Performance Coatings

Member of the Executive Committee responsible for Performance Coatings (photo)

From left to right: Rob Molenaar, AB Ghosh, Conrad Keijzer, John Wolff, Jim Rees.

“It was a year of solid progress in terms of becoming more cost effective and better positioned for organic growth”

Conrad Keijzer
Member of the Executive Committee responsible for Performance Coatings

Things got off to a weak start, with difficult market conditions in most regions (except North America) which resulted in a drop in volumes in the first half of the year. Conditions recovered somewhat as the year progressed and by the third and fourth quarters our volumes improved.

In the second half of 2013, many of our high growth markets experienced weakening currencies, which impacted our reported results and the cost base in some regions where raw materials are still predominantly imported. Several one-off costs related to restructuring also had an additional negative effect on our results.

Despite these market challenges, we continued to make steady progress with our growth strategy. In China, for example, we started construction of a new powder coatings manufacturing facility in Chengdu, scheduled to open in 2014. We also broke ground for a new powder coatings facility in Dubai. In addition, we opened a new design center for the specialty finishes market in Offenbach, Germany, and more than doubled capacity at our resin factory in Songjiang, China.

Marine and Protective Coatings launched new paint technologies, including Intersleek 1100SR and Intercept next generation fouling control products. Intersleek provides better slime resistance, while Intercept is a highly efficient biocidal antifouling with a controlled release over time. The Protective business was involved in a number of high profile projects during the course of the year. This included the ongoing supply of coatings and fire protection products for Shell’s Prelude, the world’s largest ever floating vessel. We are also supplying a large quantity of protective coatings for Ichthys, the world’s largest LNG project, off the coast of Australia.

Our Automotive and Aerospace Coatings business had a good year. Refinish volumes began to recover and the activity in Aerospace was particularly encouraging, with many airlines placing major orders. Successes included the re-painting and re-branding of the American Airlines fleet, along with important customer wins among the fast-growing airlines in China and the Middle East. Strategic partnerships were also secured by Vehicle Refinishes with several major customers, including Volkswagen, Toyota and Fiat.

Meanwhile, Specialty Finishes benefited from continued strength in the consumer electronics market and sales of coatings for mobile devices. In terms of safety, the overall TRR increased from 2.6 to 2.8 incidents per million hours worked. To address this, all of our sites have implemented Behavior-Based Safety and Life-Saving Rules programs and we continue to work towards our 2015 TRR target of less than 2.0.

To improve our cost base and drive competitiveness, we have looked hard at our production footprint – particularly in Europe – and have announced the intended closure of our production sites in Elbeuf (France), Guarulhos (Brazil), Birmingham (US), Nuremberg (Germany), Gamleby (Sweden), Suzhou (China) and Romano (Italy).