“We clearly benefited from being a global business and gained in regions less affected by the economic crisis, particularly parts of Asia and South America.”
Despite the challenging operating conditions and lower revenue, we were able to sustain and improve our results through a combination of successful cost and margin management and value engineering. We clearly benefited from being a global business and gained in regions less affected by the economic crisis, particularly parts of Asia and South America. At the same time, we continued to invest in growth markets, from where we believe long-term sustainable growth will come.
We entered 2009 on the back of recent performance improvement. But while consumer demand was quite robust, the year began with an unprecedented global de-stocking in the supply chain. This included temporary line closures at some of our beer and beverage customers. The situation recovered somewhat from Q2. Volumes held up much better in South America and – later in the year – in Asia, when compared with Europe and North America, clearly driven by local demand. But we finished the year with overall revenue down on 2008.
There was an extraordinary contrast to 2008, which was a year of market growth, when customers were increasing capacity through investments, particularly in high growth markets. In 2009, many of these trends – at least temporarily – were put into reverse. In fact, some of our customers were seeing double digit decreases in the early part of the year. We therefore had to react to significant fluctuations in demand and adaptation and flexibility were the main characteristics of 2009.
Our focus throughout the year was on customers, cost and cash. Faced with a difficult trading environment – customers adapting to the lower demand and a lack of forward visibility – we quickly adjusted and focused on supporting our customers with improved service and supply delivery. We also focused our efforts on cash, with a particular emphasis on stock levels, while maintaining best-in-class service. We reduced our costs in response to the new demand level, despite the residual inflation in some of the regions that we operate in. This required us to reduce staffing levels at some of our operations to ensure our sustained competitiveness, while we continued to invest in innovation, management and R&D.
We took steps to counter the recession by making additional investments – rather than cuts – in R&D to prepare ourselves for the economic upswing. We continued to drive basic innovation out of our global R&D center in Strongsville in the US, while also developing an increasing number of successful localized products at facilities in various high growth markets. In response to the growing market for energy drinks, and coffee and tea products packed in beverage cans in Asia, we introduced a waterborne white basecoat and overprint varnish which can withstand the heat treatment process used for these beverages. The system, Aquaprime 200/250, is the only water-based product on the market which meets the strict performance requirements and replaces the existing solvent-borne technology. We also introduced an innovative range of UV varnishes into South America. We continued to grow our position in South America by leveraging the AkzoNobel infrastructure in countries such as Chile, Colombia and Argentina, as well as increasing reactor capacity in Brazil. We are also using similar footprint opportunities in India, China and Australia. Overall, we are satisfied that the clear response we made to the difficult trading conditions was successful and is reflected in our solid 2009 performance. We are upbeat about the strengths that we have developed during this period and the opportunities this will give us in the market as the global upswing reappears.
Geo-mix revenue by destination