AkzoNobel Performance Coatings

‘AkzoNobel’s Performance Coatings activities entered 2009 surrounded by uncertainty, having experienced a rapid decline in sales volumes across most sectors during the last quarter of 2008. The focus immediately shifted to short-term operational efficiency and through a combination of cost and margin management and attention to cash flow we emerged from a difficult year in good shape and ready to take advantage of any upturn.

Balanced portfolio

The recession had a harsh and immediate impact on our industrial businesses, notably Industrial Finishes and Powder Coatings. But the balance we have in our portfolio meant that some activities were less affected by the sales slump, such as Marine and Protective Coatings and Packaging Coatings. These businesses have different cycles, and while there was some fall off in volumes, it was much less dramatic.

Operational efficiency

We had already increased our focus on margin management at the end of 2008, but the severity of the downturn required us to take further steps to improve operational efficiency during the first quarter of 2009. This included taking a closer look at our manufacturing footprint in order to right-size – without cutting back on our capabilities – which led to a rationalization, particularly in Europe and North America. We also focused on cash flow and were able to more than finance capital expenditure and incidental costs for restructuring by releasing cash in operating working capital. As a result, we generated an operational cash flow in 2009 higher than our EBITDA.

However, 2009 was by no means all about cost saving and cutting back in production. Providing support in regions where growth was still taking place remained critical and all our activities, apart from Wood Coatings, made progress in high growth markets, particularly in China and India. A number of investments were made in these regions in order to step up production levels, while we also made a significant acquisition, agreeing to take over the former Rohm and Haas powder coatings business from the Dow Chemical Company. This deal was another indication that we are not only committed to supporting growth markets, but are also serious about investing in and developing sustainable technologies.

Commitment to excellence

At no point during the economic crisis did we lose focus on our customers or compromise on our drive to improve sustainability. On the contrary, I think it helped to escalate our efforts because we’re fully aware that when the economy begins to recover, markets and customers will be more focused on sustainable products. We therefore maintained our focus on R&D and product stewardship and continued to concentrate on innovations in the field of sustainable technology. Safety performance was another parameter which improved and I’m proud to say that we never wavered from our commitment to excellence in all these areas. Credit for this should go to our people, who worked extremely hard during a testing and stressful year and adopted a very open, collaborative and flexible attitude in difficult circumstances.

One additional development of major significance during the year was our decision to rearrange the portfolio. We wanted to create a better balance in terms of technologies and markets, size and complexity, so that our businesses and activities are better equipped for growth. The new set-up is also more logical for customers and the supply chain and we now have a much better focus as we look to see where the real growth will come from, because that is what will drive us forward and bring success in the longer term.‚

Leif Darner: Board member responsible for Performance Coatings (photo)
Leif Darner
Board member responsible for Performance Coatings

“We are not only committed to supporting growth markets, but are also serious about investing in and developing sustainable technologies.”

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