From the start, 2019 was all about delivering a powerful performance to help propel the company towards its Winning together: 15 by 20 ambition. It was impressive to experience our internal momentum during the course of the year as we intensified our focus on dramatically stepping up our return on sales by 2020.
Right across the organization – from salespeople in Brazil, to operators in France and researchers in China – everyone has been fully focused on delivering for our customers, while helping the company to become the reference in paints and coatings.
We’re rightfully proud of our results, especially because we received little help from a sluggish growth environment and uncertain global economy. Our value over volume strategy helped us improve our bottom line performance, and we delivered on our promise to return the proceeds from the sale of Specialty Chemicals on time and in full within 2019. Together, we sent a strong message that our transformation is on track.
Behind the scenes, a tremendous amount of work has been going on. Integrated Business Planning is up and running and is now very much the way we run our business across the organization. The deployment of one common ERP (enterprise resource planning) system for all businesses is progressing very well and on schedule. We continue to roll out initiatives focused on standardizing global policies, increasing sales force effectiveness, and improving margin and portfolio management. At times, the company feels like a big construction site, although one where its future shape and form is becoming more visible every day.
Future growth remains very much on the agenda, be it investments or acquisitions. Hence our pride in November’s announcement that we had completed a deal to acquire French aerospace coatings manufacturer Mapaero, which will further strengthen our global position in aerospace coatings and enable us to provide our customers with a much wider portfolio of innovative and sustainable products. A month later, we announced our intention to acquire 100% of the shares of Mauvilac Industries – a leading paints and coatings company in Mauritius.
Another key development was the kickstart of a €50 million investment at our North American wood coatings facility in High Point, North Carolina (see below). This will bring world class manufacturing capability to the site, as well as the construction of a new research lab and technical application center. It’s all about further strengthening our commitment to our customers in North America, where we’ve been part of the wood coatings industry for 100 years. Earlier in the year, we officially opened a new €13 million research and innovation hub at our Felling site in the UK. This brings the latest research capabilities for testing our marine and protective coatings in conditions similar to those they face in the world’s most extreme environments.
I’m particularly energized by the revolutionary, forward-thinking approach to product development which is also at the heart of our Paint the Future innovation ecosystem (see Launching new innovations together). Originally introduced as a startup challenge, it quickly grew to incorporate suppliers and academia. The initiative brilliantly showcases the power of partnerships, enabling us to combine ground-breaking research happening outside the company with our own technologies and in-depth application knowledge.
Our value over volume strategy helped us improve our bottom line performance and our share price reached a record high
We also refreshed our approach to sustainability, with a view to making it more relevant for a focused paints and coatings company. We captured this holistic, down-to-earth approach in what we call “People. Planet. Paint.” It’s all about reducing our impact and delivering benefits for our customers, society and the environment. It’s making sustainability an integral part of the way we do business and we’re excited and proud of the path we’re on.
Of course, the real driving force behind all the progress we’ve made has been our dedicated and diverse team of colleagues around the world. It remains deeply impressive to witness the can-do attitude and resilience of our teams during this transformation. Despite all the changes, they got on with the job and stuck to our core values of safety, integrity and sustainability. They deserve all the thanks and credit for getting us into a position where delivering our Winning together: 15 by 20 ambition is now in sight.
For myself and the Executive Committee, it continues to be a humbling privilege to be on this journey together with them.
Thierry Vanlancker, CEO and Chairman of the Board of Management and Executive Committee
Landmark investment points the way
A milestone groundbreaking ceremony took place at our North American wood coatings facility in High Point, North Carolina, in November – officially kickstarting a €50 million investment which will transform the site’s manufacturing capability.
The extensive upgrade will include installing state-of-the-art production technology, as well as building a new raw materials warehouse, research lab and technical application center. The ceremony marked 100 years of our company being in the wood coatings industry in North America.
Known as the “Home Furnishings Capital of the World,” High Point has been home to AkzoNobel as a manufacturer of wood coatings since 1955. The facility currently covers 37 acres and employs more than 250 people. It produces wood coatings to serve the furniture, building products and flooring market segments, as well as our Chemcraft distributors.
Construction at the site is scheduled for completion in 2021, with rolling projects already underway.
This is a key profitability measure and is calculated as adjusted operating income as a percentage of revenue.