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AkzoNobel to Revamp Performance Coatings

Wednesday, September 3, 2014

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AkzoNobel will slim down and retool its sprawling Performance Coatings business, one of the company's three major divisions.

Performance Coatings, which has about 22,000 employees in 60 countries, will "reduce the number of global management layers" and reorganize into seven Strategic Market Units, the Dutch paint, coatings and specialty chemicals maker announced Thursday (Aug. 28).

Intersleek1100SR
Images: AkzoNobel

AkzoNobel's Marine & Protective Coatings business introduced International Intercept 8000 LPP and Intersleek1100SR in 2013. Marine and Protective Coatings will split into separate "Strategic Market Units" under the reorganization.

The company said it would "establish a new organization for its Performance Coatings Business Area in order to drive leading performance."

Current Performance

Currently, the business consists of four divisions:

Brands include International, Sikkens and Interpon.

The company's 2013 Annual Report shows that the Performance Coatings outperformed AkzoNobel's two other businesses, although both the division and the company have struggled in recent years, with a Performance Improvement Program that began in 2011.

In its most recent earnings report, AkzoNobel reported volumes up just 1 percent in Performance Coatings and revenue down 2 percent for the second quarter of FY 2014.

In the first quarter of the year, volume in Performance Coatings was up 3 percent from the prior-year period, but revenue dipped 1 percent.

AkzoNobelROI

Performance Coatings' ROI declined in 2013 from 2012 but still outperformed the company as a whole.

In 2013, Performance Coatings generated revenues of €5.6 billion and an operating income of €525 million, the company reported.

AkzoNobel's full-year 2013 report cited flat volumes and declines in both revenues and operating income for Performance Coatings. Restructuring of the division accelerated in the fourth quarter, with plans to close seven sites worldwide.

What's Changing

The simplified new structure, due to become fully operational in January 2015, will still be headed by Executive Committee Member Conrad Keijzer.

The seven new units, which "will focus on specific customer segments and technologies," will be:

  • Marine Coatings;
  • Metal Coatings;
  • Powder Coatings;
  • Protective Coatings;
  • Specialty Coatings;
  • Vehicle Refinishes; and
  • Wood Coatings.

"Following the launch of our new strategy in 2013, we have initiated a process of change throughout the organization," said AkzoNobel CEO Ton Büchner.

TonBuchner ConradKeijzer

CEO Ton Büchner (left) said the changes would create a "customer-focused, agile and lean" business. Executive Committee Member Conrad Keijzer (right) will remain at the helm.

"This planned reduction in management layers will not only enhance decision-making efficiency, but we will also create an organization that is more customer focused, agile and lean."

€250M in Restructuring

"We consider these to be key elements with regard to driving leading performance," Büchner added. "Because in addition to delivering on our organic growth and operational excellence strategy, the changes will also improve our profitability and help to deliver on our 2015 targets and beyond."

The costs associated with this reorganization are included within the guidance of at least €250 million ($328 million USD) of total restructuring charges for 2014.

   

Tagged categories: AkzoNobel; Asia Pacific; Business management; Coating Materials; Coatings manufacturers; Earnings reports; EMEA (Europe, Middle East and Africa); Latin America; North America

Comment from mohandas kunju, (9/10/2014, 7:37 AM)

More aggressive sales and marketing strategy and business associates development can fetch more market share for all core segments in India.


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