InterviewAkzoNobel delays expansion plans, moves to global purchasing

24 February 2009 18:06  [Source: ICIS news]

By Will Beacham

LONDON (ICIS news)--Dutch coatings group AkzoNobel is scaling back expansion plans and has moved from local to global procurement processes as it faces up to the economic downturn, a member of the company’s board said on Tuesday.

Leif Darner, who has responsibility for performance coatings, said the measures were necessary to ensure the company remained competitive and matched its cost base with shrinking demand in many businesses.

At its full year financial results conference on Tuesday, AkzoNobel said it was responding to worsening market conditions by taking further action to cut costs and protect margins. The company reduced its capital expenditure allocation for 2009 to €475m ($601m) from a previously planned €600m.

Darner said: “For 2009 we are delaying expansion plans which have not yet been announced. We may be putting on hold expansion plans which were based on previous demand patterns and were at an evaluation stage.”

Debottlenecking plans at existing sites would also be scaled back, he added. However, previously confirmed expansion plans would go ahead.

The results announcement said there would be a “particular focus on decorative paints in Continental Europe” in the enhanced cost-cutting programme.

Darner said: “We are looking at an optimisation of plants and are planning this at present”. He added that staff at closing sites would be informed before the news was made public.

To reduce raw material costs, Darner said that the company had moved from local to global purchasing of major raw materials and had appointed purchasing managers to carry out procurement. “For products such as pigments, solvents and titanium dioxide we go to our main suppliers to negotiate global costs. Our managers coordinate to build longer-term contracts with key suppliers.”

Asked about potential bolt-on acquisitions to help fill gaps in the decorative coatings portfolio in Europe, Darner said: “We do not aim to be the absolute leader in all countries. We are strong in the UK, Benelux and France. But in Germany we are not so strong and are going in a different direction by scaling back and exiting certain manufacturing sites.”

($1 = €0.79)

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By: Will Beacham
+44 20 8652 3214



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