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AkzoNobel Industrial Chemicals


“The market dynamics vary in each of our activities, but we were able to manage the business under extremely volatile conditions and kept our financials in good shape.”

Overview

Our results were adversely affected by the unprecedented drop in demand, although we managed to keep our financial ratios at a relatively healthy level. There was some recovery in volumes towards the end of the year.

Analysis

Early in the year our businesses experienced volume drops of between 15 and 30 percent, mainly due to the downturn in the construction and automotive sectors. During the first few months we maintained relatively good margins due to falling raw material prices and strong sale prices for some of our products. But we later faced margin pressure because of the imbalance in supply and demand. The market dynamics vary in each of our activities, so they were impacted in different ways, but we were able to manage the business under extremely volatile conditions and kept our financials in good shape. Cash management was important and we recorded our lowest ever operating working capital figures both in absolute and relative terms.

Actions

The lack of visibility and economic uncertainty required close attention and we were forced to react to the volume drop. We therefore embarked on a swift and comprehensive profit and cash improvement plan – without losing sight of our customers. This helped mitigate the adverse impact of the drop in volumes significantly, with around half the shortfall in margins being offset by countering actions. One tough decision we took was to close our Skoghall site in Sweden, where our employees have done a tremendous job. This decision involved the closure of the MCA, chlor-alkali and ferric chloride plants, and was mainly triggered by the falling demand in MCA. We concluded that the drop in demand for MCA was not only being caused by de-stocking and recession, there was actually a structural shift to Asia taking place, resulting in diminished European customer base. We can serve existing MCA demand with fewer sites, so we realigned our global supply chain. We are ramping up our Delfzijl location in the Netherlands (the biggest MCA plant in the world) and completed an ongoing expansion of our Taixing plant in China. So shutting down Skoghall won’t affect our customers. Our market position for caustic in the Nordics will be maintained based on imports.

Developments

We integrated our Ecosystems activities into other areas of the organization, largely into Chlor-Alkali. Early in the year we finalized the acquisition of the business and assets of German company LII Europe, which particularly strengthened our position in the European caustic market. In addition, we acquired the remaining shares in the Salinco co-generation unit in Hengelo, the Netherlands. We also made progress with our concept for small salt conversion plants to reduce chlorine transportation, and launched mTA (Fe-meso-Tartrate), an innovative anti-caking agent for salt, which has a better environmental profile than current alternatives.

Sustainability

There’s a big challenge for the chemical industry to contribute to some major global issues, notably climate change. This presents opportunities in the areas of green chemistry, new products and carbon capture. As we are at the beginning of the chain, we believe we can play a prominent role. We therefore stepped up our research and innovation efforts, despite the adverse business conditions. Our Carbon Policy was recognized as one of the top three innovations by the Association of the Dutch Chemical Industry (VNCI).

Revenue
in € millions

Industrial Chemicals – Revenue in € millions (bar chart)
Werner Fuhrmann: Managing Director – Industrial Chemicals (photo)
Werner Fuhrmann
Managing Director
Key brand
Industrial Chemicals – Key brand (logo)

Main products

  • Salt
  • Energy
  • Chlorine
  • Caustic lye
  • Monochloroacetic acid (MCA)

Key markets

  • Chemical
  • Detergent
  • Construction
  • Food
  • Pulp and paper
  • Plastic industries

Geo-mix revenue by destination
in %

Industrial Chemicals – Geo-mix revenue by destination in % (pie chart)
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