ARNHEM, the Netherlands - Akzo Nobel reported that Coatings delivered autonomous sales growth of 5% in 2004 thanks to strong contributions from fast-growing Asia-Pacific markets and a robust U.S. economy. However, raw material costs rose dramatically in the second half of 2004, and only a portion of the increase could be passed on to customers. Nevertheless, the company held return on sales steady at 8%, and return on investment improved from 19.4% to 20.5% for the year.
Hans Wijers, chairman, said, "Most of our Coatings businesses saw healthy volume growth, particularly benefiting our industrial segments in emerging markets. Restructuring efforts contributed significantly to profitability, and we expect to see increased benefits flowing through in 2005. Over the coming months, we expect the steep rise in raw material costs to continue, and our first priority will be to obtain better pricing."
Growth was led by Marine & Protective and Powder Coatings, where Akzo Nobel benefited from its leadership, ability to offer customers technologically advanced solutions and expanding presence in growth regions. Decorative Coatings delivered satisfactory performance despite sluggish European market conditions. Industrial activities bore the brunt of the steep rise in raw material costs during the second half of 2004, while Car Refinishes, which had been under pressure for the first nine months of 2004, began to see the benefits of its restructuring program towards the end of the year.