AkzoNobel Decorative Paints

Asia

Overview

Our Asian activities performed well during 2011 as the Decorative Paints business continued along its profitable growth path. Double digit revenue growth was achieved in South East Asia & Pacific – led by the Dulux brand – which further strengthened our leadership position in the region. India and South Asia grew by more than 20 percent to become the fastest-growing region globally. We grew ahead of the competition in Sri Lanka and gained two percentage points in market share, thus consolidating our strong leadership position. In China, we significantly outpaced a decelerating market, which was impacted by government measures to curb rising property prices.

Analysis

Continued investment in our brands, such as the rollout of the new Dulux brand identity, was a key factor in helping to boost performance, in particular our mass market penetration. This resulted in underlying volume growth and market share increases. The major floods in Thailand and the slowdown in the Vietnam economy halted the momentum somewhat in South East Asia & Pacific towards the end of the year. Increasing raw material costs put a strain on margins at all businesses, but these were partly offset by pricing actions and, in some cases, long-term sourcing strategies with select vendors.

Highlights

The rollout of the new Dulux brand identity was a major highlight which will help to further extend our color leadership and boost awareness for our products. Our continued strategic investment in brand building also included opening and upgrading more than 720 stores in China to accelerate the expansion of our controlled distribution footprint. In India, signage was changed to the newly launched brand identity in more than 2,000 outlets. This coincided with the launch of the new Dulux campaign in India and the expanded availability of our product range, which involved entering over 200 new towns via a new distribution model. We also commissioned a state-of-the-art manufacturing facility at our Hyderabad site, which has enhanced capacity by nearly 30 percent. Meanwhile, in South East Asia and Pacific, we implemented our first production facility designed to produce zero waste to set a new standard for sustainable manufacturing.

Developments

Several new products were launched throughout Asia, including mass market offering Dulux Promise, an exterior emulsion paint, and ICI Magik – an economy paint for interiors – which is available across all geographies in India. Dulux Promise is growing twice as fast as its category and ICI Magik, priced at the equivalent of €1, is growing four times as fast as the economy interior paint sector. In China, the launches of Dulux Forest Breath and a range of zero-VOC products highlighted our strong commitment to introducing both innovative and sustainable products to Chinese consumers. Also significant in China was the fact that our mass market range enjoyed the highest growth among all product segments. The emphasis on offering innovative new products continued in South East Asia & Pacific, where we introduced the next generation Weathershield range for exteriors, along with interior air-cleansing paint Dulux Pure. Our focus on sustainability was further underlined by the Thane site in India achieving an overall reduction in specific power use of 15 percent.