Our strategy
AkzoNobel is a global paints and coatings company with a proud heritage, which can be traced back to 1792. Our world class portfolio of established brands is trusted by customers around the world and we continue to be guided by our overarching mantra of People. Planet. Paint.
An enduring set of core values – safety, integrity and sustainability – underpins everything we do. Key behaviors – based on passion for paint, precise processes, powerful performance and proud people – guide our ways of working.
Our Grow & Deliver strategy balances growth with profitability improvement. Right now, macro-economic uncertainty means we need to focus on delivering profit and cash, while keeping a close eye on our markets and selectively pursuing growth opportunities. Our goal is to be a leader in the industry. And we’re well placed in the more than €140 billion paints and coatings industry. Our broad geographic presence and leading positions in many market segments still provide several opportunities for growth, despite the challenging economic outlook for 2023.
We have a significant presence in the South Asia Pacific region, where we generate around 13% of total revenue. And, thanks to our acquisition of Grupo Orbis – completed in 2022 – we now have a more significant presence in Latin America, which accounts for 12% of total revenue.
More selective opportunities for growth also exist. For example, we’re growing our Decorative Paints business in China by leveraging our premium Dulux brand to serve customers in a greater number of cities with more innovative and sustainable solutions. In addition, aerospace – as well as marine and protective coatings – market segments once again offer growth opportunities.
With stakeholders increasingly demanding more sustainable solutions, we’re able to capitalize on this trend by leveraging our leadership position when it comes to sustainability – reflected in the recognition we’ve received from various rating agencies, such as EcoVadis, MSCI and Sustainalytics. Sustainable solutions already account for 40% of revenue and we have a target to increase this to more than 50% by 2030. We’re creating a more efficient company, while lowering our carbon footprint, and are proud to have set science-based carbon reduction targets for our full value chain – a truly fact-based approach.
Innovation is essential to our success. For us, this means understanding and anticipating the changing needs and expectations of customers when it comes to providing them with products and services. Our industry-leading Paint the Future collaborative innovation ecosystem is just one example of how our pioneering spirit is helping us to continue pushing boundaries.
A game-changing partnership between PlayStation and our Bruguer brand in Spain resulted in the launch of an exclusive range of wall paint. The Galaxy PlayStation by Bruguer collection is based on the colors of the PS5’s DualSense wireless controllers. It means gaming set-ups and surroundings can now be personalized to create a truly immersive experience. A great way for both partners to demonstrate their shared passion for creativity and innovation.
We’re also building the product management capabilities necessary to deliver the products our customers desire, and which will help us win in the market at the most competitive cost – with less complexity and increased collaboration with our suppliers.
Strategic mandates – per market segment and region – are used to provide clear direction for each of our businesses, including relative priorities for growth and profitability improvement.
We’re committed to retaining a strong investment grade credit rating and have clear capital allocation priorities, including a disciplined approach to targeted value-creating acquisitions, aligned with our strategic mandates. During 2022, we completed the acquisition of Grupo Orbis and announced our intended acquisition of the African paints and coatings activities from Kansai Paint (expected to be completed in the second half of 2023).
To help deliver our strategy, we’re evolving our operating model, moving from functional excellence in silos to driving cross-functional collaboration, with an emphasis on end-to-end processes and becoming even more customer focused.
In addition, we continue to integrate our systems and applications to provide business services that are both effective and cost competitive, allowing for greater focus on what matters most. During 2023, we’ll focus on execution. Margin management is particularly important to ensure we benefit from our robust pricing initiatives in response to significant raw material cost inflation. We’re building on our experience and setting ourselves up to deal with future cycles. When it comes to costs, we’ve identified multiple opportunities – especially within our integrated supply chain – to deliver significant savings.
These actions are necessary to adapt to changes in the markets where we operate and offset cost inflation, while delivering improved performance during both the short and medium term. Furthermore, attention is required to normalize our working capital position, which will result in stronger cash flow and lower net debt/EBITDA leverage ratio.
Includes South East Asia and Asia Pacific.
Excludes Mexico.
The total amount of greenhouse gas (GHG) emissions caused during a defined period of a product’s lifecycle. It is expressed in terms of the amount of carbon dioxide equivalents CO2(e) emitted. Greenhouse gases include CO2, CO, CH4, N2O and HFCs, which have a global warming impact. We also include the impact of VOCs in our targets.
Defined as long-term borrowings plus short-term borrowings less cash, cash equivalents and short-term investments.
Operating income excluding depreciation and amortization.
Calculated as net debt divided by EBITDA, which is calculated as the total of the last 12 months.