Hard Times in Europe

Organic sales growth is a term beloved of major paint companies when it comes to showcasing their performance up-front – especially in their financial results. It has also proven to be an almost-empty cup for both AkzoNobel and PPG Industries this year in the face of softening demand for paints and coatings.

The industry’s appetite for acquisitions (non-organic growth), one of its most exciting characteristics until recent years, has reverted to company reviews, plant closures and disposals for both of these companies. This is so often the case when companies are forced to focus on costs, expenses, and manufacturing efficiency.

Performance Notes from AkzoNobel

Announcing its interim results for 2025 at the end of July, organic sales growth for AkzoNobel was flat during the first half of the year, and sales growth was down by 3% overall due to exchange effects. Operating income has been 24% lower in the same period, largely attributed to restructuring costs.

In the decorative paints domain, higher prices were met with lower sales volumes. Decorative paint sales were down in every region that AkzoNobel reports for, viz. Europe (down by 2%), Latin America (down by 9%) and Asia (6% lower). There were signs of a return to growth in China.

 In the EMEA region, Western Europe held up best in volume terms, but volume sales in Southern and Eastern Europe were weaker, effectively nullifying regional organic growth. Hyperinflation effects were seen arising from the company’s operations in Türkiye and Argentina.

Similarly, in AkzoNobel’s equally globalized industrial coatings operations, there were signs of struggles to increase sales in every segment except for marine and protective coatings. Automotive and Specialty Coatings and Industrial Coatings both experienced a sales decline of 6%, while the Powder Coatings business both saw turnover fall by 5%.  

Sales in the company’s Marine and Protective Coatings business were up by 6% in the first half of this year, with organic growth of 9% so far for 2025. Double-digit percentage growth in protective coatings sales played into this, and the company notes it is coming from North America and Asia.

Throughout all of the results, international exchange rates were seen as the biggest drag on the final figures. The weaker powder coatings result was pegged to softer demand for architectural powder finishes.

French Connections Prominent in 2025

Earlier this year, AkzoNobel announced that it had reviewed all of its French operations and was aiming to have much greater manufacturing efficiency in France. On the positive side, the investment of €22 million is going into making its site at Montataire a flagship site for decorative paint production.

Other parts of the plan, which the company started implementing in May, will see it streamline its operations to drive competitiveness and sustainability. Some of its French distribution outlets (Sikkens Solutions paint shops) are expected to be transferred to independent partners, while others will be closed.

More than 200 jobs will be lost as a result of AkzoNobel’s French reorganization (about 16% of its workforce in the country), while some others will be created. No French site closures appear to have been reported yet, but as part of its drive to simplify its European operations, AkzoNobel is closing its manufacturing facilities at Wapenveld (The Netherlands) and Machelen (Belgium) as part of a three-year transformation program.

An important item I’ve not had the opportunity to include in this column yet was that AkzoNobel revealed it has been working with France’s Arkema and the Swiss OMYA on the development of new mass-market decorative paints. The companies have been targeting the formulation of new eco-friendly decorative paints that claim a 30% reduction in carbon footprint.

This collaboration, which exemplifies the necessary approach of upstream-downstream collaboration in the coatings chain (Scope 3 emissions reduction), targets future-wave paint formulations developed from bio-based and bio-attributed binders from Arkema and recycled minerals and calcium carbonate opacifiers from OMYA.

These future-wave developments are very research-intensive, based on all of the regulatory and performance challenges that the paint industry faces. Amid the plethora of performance characteristics to pursue, AkzoNobel has focused on yellowing resistance, wet scrub resistance and brightness. The three companies have developed advanced laboratory automation (probably an HTE system) and AI in order to accelerate their joint R&D, with promising results claimed so far.

Additionally, AkzoNobel has announced it is working with BASF for the supply of its bio-mass balanced emulsions in order to drive a 5% reduction in Scope 3 emissions. This is a positive effect for acrylic binders/emulsions that is driven by BASF’s upstream use of biomass materials, allowing AkzoNobel a direct substitution for lower carbon footprint decorative paints again.

Further Afield

Finally, and reflecting my opening remarks, AkzoNobel has sold most of its Indian coatings operations to the country’s JSW Group. It’s disposing of its liquid paint and coatings activities but retaining its Indian powder coatings business and an international research center. 

The agreed deal sees JSW Group buying 75% of the shares in AkzoNobel India Limited (ANIL) and should be closed by the end of the year. AkzoNobel plans to launch a share buy-back program with some of the proceeds from the transaction. The disposal comes at a time of rising competition in the Indian paint industry, with new entrants wanting a slice of the rapid growth action that’s characterized India in recent years. JSW Paints is one of its rising stars.

Similar Outcomes for PPG Industries

In its second-quarter 2025 results, PPG Industries reported gently declining organic sales growth in the architectural coatings segment, and similar patterns were recorded in other part of the world (Latin America, Asia Pacific). Despite modest growth in Mexico (and that it should continue in the second half of 2025), the overarching trend is that the global architectural coatings market is currently experiencing falling sales.

European decorative paint demand was described as tepid in the second quarter; organic sales growth was led by PPG’s decorative paint operations in the UK and in the Nordic countries, but with weaker demand coming from Eastern Europe.

As with AkzoNobel, lower decorative volumes were met with higher prices.  Direct comparisons on global architectural coatings sales are negative generally due to PPG’s decision to divest its North American architectural coatings business last year, which means neither it nor its main rival are active in the largely mature and very sizeable North American decorative markets now.

From its industrial coatings portfolio, PPG reports the same best performance in Protective and Marine Coatings, increasing by double-digit percentage rates and being driven by new technologies. Overall, PPG recorded 6% organic sales growth in the second quarter for its Performance Coatings operations and 2% across the whole company when architectural coatings are added in.

So it’s between the proverbial devil and the deep blue sea for Europe’s top participants at the moment. Huge pressures, challenges, and costs of formulation and softening demand in the decorative sector. Meanwhile, the pursuit of higher profits somewhere in the middle, continues.