AkzoNobel Regroups after Rocky 2012
AkzoNobel is revamping its executive structure and pay, business operations and financial targets in the wake of a year-end 2012 report that recorded both modest hits and major misses.
Overall sales volume declined in 2012 for the world’s largest paint and coatings maker, but the company reported a 5 percent increase in revenues, due to favorable currency rates and price increases, according to its fourth-quarter and full-year 2012 results reported Wednesday (Feb. 20).
The company’s 2012 report shows:
AkzoNobel also noted the impending discontinuation of its Decorative Paints North America business upon its sale to PPG Industries; completion of the Chemicals Pakistan divestment; and a still-challenging economic environment in Europe.
Revenue in Decorative Paints for 2012 increased 2 percent, mainly due to positive price/mix and favorable currencies. Asian revenue is growing due to strong volume development in China. However, market conditions remain challenging in Europe and Latin America. Q4 saw similar developments to the full year. Restructuring of the business has been accelerated.
The year 2012 brought ups and downs to the world's largest paint and coatings maker. Dutch-based AkzoNobel is also a major global producer of specialty chemicals. The company's restructuring program has accelerated.
In Performance Coatings, revenue increased 10 percent compared with the previous year. The strongest growth came from Industrial Coatings and Marine and Protective Coatings.
Industrial coatings revenues increased by 22 percent, mainly due to the Schramm/SSCP acquisition. Revenue in Marine and Protective Coatings increased by 13 percent, despite a small decline in overall sales volume. A slowdown in new marine construction was offset by strong growth in the protective segment. In Q4, revenue was up 5 percent over the previous year, supported by currencies and the acquisition of Schramm/SCCP.
Revenue in wood finishes and adhesives and in powder coatings grew by 6 percent for the year, while revenue in automotive and aerospace coatings inched up 2 percent.
Overall revenues in Marine and Protective Coatings grew by 13 percent in 2012, with strong growth in protective offsetting some decline in the marine segment.
Specialty Chemicals made a good start to 2012, but demand started to weaken in the second half of the year, particularly in Europe and in general in construction-related products. Demand was also more volatile. Full-year revenue increased by 4 percent, mainly due to favorable currencies.
Trending Now: Restructuring
AkzoNobel said Wednesday that it had incurred “higher restructuring costs, mainly in mature markets” and that “restructuring activities are ongoing.” The company said the performance improvement program had cost €292 million in 2012 and had produced benefits of €250 million. The company said it had laid off 2,100 people since the program began, including 360 in Decorative Paints North America.
Restructuring of the European Decorative Paints business has been stepped up, the company said.
The company also announced a “new strategy that will build on its leading market positions in mature and high-growth markets to achieve new financial targets.”
The company said it had identified several “strategic focus areas: care for the customer, reduction of product and process complexity, cash and return on investment, embedded safety and sustainability, and diverse and inclusive talent development.”
Among the changes planned is a smaller executive team, with commensurate adjustments in pay (“remuneration aligned with targets”). Those leadership shifts have already begun.
In January, the company appointed a new Country Director for North America. Soon after that, it announced the retirement of Decorative Paints chief Tex Gunning, who will be replaced by Ruud Joosten, managing director of the Pulp and Performance Chemicals business.
Both Marjan Ouden and Tex Gunning are leaving AkzoNobel. The company said it would streamline its Executive Committee, with salary adjustments to follow.
Earlier this week, the company announced last week that Marjan Oudeman, the Executive Committee member who oversees Organizational Development and Human Resources, would leave her post to become president of Utrecht University.
The new strategy also includes these goals:
"AkzoNobel delivered a strong set of results in difficult markets, underpinned by the performance improvement program which exceeded our intermediate targets." said CEO Ton Büchner, who assumed his position last April.
Going forward, Büchner said: "The economic environment remains challenging, and we expect no fundamental changes in the trends that we have seen recently in our businesses."
Neverthess, he added, "We will continue to focus on performance improvements and operational efficiencies in order to benefit from our strong portfolio of businesses with many leading market positions and exposure to growth markets."