InterviewAkzoNobel eyes strong sales growth in Asia, emerging markets

05 November 2012 04:50  [Source: ICIS news]

By Nurluqman Suratman

AkzoNobelSINGAPORE (ICIS)--Netherlands’ coatings and specialty chemicals group AkzoNobel expects to see strong revenue growth in Asia, as well as in other emerging markets, in the coming years, backed by the region’s resilience amid the global economic slowdown, a senior company executive said on Monday.

“The business is still pretty large in Europe and the US, but increasingly, we have a larger and larger business in Asia,” Jeremy Rowe, AkzoNobel’s managing director for decorative paints for southeast Asia and the Pacific, told ICIS.

In 2011, the company’s decorative paints business generated €5.3bn ($6.8bn) in sales, with the Asia-Pacific region accounting for 18% of the total, while emerging markets in Europe and Latin-America generated 6% and 12% of total sales, respectively, according to AkzoNobel’s annual report.

North America has a 12% share, while mature European markets have a 20% share of the total, based on the same report.

Currently, Asia accounts for about 20% of the company’s revenue, Roye said.

“About 40% of our business is generated from fast-growing markets now, which includes Asia, Latin America as well as parts of Eastern Europe and this will grow to more than 50% in a few years’ time for sure,” Rowe said.

AkzoNobel has more than 20 manufacturing sites across all its decorative paints, performance coatings and specialty chemicals businesses in southeast Asia, including four main production facilities in Vietnam, Thailand, Indonesia and Malaysia, according to Rowe.

The company’s production sites in Vietnam and Indonesia has been expanded over the last couple of years, he said.

“At this point there are no plans to build new major production facilities in the region as the business has enough capacity for its growing demand, Rowe added.

Meanwhile, the firm’s new multi-purpose AkzoNobel House in Singapore will soon be fully operational by early next year, according to Rowe.

The site will house a number of AkzoNobel businesses and corporate functions, including a new global decorative paints exterior wall expertise centre, as well as research laboratories for the firm’s decorative paints, functional chemicals and surface chemistry businesses.

Demand for decorative paints is still registering strong growth rates in Asia, and is higher than the levels seen in Europe. But the pace of growth has been slower compared to rates seen in previous years as economies weaken, he said.

“Growth rates have come down from 2010 and 2011, but Asia has significantly higher growth rates than the other regions,” Rowe said, adding that paint markets generally grow at about 1.0 to 1.5 times the GDP growth.

“We tend to experience slightly sharper slowdowns and rises when GDP changes. The important thing for us in terms of long-term market growth is that even if there is a short-term break – such in 2009 and 1999 – fundamentally, you know it’s going to rise again,” Rowe said, referring to the years that immediately followed major financial crises.

The global economy plunged into recession in 2009, following a global financial crisis that originated in the US in late 2008, while 1997-1998 marked the Asian Financial Crisis.

($1 = €0.78)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Nurluqman Suratman

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