CEO statement

As I look back on 2015, I take great pride in the fact we continued to be successful doing what we do best – creating everyday essentials to make people’s lives more liveable and inspiring. This is the purpose that drives us. It sparks our creativity, gives us energy, enables us to deliver for our customers and, ultimately, generates value for our business. We’re using our key strengths – essential ingredients, essential protection and essential color – to help build a solid foundation for the next phase of the company’s strategy.

Although conditions were challenging during the year – with many markets and regions experiencing varying degrees of volatility and uncertainty – we made significant progress towards our vision of leading market positions delivering leading performance. We are now a stronger, leaner, more agile company. We have new operating models in place; we’ve refined our portfolio; our factory footprint has been optimized; a continuous improvement culture is being initiated and there’s continued focus on operational excellence. In addition, our ability to successfully commercialize innovation remains strong, we continue to lead the way in terms of sustainability and our Human Cities initiative has evolved and continues to grow and thrive.

All of this contributed to our performance, which saw us successfully achieve our 2015 financial targets. We continued our strong track record of performance improvement, with higher return on sales and return on investment. The increase in the dividend is also a clear sign we are more confident about our cash flow generation. We now plan to accelerate our efforts to fully accomplish our vision, which remains critical to the next phase of our strategy. We aim to build on the foundations we have created and grow in line with, or faster than, our market segments. New financial guidance for 2016-2018 has also been communicated (see the Strategic performance section).

We have been relatively cautious with regard to acquisitions in recent years, choosing to concentrate on performance improvement through operational excellence. However, we are now at a stage where we will focus on organic growth and innovation and, where applicable, will consider value-generating bolt-on acquisitions, in line with our focus on market leading and profitable positions.

On an organizational level, we made further improvements. Support functions such as Human Resources, Information Management, Finance and non-product related Procurement have been simplified and operate under a Global Business Services model (as of January 1, 2016), which will continue to develop over time. We’re also enhancing our Integrated Supply Chain activities through the AkzoNobel Leading Performance System (ALPS), a continuous improvement program designed to further build operational excellence.

Our innovation also continued to prosper, especially our digital tools. For example, our Visualizer app has been downloaded over eight million times to date. Launched in 2014, the pioneering decorating app won several major awards in 2015 and its functionality is being regularly updated. In addition, our International brand launched Intertrac Vision, the shipping industry’s first consultancy tool to provide accurate and transparent predictions on the fuel and CO₂ savings potential of fouling control coatings, prior to application.

We also made progress on our strategic sustainability targets. As well as maintaining our revenue from eco-premium solutions, we reduced our CO₂ footprint (across the value chain) and improved our Resource Efficiency Index. A major highlight was being ranked top of our industry group in the Dow Jones Sustainability Index for the fourth year running. This sustained performance provides reinforcement for our belief that sustainability is fundamental to our business strategy. It also shows the value of our Planet Possible approach to resource efficiency. A key development was the agreement to buy sustainably generated steam from Dutch energy provider Eneco at our Delfzijl site. It will help reduce our CO₂ emissions by over 100,000 tons a year.

After launching in 2014, our global Human Cities initiative continued to progress. Designed to help cities adapt to rapid urbanization, we’re using our key strengths – essential ingredients, essential protection and essential color – to energize, inspire and sustain communities for generations to come. During 2015, we launched the first project linked to our partnership with The Rockefeller Foundation’s 100 Resilient Cities program. It involved restoring and safeguarding the heritage of one of Singapore’s most historically significant buildings. Meanwhile in Brazil, we’ve added a sense of identity and helped to revitalize a favela community in Santa Marta, Rio de Janeiro, as well as training local people to become painters.

All our achievements were made possible by our employees. I thank all of you for your passion and hard work. So it was pleasing to see our ViewPoint survey results, which showed engagement levels have risen every year since we started the survey in 2010. Allied to this, our safety performance further improved. Our aim continues to be zero incidents.

We expect the volatility experienced in 2015 to continue during 2016, so we anticipate limited support from our markets. Having built a foundation for the future, we will continue to drive operational performance and are confident the next phase of our strategy will enable us to make further progress towards our vision, while creating everyday essentials to make people’s lives more liveable and inspiring.

Ton Büchner
CEO and Chairman of the Board of Management and Executive Committee