability. One outcome of this theme is our continuous development of eco-premium products, such as Ecosure, The Freshaire Choice and Dulux Anti-Formaldehyde Paint, which were launched during the year. Their introduction confirmed that AkzoNobel is the first major paint manufacturer to make a significant move towards creating credible environmentally sustainable paint products for both the professional and the consumer markets.

We were also supported by the balanced structure of our new global Decorative Paints organization. There’s a good split between consumer and professional business, reflecting the market segmentation within the professional/trade segment. There’s also a good balance of new build and maintenance activities, along with rapidly growing revenue share in emerging markets, where we are achieving good profitability at the same time. However, despite the quality of our business, we also started to feel the impact of the global economic crisis, which particularly affected the US and the UK markets during the second half of 2008.

We expect challenging times, but at the same time we are confident that we can turn this crisis into an opportunity by using it as an additional driver for change and reinvention. We will continue to invest in our people, brands and markets to come out of the crisis stronger, and we will be ready to capture growth opportunities in the emerging markets of Asia, Latin America and Central Europe and to win in the mature markets in Western Europe and North America.

Tex Gunning, Managing Director Decorative Paints (photo)

Tex Gunning
Managing Director Decorative Paints

“We have started 
  a program of   leadership and   internal community   development to   provide stability,   meaning and   inspiration”


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A selection of leading brands from our portfolio – AkzoNobel Decorative Paints (photo)
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