akzonobel china 9 march 2010 welcome to akzonobel china ...… · performance coatings 2009 •...

Welcome to AkzoNobel China

Meeting with Deutsche Bank & Investors

AkzoNobel China 9 March 2010

• China

• AkzoNobel in China

• Highlights in 2009

• Decorative Paints

• Performance Coatings

• Specialty Chemicals

• Outlook

Agenda

3

China

• China had a good growth in 2009, much better than most predicted 12 months ago; growth around 8-9% expected over the coming years

• The business environment in China is getting more regulated, and we see quite a number of new rules and legal requirements being introduced.

• China’s growth will change from being mainly investment driven to become more consumer focused and also the net export is expected to add positively to the growth

• There are signs of various bubbles, but major inflation issues are unlikely in 2010

• China is expected to appreciate its currency by some 5% by end of 2010

3Welcome to AkzoNobel China

44

AkzoNobel China

• Started early 1980’s25 manufacturing sites；6,300 employees;a revenue for 2009 of €1,044 Billion;investment more than €944 Million.

• Diversified product application in all business areas

MM

US$

2012 Vision2012 Vision

US $2 BillionUS $2 Billion

AkzoNobel China AkzoNobel China Vision Vision


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AkzoNobel in China

Performance Coatings• AkzoNobel is the largest paint and coatings company in China• 14 Production sites in China• Activities: West to East gas pipeline ,Shanghai International Airport,

Beijing 2008 Olympic Swimming Center, National Indoor Stadium, Qingdao International Sailing Center, Beijing Olympic Convention Centre

Decorative Paints• AkzoNobel is the fastest growing decorative paints company in China• 3 Production sites in China• Well-known “Dulux” brand owned by AkzoNobel is one of the leading

brands in decorative paints

Specialty Chemicals• 6 Manufacturing sites in China• Multi-site in Ningbo (€275 mln investment)• Inauguration Industrial Chemicals site Taixing, April 8


66

AkzoNobel in China

Decorative Paints 装饰漆Performance Coatings 功能性涂料Specialty Chemicals 特殊化学品

Guangzhou, Dongguan 广州，东莞

Suzhou苏州

Shanghai 上海

Langfang廊坊

Beijing 北京

Shenzhen 深圳

Ningbo宁波Jiaxing

嘉兴

Tianjin 天津

Chengdu 成都

Taixing 泰兴


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AkzoNobel China Key facts

2009• Revenue €1,044 billion• 6,300 employees• EBIT: € 163 million

2008• Revenue €1,054 billion• 6,300 employees• EBIT: € 144 million

• The year has been focused on Customer, Cost and Cash and this approach has paid off well for all businesses.

* Before incidentals


88

Full spectrum of our business

• All our business units in China are in operation• We are the biggest paint company here• We hold leading positions in most sectors, where we operate• Our two biggest brands in China are

- Performance Coatings

- Decorative Paints


9

Highlights in China


• We expanded our MCA factory to 60,000 Tons in Taxing

• We started Chelate production in Ningbo (new multi-site)

• We established a R&D Center for Powder Coatings in Ningbo

• We introduced our Science Award to China partnering with Chinese Chemical Society

• We keep our focus on the key strategic projects

• We continue to invest to build the Ningbo project

• We maintain our ambitious training plan for managers

1010

01 Decorative Paints

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Decorative Paints China


• Established in 1990, first JV with Swire Pacific

• 3 Factories and 7 Regional Sales clusters, +1,300 employees

• Key Player in Decorative Paint Market

• Channel: Traditional Trade, Modern Trade & Project

• Consumers: BIY, DIY, HID

• Category: Emulsion, Woodcare, HPC & Pre-Deco

• Major Competitor: Nippon

• Our Mission: we bring color to peoples lives


• 10 years consecutive growth at over 3X market pace.

• Highly profitable. Negative operating working capital.

• Superior DULUX brand innovating Super Premium to Mid Tier.

• Expansive Controlled Distribution model covering Tier1 to Tier 3 cities;

• Traditional, Modern, Projects channels.

• Managed by a highly capable team accustomed to “winning”.

• Business Conduct/Control/SSHE standards and performance are high.

Decorative Paints China

13

Our Brands


• DULUX is the flagship emulsion and woodcare brand both in retail (Dulux) and project channel (Dulux Pro)

• MAXILITE is a economical emulsion brand

• LEVIS is the key retail brand of both emulsion and woodcare focus on professional customers

14

Geographic Presence


• 3 Factories• Shanghai

• Guangzhou

• Lang Fang

• 7 Clusters• East – Shanghai

• South – Guangzhou

• West – Chengdu

• North – Beijing

• Central – Wuhan

• NorthEast – Shenyang

• NorthWest – Xian

15

Our Business Portfolio


Traditional Trade

Modern Trade

Professional

Project

Channel

Our business is retail focus with majority business contributed by Traditional Trade, particular the Dulux Control stores.

Premium

Mid-Tier

Low-End

Woodcare & Others

Products

We have a balanced product portfolio to meet difference customer’s need with focus on Premium segment.

Tier 1

Tier 2

Tier 3

Geographic

We have covered +600 cities in China, focus on all T1, T2 and big T3 cities.

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Accelerated Control Store Expansion Some Key Initiatives


• For end consumers, DDCN (Dulux Decorative Centre Network) is a trusted place to experience Dulux brand promises through simplified paint purchase process, decoration inspiration, simplified color decisions and post sales services

Store positioning:• Store design follows the consumer shopping

route of Inspiration, Visualization, Selection, Service

Visualizatio n

Service

Selection

Inspiration

Double the number of our Dulux Control Stores in 5 Years

17

DDCN – Store Photos


18

Easy Paint Service Some Key Initiatives


Differentiate service content

• Create new business opportunities by speeding up the repainting cycle

• Value-added and differentiated service offering incl:- Aesthetic finish eg. Wall drawing- Color consultant service- Air quality check service

Performance Coatings02

2020

Performance Coatings 2009

• Marine and Protective coatings had a very good year, especially Protective Coatings

• Industrial Finishes had a better than expected year given the segment’s close relation to the furniture export market in US

• Car refinishing had a good year• Packaging had a good year • Powder will be the focus for this presentation

* Industrial finishes have been reorganized to Coil and Extrusion Coatings, Specialty Plastic

Coatings and Packaging Coatings.


2121

furniture

architecture

GI

appliance

automotive

IT /communicationsfunctional

Markets of Powder Coatings


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Powder Coatings Asia Pacific Powder Coatings Asia Pacific

Our Customers

http://www.cat.com/

http://xupera.com/salaprensa/files/2008/04/logogamesa-de.jpg

http://www.diebold.com/default.htm

http://espaciocoches.com/wp-content/chery-logo.jpg

http://www.kinig.com/upfiles/news/200812/byd_logo.jpg

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Powder Coatings China

• AkzoNobel is the leading supplier of Powder Coatings in China

• Present in this market since 1991

• We operate from sites in Shenzhen, Suzhou, Ningbo, Langfang and Chengdu

• New site to open in 2010 in Wuhan

• Approximately 1,000 employees

• Technology centre in Ningbo (opened 2009), integrated in the global R&D network

• We benefit from the worldwide presence of AkzoNobel Powder Coatings in our approach to global companies


2424

Powder Coatings China

• Sales dropped in the market sectors heavily dependant on exports (Furniture; Appliance; segments of GI)

• East and South China were worst affected. Little impact in the North, Central and West.

• Architecture; Automotive; Construction Equipment; Railways and other related segments benefited heavily from the Government’s 4 trillion RMB stimulus package.

• Overall, sales just marginally below 2008 and recovered in Q4.

• Margins improved due to the favorable sales mix; the introduction of new value added product ranges and the lower raw material prices.

• Tight cost control led to a significant EBIDTA improvement y-o-y

• Despite initial customer credit concerns we achieved an important reduction of OWC


2525

2010 Powder Coatings in China

• Powder Coatings to develop in new sectors:- Automotive OEM bodyshell- Temperature sensitive substrates

• Environmental awareness and new regulations will present new opportunities for eco-efficient coating solutions. Powder will be in an excellent position because of its inherent lower environmental footprint:- Replacement of solvent based paint- Alternative to other metal finishing processes

• We will increase our R&D resource in the country and increase the number of partnerships with innovative local companies


2626

2010 Powder Coatings Outlook

• Domestic market remains strong. Some recovery in the export related market sectors (Furniture, Appliance, segments of GI)

• Sales will be stronger. Expect to do in line or better than GDP

• Raw material prices can put some pressure on margins, but we are confident to compensate with price increases and further improvement of the sales mix.

• Good projects in the pipeline will start materializing in segments of IT, ACE, Automotive and Architecture.

• Cost control remains tight as we may start seeing renewed inflationary pressure.

• Wuhan new factory will start manufacturing in Q3

• R&H Powder Coatings


Specialty Chemicals03

28

Specialty Chemicals

• Functional chemicals: Chelates & micronutrients, sulfur products, & polysulfides, High Polymer Specialties and Elotex overall the balanced portfolio had a satisfactory year

• Industrial Chemical (MCA) had a challenging year, where the upturn mainly re-occurred late in the year

• Pulp and Paper chemicals had a good year despite many of the customers reducing capacity dramatically in the beginning of the year.

• Specialty Chemicals recovered well after a tough recession early in the year


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Elotex in China

• Elotex: Polymer Powder Additives in Cement or Gypsum based Dry Mortar

• AkzoNobel is the leading supplier of Polymer Powder Additives for Dry Mortar Industry in China

• We participate/lead more then 15 National Standards

• We operate from our new site Songjiang Shanghai

• close to AkzoNobel R/D-I center in Songjiang Shanghai

• In China since 1995

• Participate and drive Building Energy Saving Technology

• Synergy by working with SBU Cellulous Specialties Business and Deco

• Global SBU networking with rest of global team


30

2009 Business Performance of Elotex

• Sales Volume increased by 10% and Margin Contribution improved despite sales price pressure.

• China Construction Market recovered since 2Q of 2009.

• New Production Plant startup smoothly, key products have been localized.

• Innovative products improved sales and our OWC improved as we made more local made products.

• Cost reduction such as sharing corporate resources and organization optimizations.


31

2010 Elotex Business Outlook

• China Construction Market will remain strong in 2010

• Thermal Insulated Building is mandatory in China

• Develop more distributers to cover 3rd and 4th tier cities where urbanization process will be accelerated.

• RM price is expected to be increased, which will be absorbed by sales price rise,

• Push Innovation application such as Color Mortar.

• Introduce Innovative Products (Water resistance powder for Gypsum, Effluences Reducing Powder etc)

• Localize more products to reduce OWC (on transportation)


Outlook AkzoNobel China

3333

Well positioned to meet current challenges

Sound fundamentals

• Strong market growth +9.6% is expected in 2010

• Diverse spread in attractive sectors

• Sustainability is integrated in everything we do

Strong track record

• Operational excellence

• Strong operating working Capital

• Relative to market low staff turnover

• Values is an integrated part of our operation

• Focus on customers, cost and cash continues


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Strong emerging markets growth potential (including China)

Source: Food & Agriculture Organization of the UN, 2005 data for paper and paperboard; Plastic Europe MarketResearch Group (PEMRG) 2005 plastics data; Euromonitor 2007 coatings data; WorldBank population data

Paper

Plastics

Industrial and Special Purpose Coatings

Architectural Paint

Emerging Per Capita

MaturePer Capita

8 liters

13 liters

< 2 liters

< 6 liters

~100 kg ~20 kg

~25 kg~25 kg~170 kg~170 kg


3535

Community Programs across China

Powder Coatings, Langfang: support for local welfare house for the disabled, publicity for sport events in local schools and green events

Polymer Chemicals, Tianjing: financial aids for poor students and refurbishment for school for disabled children

Industrial Finishes, Tianjing: refurbishment for local schools

ANCR, SH: Refurbishment of the Youmiao School

Polymer Chemicals, SH: Little Sunshine House and renovation for Pinghu Migrant School

Deco Paints, SH: the Dream Centers and support for migrant schoolsIndustrial Finishes, SH: financial-aids for poor studentsMarine & Protective Coatings, SH: support for the disabled children

Pulp&Paper Chemicals, Suzhou: financial aids for poor college students and EKA Cup Green Environmental Protection Knowledge Contest

Deco Paints, Suzhou: renovation for local museums

Powder Coatings, Suzhou: donation for earthquake victims

Powder Coatings, Ningbo: support for the disabled and the under- privileged and improving environmental awareness

Polymer Chemicals, Ningbo: improving environmental awareness

Powder Coatings, CD: Post relief aid for earthquake victims

Industrial Finishes, Dongguan: donate books for School libraries, visits to nursery home for the elderly, help young quake- survivors

Deco Paints, Guangzhou: Post relief for the Sichuan Earthquake victims

Deco Paints, Hong Kong: support for Po Leung Kuk orphanage

Industrial Finishes, JX: support for Hui Xin Orphanage ;design contest

泰兴


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AkzoNobel Chemical Sciences Award in China• China is strategically important to AkzoNobel

• Commitment to investing in research and in business infrastructure

• Ambition to connect with Chinese scientist communities and promote science advancement in China

• This new award will help achieving this

• Partnership with Chinese Chemical Society


3737

AkzoNobel values

• Focusing on our customers’ future first

• Embracing entrepreneurial thinking

• Developing the talents of our people

• The courage and curiosity to question

• Integrity and responsibility in our actions


akzonobel china 9 march 2010 welcome to akzonobel china ...… · performance coatings 2009 •...

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