The global Buildings and Infrastructure end-user segment uses a wide variety of products to build, decorate, protect, maintain and renovate building interiors and exteriors. Various products are also used for the construction and maintenance of infrastructure, such as airports, bridges and roads. The segment can be divided into three specific sub-segments:
New build projects
Maintenance, renovation and repair
Building products and components
Percentage of AkzoNobel revenue
Examples of AkzoNobel products sold into this end-user segment
The Buildings and Infrastructure end-user segment has experienced a significant contraction since 2006, with limited recovery since then. Due to continued restrictions in the mortgage market and low levels of consumer confidence, the sector remains depressed, impacting all three sub-segments – New build projects; Maintenance, renovation and repair; and Building products and components. The outlook in mature geographies remains neutral at best, while in some areas of Western Europe, the expectation is that there will be further declines, even off the existing low base. The outlook for high growth regions is more positive due to population and wealth growth, but the growth rates going forward are expected to be lower than historical growth rates. Government stimulus packages for infrastructure development are also in place in many regions.
Future sustainability developments
Even in a difficult market environment, there are pockets of demand due to the requirement for increased sustainability and lower energy costs in the Buildings and Infrastructure segment. Changes in demand due to changes in energy requirements in residential, commercial and infrastructure buildings are expected to be considerable. For example, according to the World Business Council for Sustainable Development’s (WBCSD) Vision 2050 report, the expectation is that by 2050, 70 percent of the world’s population will live in urban areas and 95 percent of new building stock will use zero net energy. The proportion of buildings heated by fossil fuels will also fall below 6 percent.
Implications for strategy and actions
To address this difficult end-user segment environment, AkzoNobel will need to manage product lines and improve margins in all geographies, while remaining focused on delivering better value for customers. Innovation will play a vital role in terms of improving our sustainability profile and establishing triggers that prompt the use of our products. We will need to continue to restructure in mature geographies, while in high growth areas we must continue to ensure strong positions and appropriate business models.
New non-residential construction1
Total market maintenance and repair3
Sources: (1/3) IHS / Construction IC (2) Euromonitor International.