AkzoNobel Decorative Paints

Americas

Overview

While adverse economic conditions and raw material price rises negatively impacted the performance in North America, there was more resistance to the slowdown in Latin America, notably in Brazil, where sales, profit and market share all increased.

Analysis

Volume and revenue gains were realized in the US – primarily due to the new incremental Walmart business – but profitability was affected, despite multiple pricing actions, aggressive margin and cost management and continuous improvement initiatives during the year. Even with these challenging trading conditions, investment in the US paint business continued to yield positive results in terms of market share, quality and product innovation. In Canada, the do-it-yourself segment was much weaker than in 2010, but the professional sector held up reasonably well thanks to a mild recovery in work on large construction and renovation projects. Our Latin American business combated the tough economic climate by reinforcing brands, focusing on customer intimacy and launching unique marketing campaigns. This proved to be particularly successful in Brazil, where sales grew 15 percent and profit leapt 25 percent. Significantly, more than 30 percent of the volume in Brazil came from eco-premium products.

Highlights

The launch of a comprehensive Walmart paint program was completed in the US, which means that all 3,500 stores have now been reset with the full range of AkzoNobel products. This is in addition to the 325 stores we already serve in Canada. Our sustained investment in the flagship US Glidden brand yielded a two-point year-on-year market share increase and it has now become the most widely available paint brand in the country. Meanwhile, our new Glidden Trim & Door product was launched within The Home Depot nationwide. It features innovative Gel-Flow technology which allows it to fill and cover wood grain and minor surface imperfections to provide an exceptional high gloss, no brush mark finish. As part of our global Decorative Paints marketing strategy, all 235 company-owned and franchise stores in Canada were rebranded with the Dulux identity. This included 17 new stores opened in 2011 to expand the business’ coverage for the professional market. In Brazil, Coral not only became the country’s leading paint brand, but was also named brand of the year by customers. Other accolades included recognition as Brazil’s green company of the year.

Developments

Our efforts to promote the proper disposal of paint intensified in Canada, where we further expanded our industry-leading recycling program to 21 collection points in Quebec and Ontario. The initiative is designed to encourage professional paint contractors to recycle their leftover products in a safe and environmentally responsible way. Also in Canada, we introduced a new line of low VOC paint using alkyd-in-water technology under the Sico brand, which was subsequently expanded to our Dulux and CIL brands. Another notable development occurred in the US, where Glidden earned several important “best buy” designations, while our Sikkens wood care brand was also ranked number one. In Latin America, the Tudo de Cor Para Você program (All the Colors For You - part of the Let’s Colour campaign) continued to be a huge success. The initiative – which involves painting deprived neighborhoods in order to add color to people’s lives – received a further boost during 2011 when former tennis star Gustavo Kuerten became an ambassador for a major event staged in Florianópolis.