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Marine and Protective Coatings

Revenue for Marine and Protective Coatings was up 4 percent. In Marine, volume fell short of last year. After record activity levels in new construction in China and Korea last year, demand softened in the second half of 2011. Maintenance and repair markets have been mixed, with some slow recovery over the course of the year in deep sea maintenance. In Protective Coatings, the year has seen strong revenue growth, with positive development in both heavy industry as well as oil and gas markets, with increasing infrastructure requirements in China, India, South East Asia, South America and the Middle East regions. In Yacht, it has been a tough year with weak demand across all regions. Volume off-take was low with our key distributors given their low retail activity in core European and US markets; likewise the number and scale of super-yacht projects was lower than had been anticipated. Raw material increases put pressure on margins in all sectors. At the end of the first quarter, we launched Interline 9001, our next-generation chemical tank coating technology. The coating offers fewer cargo restrictions, reduced cleaning time and zero absorption for many cargos. The product was well-received in the market, with positive feedback from major operators. A new €7 million, state-of-the-art fire protection laboratory was opened at the Felling site in the UK, creating a global center of excellence for fire protection development which will significantly improve our ability to develop and bring new products to the market.

The final quarter ended with slow activity levels, causing volumes to end lower than Q4 2010. Marine Deep Sea and Protective Coatings generated volumes above the level seen during the last quarter of previous year and new construction continued to be lower than the same period last year.

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