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Recovery-fueled growth in Performance, Protective and Marine Coatings helped propel AkzoNobel to a banner fourth quarter and 2010, the company reports.
The world’s largest paint and coatings company, and a major producer of specialty chemicals, reported a 17% increase in fourth-quarter revenues, to €3.6 billion (about $4.9 billion USD), and a 12% increase in revenue for the year 2010, to €14.6 billion (about $19.9 billion USD).
Revenue growth was driven by a 6% volume increase across all three business areas (Decorative Paints, Performance Coatings and Specialty Chemicals) as demand recovered, particularly in high-growth markets.
EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization, before incidentals) rose 16% for the year and 3% for the fourth quarter. Adjusted Earnings Per Share (EPS) was €3.71 (about $5.05 USD), up from €2.06 (about $2.80 USD) in 2009.
Raw-material price increases hurt full-year results in all businesses, especially in the second half of the year. Thus, the company said, prices on its products will continue to rise in 2011.
The company said it would aim for more than 5% revenue and EBITDA growth in 2011.
‘Our Plans are on Track’
“Our 2010 performance marks the first year of delivery of our new strategy,” said CEO Hans Wijers. “All business areas have reported strong revenue growth, increased profitability, improved sustainability performance, and higher returns on invested capital.”
“AkzoNobel’s revenue in high-growth markets, currently representing around 40% of our total, grew more than 20%, outperforming the market in 2010. In our mature markets, revenue increased close to 10%, further evidence that our medium-term growth plans are on track.”
Broad demand for Specialty Chemicals across all markets reaped a full-year EBITDA increase of 27%, Wijers said. Volume growth and selective acquisitions helped Performance Coatings turn in a solid 2010 performance, although higher raw-materials costs eroded EBITDA margins.
Asia and Latin America saw double-digit revenue growth for Decorative Paints, with lower volumes in mature markets.
Performance Coatings
Performance Coatings had a good quarter and year, notching a 22% revenue increase for the fourth quarter and a 16% increase (9% in constant currencies) for the year. Volume increases were seen in all businesses and all regions, especially Eastern Europe, Latin America and Asia.
Powder Coatings showed the largest increase, due to an acquisition, followed by Industrial Coatings, driven by good performances in Coil and Packaging Coatings.
Performance Coatings consolidated the acquired powder coatings activities as of June 1. The sector acquired the Lindgens Metal Decorating business in Q3 and Changzhou Prime Automotive Paint Co. Ltd. on Oct. 1—deals that contributed 5% to Performance Coatings revenue, the company said.
Protective and Marine Coatings
Marine and Protective Coatings had slower volume growth, due to lower investment levels in the European and U.S. markets. Still, revenue for Marine and Protective was up 7%, positively impacted by currencies.
Volume in the Marine segment finished ahead of 2009, driven by record activity in new construction in China and Korea. New construction finished the year ahead of 2009, more than compensating for weaker performance in deep sea maintenance markets, due to cash-conscious owners delaying maintenance and repairs.
Protective Coatings saw modest volume growth toward the end of the year, an indication of some recovery. In Heavy Industry, the winding down of stimulus programs hurt the high-value infrastructure sector, and the prevailing economic climate continued to dampen growth in the Oil & Gas markets.
The company reported a higher percentage of revenue from eco-friendly products. On the other hand, it said, the company’s Total Recordable Injury Rate “needs attention.”
Wijers Urges Education Spending
AkzoNobel CEO Hans Wijers has called on European governments to “put their money where their mouth is” and invest in science and technology education, saying his company’s continued R&D presence in Europe depends on the availability of trained researchers.
In an interview published Thursday (Feb. 17) in The Financial Times, Wijers, a former Dutch minister of economic affairs, said his company had “no plans” to move its three research centers in the Netherlands and the UK, “provided we continue to experience that there is good, highly educated chemists and technologists available in these countries.”
“We are sometimes concerned that in this part of the world, governments tend to spend less than they do [elsewhere],” he said.
Wijers expressed concern that government decisions on austerity budgets were at odds with their oft-stated commitment to knowledge-based economies.
“They have to continue to make sure that people who study [chemistry], physics, or mathematics, that it remains attractive and accessible for them to go to universities. These are areas where [governments] need to invest, [not] cut.”
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