Decorative Paints

Executive Committee responsible for Decorative Paints (photo)

It was a positive year for the Decorative Paints business. We operationally outperformed 2013 by some distance, despite continued market weaknesses, and remain on track to achieve our operational objectives for 2015.

A lot of work has gone into streamlining our global activities over the last few years in order to make the business more efficient and profitable, as well as providing further growth momentum. This is clearly paying off, as we continued to grow in very challenging economic circumstances.

Markets remained weak, especially in Europe, where many economies are still trying to recover from the ongoing economic recession. The professional market in the UK was something of an exception, while consumer confidence all over continental Europe was fairly low. We continued to perform well in China, despite evidence of the economy slowing down. Our performance was also good in Latin America, even though circumstances were less than favorable in countries such as Argentina and Brazil. South East and South Asia also contributed strongly, with India, Indonesia and Vietnam in particular posting good results.

A specific area of attention this year was Europe, where we successfully implemented a new operating model in October. It is designed to take advantage of our scale in back office functions such as Finance, Human Resources and Information Management, which have been combined on a global and European level. This model enables us to operate a more focused Sales and Marketing organization within the countries themselves. The introduction of this model builds on changes we introduced to our global management structure and set-up at the start of 2014. As a result of these improvements, we now have a more agile and competitive Decorative Paints business which is better positioned to achieve profitable growth.

Even though it was a busy year in terms of reshaping the organization, we remained highly focused on maintaining our good safety performance. Our total reportable rate of injuries (TRR) improved from 1.9 to 1.6, and we continued to introduce sustainable innovations to the market. This was highlighted by the proportion of revenue we achieve from eco-premium solutions with customer benefits. Notable product launches included Coral Acrílico Total in Brazil, a wall paint for internal and external use, with great resistance, coverage and washability, which reinforced the brand’s position in the premium segment. We also launched Nordsjö One Supertech in the Nordics, a self-cleaning paint which has already proved to be very successful. Another highlight was the introduction of our award-winning Visualizer app. This is available as a free download and we’re particularly proud of it because it represents a world’s first in augmented reality technology. It enables users to see in real time what a room would look like if it was painted in different colors – before any paint has been applied to the wall. The app has been hugely successful and it underlines how we’re working to embrace digital innovations alongside our product innovations.

Color is also one of the main pillars of the Human Cities initiative which the company launched in 2014. Designed to make cities more enjoyable and inspiring, it will give extra momentum to the global “Let’s Colour” initiatives that Decorative Paints has been running for a number of years. In particular, “Let’s Colour” will play a key role in supporting the commitment AkzoNobel made to the Clinton Global Initiative in September, which established a partnership with 100 Resilient Cities – pioneered by The Rockefeller Foundation. As part of that commitment, over the next two years, we will contribute to special projects in four cities named on the 100 Resilient Cities list.

Another notable development this year was the groundbreaking at our new site in Chengdu, China. The plant will be our fourth in China producing decorative paints and is due to open in 2016, with full operations expected by 2017. There is strong demand for our products in the region and this will enable us to meet the increasing needs of the market.