“We kept ourselves relevant and competitive in the market and responded very well to the global downturn.”
We had a very slow start to the year, but there was a major improvement during all of the remaining three quarters, notably Q3, when we posted a record profit. Overall, our results for the year were back to pre-crisis levels. We kept ourselves relevant and competitive in the market and responded very well to the global downturn.
We were very effective at taking out costs and improving our margins. Crucially, we reacted very quickly to the recession. By mid-2008, we’d already started a cost reduction and business improvement program. This allowed us to continue serving our customers well and prepared us to take full advantage of any renewed growth. We also started taking a more holistic approach, reorganizing and changing the business model and substantially reducing our credit risk. In addition, this was the first full year that the 2008 Jiangsu QiangSheng deal contributed to our results. Combined with acquiring a majority interest in our Kayaku Akzo Co. Ltd (KAC) joint venture – which we completed in January 2009 – we saw a positive impact in terms of the top line. The KAC transaction was a strategic deal which gives us a good position in Japan and we believe we can still realize a lot of synergies.
We serve a lot of industries involved in the housing, durable goods and automotive sectors and these nose-dived once the recession kicked in. Our High Polymer Specialties (HPS) business suffered most, because it mainly supplies PVC manufacturers, with most of the PVC produced going into housing and infrastructure. Our Cross-Linking Peroxides business was also impacted, although to a lesser extent, because it serves a wide variety of sectors, while our Organometallic Specialties (OMS) activities were the least affected because they are more geared towards consumer markets such as polyethylene, rubber tires and food packaging. By the second half of the year there were signs of a recovery in the US, while Asia – especially China – recovered earlier. We have a good presence in Asia thanks to our focus on the BRIC countries and these regions made an important contribution to our profit levels.
We reduced the complexity of the business and reorganized to focus resources more on our customers. This included merging our HPS and OMS activities. They were sharing a lot of common customers and used the same sales forces in some parts of the world, so it didn’t make sense to have two separate businesses. We were therefore able to take out a whole layer of costs and have made our organization much stronger.
Our patented continuous initiator dosing (CID) technology – which helps increase PVC reactor capacity – continued to gather momentum. We secured a number of European contracts by the end of the year within the PVC market and are now looking to expand into the expandable polystyrene (EPS) market. There are clear opportunities for a further roll-out of this technology into the US and Asia and this will enable us to further differentiate ourselves from our competitors. Sustainability remained a key priority throughout the year, with good progress being made in several areas, notably on customer testing of the new, heavy metal-free corrosion protection technology – known as Fuzebox – which we are developing. It was also announced that Polymer Chemicals will be merged into the Functional Chemicals business unit. This is a move which will streamline the organization and make our business even more cost competitive.
in € millions
Geo-mix revenue by destination