This issue of PCI features the 19th annual ranking of the top coatings manufacturers in the world. Listed in the article (page 24) are the Top 10 global leaders and the Top 25 North American companies. Sales numbers listed for each company reflect worldwide 2010 global coatings sales figures.
The Top 10 global companies all reported increased sales in 2010, ranging from a few percentage points to over 10 percent. Most of the increases were close to 10 percent. The picture for the Top 25 North American companies appears somewhat more mixed. While only a few companies reported decreased sales for 2010, about a third reported either flat sales or modest sales increases. However, compared with the drop in sales seen in 2009, the industry appears to be rebounding.
Industry consolidation continues to play out around the world. In March 2010, The Sherwin-Williams Co. acquired the Industrial Wood Coatings business of Arch Chemicals. In June 2010, -AkzoNobel finalized its purchase of Dow Powder Coatings, the former Rohm & Haas powder activities, from the Dow Chemical Co. Earlier this year, Japanese Kansai Paint Co. successfully acquired Freeworld Coatings Ltd., a South African coatings company. And in June of this year, Denmark-based Hempel announced its acquisition of decorative coatings manufacturer Crown Paints.
Globalization appears to make sense in this business climate. As the global economy began to improve, demand grew in the emerging economies of Asia, Eastern Europe and South America and then moved to the more developed economies in Western Europe and the United States. In general, companies with a larger global footprint and more diverse offerings were able to recover more quickly than companies with a more narrow focus.
Charles E. Bunch, Chairman and CEO of PPG Industries, commented to shareholders at the company’s annual meeting this year on his company’s move to a more global focus, “We have continued to pursue growth in emerging regions such as Asia/Pacific, Eastern Europe and Latin America, which has broadened our reach and reduced our exposure to weaknesses in any one region.” PPG’s businesses in emerging regions grew 20 percent in 2010, he said, and with sales of nearly $3.6 billion, these regions now account for 27 percent of the company’s sales. The United States and Canada now represent less than 45 percent of PPG’s sales.
Valspar’s most recent financial results illustrate another major theme in the coatings industry – price increases. While the company reported increased sales for the second quarter, net income was down, due in part to rising raw material costs.
In a news releases announcing a price increase in AkzoNobel Powder Coatings’ Europe West segment, Gordon MacLeman, Managing Director of the Sub Business Unit Powder Coatings Europe West, commented on the challenges facing the industry: “These are really unprecedented times for our industry. This level of increase in purchasing cost was literally unimaginable until very recently. Unfortunately we believe we will see continued shortages, and consequently increases in our purchase cost for some considerable time to come.” Faced with rising raw material costs, companies are adjusting pricing and continuing to hold costs.
Going forward, the industry is responding to the challenges of globalization, the lingering effects of the 2008 financial crisis, and rising raw material costs by continued consolidation, diversification, price adjustments and strict cost containment.
While the PCI staff made every effort to seek out the top companies in the industry, we may have inadvertently omitted some. Please contact me at email@example.com if you have interest in being included next year.