Specialty Chemicals

Executive Committee responsible for Specialty Chemicals (photo)

For Specialty Chemicals, 2015 was a year where we achieved a significant improvement in our results. However, although we felt a strong tailwind from currencies and, to a lesser extent, raw materials, overall we were operating in a low to no growth environment.

The slowdown was most noticeable in China and other South East Asian countries, while the economies in Russia and Brazil fell into recession. There was some recovery in Europe and a few bright spots in the US. Our portfolio proved to be resilient, even under volatile market conditions. We made major improvements in terms of performance and enhancing the quality of the business, achieved mainly through operational excellence and our focus on continuous improvement.

Looking at 2015 in more detail, the Industrial Chemicals business benefited from higher availability of assets – including the newly converted Frankfurt chlorine plant – which came fully on stream in the second quarter. Pulp and Performance Chemicals also took advantage of high asset utilization and continued to perform well.

At the end of 2014, we restructured Functional Chemicals into two business units. The newly-created Ethylene and Sulfur Derivatives business had a good first year. Headquartered in Shanghai, we’ve worked hard to optimize the ethylene oxide value chain, which helped improve results. Polymer Chemistry, based in Chicago, was more or less stable. Thankfully, no Polymer Chemistry employees were hurt due to the Tianjin port disaster, but the business was significantly impacted by constraints put in place by the authorities during Q4. Surface Chemistry, meanwhile, was hampered by lower activities in oil and gas.

Early in the year, we completed the divestment of our Paper Chemicals business to Kemira. This included maintaining a strong supply relationship with the buyer through toll manufacturing agreements and a strong partnership for the supply of colloidal silica. We also started a joint venture with Evonik Industries to build and operate a membrane electrolysis facility for potassium hydroxide solution and chlorine at our site in Ibbenbüren, Germany. The site will secure the long-term supply of chlorine and hydrogen, as well as improve our environmental profile and operational efficiency.

Another highlight was the multi-year agreement to purchase sustainably generated steam from Dutch energy provider Eneco. The partnership will help to reduce our CO2 emissions by over 100,000 tons a year. It’s a major deal which underlines our ongoing commitment to the company’s Planet Possible approach of doing more with less. In fact, 70 percent of our innovations over the last five years have been and this trend is expected to continue.

Our safety performance improved further in 2015 and we met our internal target. Our process safety performance also continues to be encouraging. Specialty Chemicals received an award from the American Chemistry Council for product safety, while AkzoNobel as a whole was recognized by the European Chemicals Industry Association (Cefic) for product stewardship.

We are now focusing on profitable, organic growth. We have identified three specific areas that we will be concentrating on alongside our continued productivity improvements: growing with our customers through commercial excellence, leveraging geographical opportunities and delivering growth through product and process innovation. We have a clear vision on how to achieve leading performance through our focus on organic growth and operational excellence.

Eco-premium solutions (EPS)

A measure of the eco-efficiency of our products. An eco-premium solution is significantly better than competing offers in the market in at least one eco-efficiency criterion (toxicity, energy use, use of natural resources/raw materials, emissions and waste, land use, risks, health and well-being), and not significantly worse in any other criteria.