AkzoNobel Specialty Chemicals

There can be no doubt that 2010 was a good year for Specialty Chemicals. Emerging strongly from the recession, we not only reaped the benefits of our restructuring efforts, but were also boosted by robust demand during the first half of the year due to restocking. In addition, various outages within the industry enabled us to supply customers when others couldn’t. We therefore increased market share because of our reputation and reliability in supply in a market that quickly recovered. So our success during the year was a combination of cost control, favorable market conditions and our own hard work. It was a busy year, and our employees should be commended for their efforts.

Our performance in high growth markets was particularly good, but we also did well in the Americas, and while Europe proved more challenging, we were still able to improve on 2009. Europe remains a low growth area, however, and the formal closure of our Skoghall plant in Sweden was another step towards us rebalancing our production footprint to the high growth areas, where demand is developing much more strongly. This was further reflected by two key events in China, namely the official opening of our Ningbo multi-site and the expansion of Industrial Chemicals’ Taixing plant. The Ningbo inauguration in particular was a major milestone, bringing new chelates, ethylene amines and ethylene oxide capacity to the market.

Another important development was the National Starch transaction. Like the rest of the Specialty Chemicals portfolio, the business suffered as a result of the recession, but we were able to take effective measures to recover much of the lost ground before transferring ownership to Corn Products International. 2010 was also the first full year of operation following the merger of Polymer Chemicals into Functional Chemicals. The timing was just right, as it was implemented before the market picked up again and we were able to fully benefit from the recovery. This resulted in our polymer activities having an excellent year, particularly the High Purity Metalorganics (HPMO) business, which supplies the booming LED market.

Sustainability, of course, remained high on the agenda and several products continued to make good progress, notably our Dissolvine GLDA chelate and our next generation anti-caking agent for salt (mTA) for chemical transformation. We also conducted an eco-efficiency study early in the year which involved carrying out a quick scan of 75 sites where most of our footprint is in terms of waste, energy and CO₂. This forms part of a program we have embarked on to reduce our footprint by 10 percent by 2015 and we have identified a great number of opportunities to make savings. The progress on our safety performance, on the other hand, was slightly disappointing and we will continue to increase awareness throughout the organization.

The focus continues to be on growth, with each of our businesses well positioned to make a contribution to both the top and bottom line. We see great possibilities and opportunities to contribute to the accelerated growth agenda of the company, while maintaining a healthy cash flow. To facilitate this, and to keep our leadership suitably challenged, the Managing Directors of four of our business activities are being rotated. As well as bringing a fresh perspective, we feel that this will benefit the company and enable each of the senior leaders to continue to learn and develop themselves while bringing their experience to new markets and businesses.