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AkzoNobel Surface Chemistry

We had a very good year and improved on our 2007 performance. Following several years of restructuring, the business is now meeting the company’s profitability targets. This has been accomplished during a period of unprecedented raw material and energy cost escalation and negative currency exchange rate impact.

Much of our attention in 2008 was focused on integrating the former ICI’s Alco and Personal Care activities with our Surfactants business. We believe that taking advantage of both our improved operating structure and the broader, more sustainable product portfolio will enable us to grow in this challenging business environment.

Operational performance

Raw material and energy costs rose by more than ten percent in 2008. However, a structured approach to strategic purchasing, margin management and value selling enabled us to improve margins. Our fixed cost structure also benefited from our operational excellence program and the consolidation of our manufacturing plants carried out over recent years, which included an overall 30 percent reduction in headcount.

Markets and regions

The US recession which spread to other parts of the world during the second half of the year resulted in a slowdown in some of our key markets. Our sales volume to the BRIC, CIS and the Middle East countries continued to grow quite well, while shipments in North America and Western Europe were essentially flat. In Asia, our sales growth slowed as we focused on improving margins in a very competitive climate.

But we actually benefit from the diversity of the markets we serve, some of which are counter-cyclical. For example, there was strong underlying growth in agro-chemicals, driven by bio-fuels, while sales to oilfield applications continued to grow based on high oil and gas prices. The mining market also continued to expand to meet global fertilizer demand and infrastructure investment. On the other hand, the cleaning, asphalt and personal care markets weakened somewhat due to the economic slowdown. In addition, the hurricanes that hit the southern US in September affected our Houston site, forcing us to declare force majeure for a short time.

Frank Sherman, Managing Director Surface Chemistry (photo)

Frank Sherman
Managing Director Surface Chemistry

In € millions

Revenue – Surface Chemistry (bar chart)
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