Akzo Nobel to Divest Units, Cut Costs, but Seek Expansion of Coatings Business
But Hans Wijers, who assumed leadership of the company on May 1, said Akzo Nobel is "committed to further growth" of its Coatings segment, which he described as "a very attractive business with a high upside."
Wijers and key Coatings executives offered an extensive review of the business's architectural, industrial and powder-coatings segments during the company's annual spring meeting with financial analysts and reporters. Wijers succeeded Cees van Lede at the helm of the world's biggest coatings manufacturer.
Wijers declined to provide specifics on discussions of the divestiture plans, saying the company will provide more details before the end of the year. He said the program would be pursued "to create room to maneuver." In the short term, he said, "we will improve the performance of all three groups Pharma, Coatings and Chemicals. In the long run we will keep all strategic options open."
According to news reports in Europe, the company said the majority of the divestments would involve its chemicals business. Cost-cutting plans, meanwhile, will primarily target the company's pharmaceuticals operations. The company will seek to build on its leadership position in coatings, the reports said.
Rudy van der Meer, the member of the Akzo Nobel Board of Management responsible for Coatings, said the company would continue efforts to improve the business' performance, pursue organic growth and selective acquisitions, and continue to reduce costs.
"Our focus remains growing in emerging markets," Van der Meer said. "In the last five years we have doubled our sales in emerging markets to 1.5 billion euros and grown in Asia-Pacific from 4 to 12% of our total sales." At the same time, he said Akzo Nobel will seek to accelerate research and development programs for waterborne, high-solids, powder, and UV-cure coatings technologies.
Robert Torba, Industrial Finishes general manager, said the largest plant-consolidation and cost-reduction program in the company's history is in various stages of completion. At the same time, the business is pursuing "geographic growth investments at an all-time record pace," he said.
Bill McPherson, general manager of Powder Coatings, said the business will discontinue production at Akzo Nobel's Houston powder facility, with those operations shifted to manufacturing sites acquired in 2002 in Monterrey, Mexico, and to other sites in the United States acquired as a result of the company's purchase of part of Ferro Corp.'s powder-coatings business.
Also as a result of the Ferro acquisition, Akzo Nobel purchased powder-coatings manufacturing sites in China and Korea, and the company recently started production at a new site in Vietnam.
Stephanie Knowles, head of Retail Europe for Decorative Coatings, said the company's architectural-coatings business is in a strong position to benefit from a change in the marketplace from "a very local market to a regional market."