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In 2011, our growth in Asia was strong, but slowed down somewhat during the year. Revenue increased 13 percent from 2010 (in constant currencies: 16 percent), with all Asian countries contributing to this growth.

Our full-year revenue growth (16 percent) in China significantly outpaced market growth in 2011 (2 percent). Investment in brand building has started to come to fruition, with increased brand awareness across China. We successfully launched the Let’s Colour campaign to build brand image and inspire customers to redecorate their houses. We opened or upgraded over 900 third party Dulux customer stores in 2011 to accelerate the expansion of our “controlled” distribution footprint. Major new product launches like Forest Breath and VOC-free series generated significant revenue. We continued to invest in people, while at the same time built organizational and system capabilities for future growth. The sales organization was restructured to aggressively grow the project business: we welcomed more than 300 new colleagues to our organization, with the majority being deployed in field sales. We continued to build capability in our Dulux Easy Paint service in order to build a leading position in the redecoration market. The market outlook for next year is still uncertain. We will, however, continue to accelerate our brand building and channel development to fully capture the growth potential in the medium- to long-term.

The South East Asia business grew faster than the market and we improved our competitive position, cementing our overall number one position in the region. This was achieved through continued investment in the Dulux brand across the region: particularly the launch of the Dulux Let’s Colour brand identity, as well as key product and innovation launches such as Dulux Weathershield 2nd Generation and our new Dulux Inspire offering in Vietnam and Thailand (designed for the mid-market). The markets have also been impacted by the economic slowdown, particularly Indonesia and Malaysia, and our Thailand business has been affected by the recent flooding. We continued to invest in our business partners – painters, architects, interior designers – and our channels and customers, along with continued expansion of our tinting machine footprint. In order to stay ahead of our growth, we made a major transition in our distribution system in Indonesia and continued to build up our supply chain footprint and capabilities accordingly.

Growth in India was strong in 2011 and ahead of the market. We revised our product portfolio and re-established Dulux as a quality leader. Velvet Touch Trends launch doubled our “special effects” sales in launch markets. Dulux Guardian and Dulux WeatherShield Max were launched in the retail channel in December in three regions (North, South and East India) with encouraging feedback from the market. Contractor engagement continued to rise, peaking in December, supporting a 40 percent volume growth in the trade business. The steep increase in raw material prices was almost completely mitigated with pricing actions and the adverse effect of the high currency and price inflation was mitigated by a tight cost control program.

The overall growth momentum in Asia continued in Q4. However, in China measures introduced by the central government to curb rising property prices have led to some softening of demand in Q4. Asia revenue increased by 8 percent in Q4 (in constant currencies 9 percent) while maintaining healthy profit levels. Continued strong revenue growth in China and India was offset by a slowdown in South East Asia as a result of the flooding in Thailand and weaker demand in Indonesia and Malaysia.

Copyright © 2012 Akzo Nobel N.V.