From left to right: Peter van Campen, Jeremy Rowe, Jan-Piet van Kesteren, Liang Qi Lin, Ruud Joosten, Amit Jain, Jaap Kuiper, Kees Ekelmans, Guy Williams.
“We are taking decisive action to streamline our product range, reduce complexity and become more competitive”
Member of the Executive Committee responsible for Decorative Paints
Our Decorative Paints activities had a positive year, outperforming 2012 by some distance, despite continued market weakness, unfavorable exchange rates and the impact of further restructuring costs.
China in particular had a very strong year, while South East Asia and Pacific showed signs of recovery and Latin America started to pick up again. Europe, however, remained challenging, with no real recovery being evident during the course of the year. Most of the gains in the region were generated through cost-cutting, working capital management and margin improvement initiatives, although the UK and notably Russia performed very well.
Given the strategic importance of Europe to our Deco activities, we are taking decisive action to streamline our product range and operations, reduce complexity and become more competitive. This was highlighted by the sale in December of our German professional paint stores, which will enable us to sharpen our distribution focus and concentrate on strengthening our efficiency and profitability in Germany. We have also been taking steps to optimize our activities in France by improving the stores network that we have there, further contributing to the company’s performance improvement ambitions.
Another key divestment completed in 2013 involved our Building Adhesives business, which was sold following a strategic review of its fit within our portfolio. The sale was announced a few months after we finalized the €0.8 billion divestment of our North American Decorative Paints business. Our focus now is on continuing to improve the performance of our European activities and accelerating profitable growth in high growth markets such as Asia and Latin America. We have already made good progress in simplifying the organization – including the introduction of an enhanced leadership structure – and plan to implement a new business model for Europe which will make us more agile and better positioned to increase market penetration.
We also continued to invest throughout 2013, which proves that we’re taking a long-term view – in Europe as well as the high growth markets. A new €20 million plant was inaugurated in Gwalior, India, and we announced plans to build a production facility in Chengdu, China, which will start-up in 2015. In addition, a new research center was opened in the Netherlands, while construction work is continuing at Ashington in the UK, where we are developing a world class decorative paints site. Scheduled to open in 2015, it will feature our award-winning system for harvesting rainwater, which will significantly reduce annual fresh water usage. In addition, the global brand identity roll-out continued to make strong progress and our "Let’s Colour" campaign gathered further momentum across the world.
Our focus on innovation was also stepped up, particularly with regards to the development of eco-premium solutions that benefit the customer. In 2013, these generated 27 percent of revenue, supported by several new product launches across the globe. Another notable achievement in the area of sustainability saw us reduce cradle-to-grave carbon emissions per ton of product sold for the third consecutive year – this year by 3 percent. Safety performance was noteworthy as well. The TRR was below the company’s 2015 target of 2.0 (down from 3.5 in 2011) something we should be particularly proud of, although we’ll look to improve even further.
With an improved 2013 performance to build on, we will continue to address our cost base and target profitable growth. At the same time, we’ll be working even harder to develop bigger and better sustainable innovations for our customers in order to create a leading Deco organization which is fully focused on achieving the company’s strategic targets.