Brazil's demand for paint and coatings is a bright spot in AkzoNobel's worldwide operations during the current world economic crisis, and new investment in the country will help assure it continues to shine in the company's financial statements. During the third quarter, sales in Brazil were up by double-digits and are expected to reach 700 million this year.
Latin America as a whole represented eight percent of global sales for the company during the quarter. For full year 2007, AkzoNobel reported 475 million in sales for Latin America as an origin, and 606 million in sales for Latin America as a destination. Across the region, the company has 2,700 employees.
"We fundamentally believe in Brazil. If the country does not grow in the area of four to five percent per year, as has been happening, it will still grow between 2.5% and three percent," said AkzoNobel CEO Hans Wijers in São Paulo recently. This level of growth in Europe or the U.S. would be reason for euphoria. It means the market ke EPS growing."
The national paint and coatings association, Associação Brasileira dos Fabricantes de Tinta (Abrafati) predicts that paint sales in Brazil will increase seven percent this year to 1.1 billion liters. Paint consumption has traditionally grown faster than GDP in Brazil, and since consumption per liter is low, any increase in liquid disposable income boosts architectural segment sales.
Last year, total paint and coatings market sales were up 19% to $2.4 billion, according to Abrafati. Architectural segment sales were up 20% to $1.4 billion; automotive repainting sales were up 17% to $223 million; automotive OEM sales were up 13% to $171 million; and industrial segment sales were up 20% to $600 million.
Over the past three years, the company has invested 100 million in Brazil, and the pace may slow but will continue, Wijers told local press. With the acquisition of ICI in January, AkzoNobel added the Coral brand of paint-Brazil's second largest in the architectural segment-to its portfolio, which also includes Dulux, Sikkens, Wanda, Ypiranga, Interpon, International and Glidden.
Among recent market developments, the Wanda brand acrylic primer was reformulated for better coverage. Similarly, the Ypiranga brand architectural paint line now includes the Renova acrylic sub-line, with 17 ready-mixed colors. And the International brand has been repackaged to match the United Kingdom standard, for the Pintoff, Solgard and Flexacryl products. The company uses the Inspiration Color System, with some 2,000 color options, at its retail centers.
To better play its role as a corporate citizen, AkzoNobel has engaged in several social projects in Brazil lately. One, sponsored by Akzo Nobel Car Refinishes São Paolo, involved the establishment of a safe house for endangered children in the Sao Paulo neighborhood of Jandira, called Casa Familia & Vida. The refinishes group also is sponsoring the refurbishment of the central market in Serra Branca.
Similarly, another company unit in Sao Paulo-Surface Chemistry, Polymer Chemicals, Functional Chemicals and Flexsys-is sponsoring after-school art lessons and sports training for the children of the Itupeva area of São Roque da Chave. The program is called Key to Life. Brazil places a premium on annual social and environmental reporting by major corporations that are publicly traded.