CW: How did the market for paint and coatings fare overall in 2021?
Bryant
While coatings remained a strong sector, markets were mixed in 2021 due to supply chain constraints and raw material inflation. Refinish saw continued demand recovery with an uptick toward the end of the year as bodyshop activity improved from the prior-year levels. Industrial demand remained strong throughout the year, especially as North American housing and remodeling activity increased. For Mobility, Commercial Vehicles saw ongoing strong production rates but were offset by Light Vehicle volume pressure due to supply shortages. Global vehicle production for 2021 only increased by 2.5% and, due to supply chain shortages, approximately 9.6 million vehicles were deferred during 2021 due to the semiconductor shortage versus original industry production estimates.
Crossman
Although hugely challenging, with the impacts of Brexit and the pandemic going hand in hand with material availability and pricing, 2021 was a relatively successful year for HMG. Our first-rate team at HMG showed great tenacity and flexibility to ensure that our customer orders were fulfilled. We saw companies looking to work closely with British manufacturers, presenting a number of opportunities for the business as people looked to secure a local supplier of paints and coatings.Holzenkamp
2021 proved to be another challenging year, especially in the automotive OEM sector. Besides coping with the ongoing pandemic, our customers had to temporarily curtail or even completely shut down their production due to the global shortage in semiconductors. Escalating raw material and energy prices also left their mark on our business environment. Despite all these hurdles we continued to focus on our customers and managed the market volatility successfully in very close cooperation. In addition, our refinish coatings, deco business and surface technology businesses performed excellently in 2021.McGarry
In 2021, despite the ongoing impacts of the pandemic, we saw increasing demand across multiple end-use markets, particularly related to coatings for cars, airplanes and ships. Fulfillment proved to be a challenge, however, as production and congested transport lanes across the entire industry were stunted by supply chain disruptions, raw material and labor shortages, and significant cost inflation.As more people returned to the roads for in-person work, coupled with low inventory levels of new cars available, PPG has seen a rise in automotive refinish demand for repairs of older and used vehicles. We also saw similar trends in aerospace. Travel was still down compared to 2019, so airline orders for maintenance, repair and overhaul (MRO) coatings on existing fleets increased.
The other emerging trend was the shift from do-it-yourself (DIY) to do-it-for-me (DIFM) in the architectural coatings market. As consumers shifted from a stay-at-home mentality to venturing out, our professional paint contractor order books and backlog have increased steadily in the back half of 2021 into 2022.
As businesses around the world attempt to address the supply chain challenges, there has been a push to strengthen transport and shipping infrastructure. PPG saw growth in our marine and protective coatings business as new builds, especially container ships, are taking off and are expected to grow for the next several years.
Petersson
In 2021, supply chain shortages became an issue for many companies, and raw material prices increased in an unprecedented way. The paints and coatings industry was forced to pass some of these increases onto customers and Hempel was no exception. However, we do not allow price to be our only focus. We believe that quality has long-term business benefits, and we are taking a proactive approach and working transparently with customers.The year also brought new challenges. As companies and economies learned to function with the COVID-19 pandemic, raw material prices started to spike. An unprecedented general price increase of around 40% compared to Q4 2020 called for a prompt and decisive response. We took actions to maintain our margins, primarily adopting a cost-conscious approach, further accelerating our productivity programme, our cost saving programme and increasing commercial efforts to bring even more value to our customers and increase sales prices. Under these challenging conditions, we were proud to end the year with an EBITDA of €03 million and an EBITDA margin of 11.4% which was in line with our 2021 outlook.
Roy
The paints and coatings market in India faced and successfully weathered a lot of headwinds in 2021. The economy, that had revived after the 2020 pandemic, stuttered again as the new fiscal began with yet another wave of the pandemic. But India brought it under control with the world’s largest vaccination drive. Raw material prices hardened throughout the year and all companies had to take a series of price increases.However, the Indian market has time and again proven to be resilient and demand in the decorative paints segment, held up well. Protective coatings business is back on even keel. Industrial and automotive segments have revived, though it will take a while for demand to hit pre-pandemic levels. Overall Berger Paints has registered good top-line growth in the first three quarters. Increased input costs have muted bottom-line growth overall for the industry.
Sabas
In 2021, business at Beckers was strong and back to pre-COVID levels across markets. Coil Coating is our main driver of growth, while we also see good developments in industrial coatings.
The tension on the supply chain hurt the paint industry significantly. We have had to deal with an unprecedented and exceptional raw material shortage and rising prices. To maintain continuity of supply and to mitigate cost impacts, while ensuring that our products continue to meet the quality and performance standards required, our Procurement and R&D teams have successfully implemented system changes in several countries, identifying substitutes for the most problematic components. Nonetheless, we have also had to pass on part of the additional raw material costs. It proved key to stay close and be fully transparent with our customers so that we can jointly find a way to remain competitive in these challenging times.
Vanlancker
Our 2021 results demonstrate the strength and commitment of our employees around the world who remained committed in working to supply our customers despite the continued headwinds of the COVID-19 pandemic, significant raw material inflation and industry-wide supply constraints. We had to move quickly to increase prices to help off-set the raw material inflation while actively finding solutions to supply customers in a challenging environment.I’m proud of the resilience of our people and the energy we’re putting into delivering on our Grow & Deliver strategy. AkzoNobel being named a Top Employer in eight countries this year is a great example of how our organization is well placed to deal with the challenging business environment. At the same time, we’re continuing with our widely recognized People. Planet. Paint. approach and are setting the standard by being the first paints and coatings company to have sustainability targets officially validated by the Science Based Targets initiative.
We announced the acquisition of Grupo Orbis in 2021 expanding our long-term position across South America to service paints and coatings needs in the Andean region and in Central America. We expect this acquisition to close in Q1 2022.
Wakatsuki
In the field of decorative coatings, strong market growth continued, especially in China, and a recovery was also seen in the market of professional painters in Oceania.On the other hand, in the automotive coatings market, automotive production in Japan decreased by 4% YoY to 7.44 million units, while the production in China was 23.68 million units, almost the same as the previous year. However, compared to the period before the COVID-19 pandemic, automotive production worldwide continued to decline due to the global shortage of semiconductors and the stagnation of parts supply caused by the pandemic.
In 2022, we expect the recovery of automobiles production volume as the shortage of semiconductors and parts is being resolved in Japan, China, and the Americas.
Yannidis
The upward trend in DIY and home improvement we observed in 2020 has significantly slowed down causing a reduction of sales in that segment. We believe that consumers fulfilled their needs during lockdowns and turned to more leisure related expenses. The tourism industry started reinvesting at a rate that compensated the loss of sales and eventually the year ended with demand for architectural paints in 2021 being at the same levels with the previous years.CW: Have you seen an improvement in business as the pandemic seems to be coming to an end?
Bryant
Yes, we are seeing improvements as the pandemic appears to be ending – or at least becoming more manageable – but we expect some of last year’s challenges to follow us well into 2022.Axalta’s fourth-quarter and full-year 2021 results were marked by ongoing strong demand conditions and solid execution by our team. As a result, we achieved a net sales increase of more than 18% year-over-year. In addition, we are encouraged by the early improvement in the availability of semiconductor chips that we saw within the automotive manufacturing sector during last year’s fourth quarter. Based on that, we remain optimistic that 2022 could see some rebound in Light Vehicle production. That outcome, coupled with strong consumer demand, has the potential to drive a multi-year recovery and increase demand for our products and solutions.
Crossman
It’s too early to predict the short-term future, as recent history tells us that the landscape can change extremely quickly. However, we are reasonably optimistic that we can build on the activity levels experienced across certain business areas through the pandemic.Holzenkamp
The automotive OEM business is starting to ramp up with focus in Asia. But we do not expect the automotive market to fully recover in 2022. Supply chain disruptions, especially in semiconductors, continue to create volatility in the business environment. But now that the pandemic situation is improving, we are looking forward to reconnecting by increasingly meeting our customers again.McGarry
In the last quarter of 2021, PPG experienced year-over-year sales growth across multiple business units in both our performance coatings and industrial coatings segments, but we have not yet escaped the far-reaching effects of the COVID-19 pandemic. PPG ended 2021 with substantial sales backlogs – we have the orders, but logistics and freight issues, raw material inflation, and labor shortages are impacting our ability to fill those orders.The Omicron variant contributed to large numbers of workers in quarantine throughout 4Q, 2021 and Q1, 2022 due to illness or exposure. Raw material inflation was up almost 20% compared to the prior year. These workforce, transportation and supply challenges have impacted our bottom line despite increased volume. However, we saw some of these pressures begin to ease in early 2022.
We are confident that as the material shortages resolve and customer orders return to a consistent pattern, we will see our production return to pre-pandemic levels. Overall volumes were down in our non-architectural businesses by mid-to-high single digits versus 2019. We know that we were well supplied by the raw material community in 2019, so plenty of capacity exists to help us return to more normal levels of service.
Petersson
The COVID-19 pandemic remains a challenge, bringing uncertainty to all countries and uneven performance to every business segment, although in 2021 the impact was more pronounced in the beginning of the year than towards the end. Since the start of the pandemic, our priorities have been clear. Our number one concern is the safety of all our employees. At the same time, we have worked to ensure our business continues to run smoothly and our customers, partners and others are safe when dealing with us. In addition, we implemented measures to protect our financial robustness and to ensure we have capacity for continued investment. These actions have proven effective and placed us in a strong position.Roy
In India, the pandemic affected demand in two distinct waves. In the first, it hit urban demand and the subsequent waves affected rural demand. However, as we speak, it does appear that the pandemic is waning as cases and fatalities drop rapidly.With respect to the business, it was our experience that retail demand returned as each wave waned. One of the reasons was increased consumer confidence. Painting service providers, like Berger Safe Express Painting™ have been quick to implement safe and hygienic working practices to reassure consumers that it was safe to paint once again.
Apart from the resurgence of retail, we find that the construction industry has been rapidly normalizing operations with the result that project business is on the up. The demand for industrial paints and protective coatings that depends on many other factors has lagged retail demand by a few months.
Indications are that a corner has been turned and that there will be sustained improvement in demand in the coming year.
Sabas
We have seen a significant improvement, which, however, was not correlated to a pandemic slowdown. The industry learned how to live with COVID-19. Remote working, safety measures, distance rules were key to creating the conditions for improvement. Vaccinations helped to protect our people, and these factors contributed to the increase in business.Vanlancker
We have adapted ourselves. Thanks to the agility of the organization, we managed to control the situation. The pandemic is being closely monitored given how the variants spike in different parts of the world at different times. We have been taking maximum precautions to ensure the safety and well-being of employees. In many regions, employees are working from home where possible. AkzoNobel has introduced a hybrid way of working pilot. Hybrid way of working means that colleagues whose roles allow it can choose to work at home for up to 40% of their time. The transition period and the implementation timeline differ per country depending on local regulations and works council consultations. Appropriate measures are being taken to continue serving customers and manage costs. At the same time keeping the organization intact and able to respond quickly to changes in end market demand.We are seeing more re-openings and less restrictions such as Southeast Asia where much of the business has opened for business after extended lockdowns and restrictions throughout the second half of 2021. However, the pandemic is not over as the industry is impacted by labor shortages and supply constraints, especially in North America.
Wakatsuki
The impact of pandemic on the company’s business was on a recovery track in 2021 compared to 2020, with sales revenue increased to 49.6% YoY in Asia due in part to the impact of the newly consolidated Indonesia business,18.8% YoY in Oceania, and 35.0% YoY in other areas, mainly in Turkey, with the architectural coatings business driving growth globally.In 2022, we expect the recovery of market conditions from pandemic in the global decorative coatings market, and the recovery of the automotive market as well, resulting in sales revenue growth of more than 10% in existing businesses.
Yannidis
We have seen significant improvement of our business. In a market that has remained at the same size we managed to increase our market share according to our strategy and finally closed the year with 17% growth in sales. Our commitment, to provide the most competitive total offering to our customers, has been remained as our cornerstone. In order to promote excellence through all company’s functions and activities we invested in growing our family of people, increasing production capacity and securing significantly higher inventory levels. In that respect we have managed to maintain out supply chain efficiency despite the increasing sales and the raw material shortages.Our investment in marketing and advertising has also raised our brand equity to the highest level that we have ever measured. Financially, we have sacrificed our EBITDA by 30% in an effort to be able to provide consumers with affordable paints and support them complete their projects and have the living standards they deserve. Unfortunately, the vast majority of our suppliers do not share the same mindset with us…
CW: What areas of the paint and coatings market represent the most growth opportunities for your company?
Bryant
In 2022, we expect to see continued growth within our Performance Coatings segment, including our Refinish and Industrial Coatings businesses. Notably, in 2021, we introduced a series of new product innovations, which we expect will contribute to growth in these two segments. For example, in Refinish, we developed the industry’s first fully automated color mixing process via Daisy Wheel 3.0, the most efficient mixing process among bodyshops in the global refinish market. In Industrial, we introduced Imron® Industrial NISO 3325, a non-isocyanate acrylic coating that is durable, sustainable, and chemically resistant. In addition, we expanded upon the Imron Industrial portfolio with a new high-performance urethane direct-to-metal primer and the Imron Industrial Ultra 2.8 VOC Topcoat, which offers low-VOC emissions and a faster cure when compared to other urethane topcoats.We expect to see growth slightly ahead of global production for the Light Vehicle and Commercial Vehicle markets in our Mobility business, given specific customer exposures and organic growth expectations for 2022. Further, we anticipate an uptick in global automotive production based on industry forecasts.
Crossman
One of our greatest strengths is our product mix, as economies and industries recover at different paces our flexibility allows HMG to be at the forefront of providing the paints and coatings required by our customer base with short lead times. This is exemplified in the decorative coatings marketplace where we’ve been able to offer seasonal product and color choice to satisfy consumer demand and we see further opportunities within this market.Holzenkamp
The automotive OEM market is still the most important market for us. We see strong growth potential in Asia Pacific, where we further strengthened our market position in recent years by strategic investments. We are established as one of the leading suppliers for automotive coatings solutions globally and will differentiate also in the future with innovation and sustainability. The increasing need for electric vehicles, autonomous driving and more sustainable solutions offer significant growth potential for BASF.McGarry
The automotive and aerospace industries are full of opportunity for PPG. Consumer demand for new cars remains robust, and automotive OEM customers will be able to continue to produce more cars to meet consumer needs and replenish dealer inventories as 2022 progresses. We also know that inventories are exceptionally low in our Automotive Refinish market, so demand will increase by both the improvement in miles driven, but also by restocking.New business wins in aerospace, coupled with strong demand for PPG’s technology-advantaged products, show promise for airline MROs and wide-body aircraft new builds. We recently completed a $15 million investment in our Sylmar, CA, manufacturing facility, which develops and produces aircraft transparency technologies for military aviation programs. On the commercial side, air travel is expected to increase as consumers begin booking vacations in the aftermath of the latest spike of Omicron cases.
In architectural coatings, our recently expanded relationship with The Home Depot and HD Supply will allow us to distribute PPG PRO Painter products at all U.S. locations, totaling more than 2,000 distribution points. Our painting contractor customers are reporting backlogs of jobs due to the supply problems of the last year and increased consumer pull. PPG’s expanded offerings at The Home Depot will help pro painters save time. Instead of visiting multiple stores to find the supplies they need for a job, now they can get paint and other materials in a single location. This has also allowed us to expand our digital and e-commerce offerings to provide the best service to our professional paint customers.
Petersson
We will continue to build segment leadership positions in selected geographies within Marine, Decorative, Infrastructure and Energy. We believe our technology and expertise in these areas brings real value to our customers and our focus will ensure we have a robust product development pipeline to continuously reinforce our position.Roy
We anticipate growth opportunities in various segments of the coatings industry. In the decorative coatings market, from new constructions where the realty and infrastructure sectors are already accelerating and are expected to grow further, fuelled by a thrust on affordable housing creation by the government. We also see growth coming from the repainting and maintenance businesses where consumer demand is surging, especially in urban markets.The decorative coatings segment constitutes close to 80% of our sales while also growing the fastest.
We expect substantial growth in the protective coatings segment where Berger Paints is a clear market leader. The government is boosting spending on infrastructure and we are the best placed to capitalise on this investment boost.
Sabas
Sustainability is the key growth driver. Our new Beckers Sustainability Index (BSI) enables us to verify the environmental impact of our products, and we are using it to continuously improve the sustainability performance of our products. The BSI is driving our product development processes to make our existing and new products more sustainable. In Industrial Coatings, our focus is on water-borne coatings, and in Coil Coatings we will be the first to launch Radiation Curing technology on the market this year.We will also leverage new markets. In Coil Coatings, this includes technologies for the Domestic Appliances market, for High Durability products, and for the Core Plate Varnishes market, helping the e-mobility industry by enabling electric motor innovation and efficiency. In Industrial Coatings, we are developing new solutions for the Consumer Design Finishes market.
Vanlancker
Although demand trends continue to differ per region and segment, there are many positive trends. Demand for paints is strong in all regions. Trends in EMEA are driven by both the professional and DIY segments including higher structural DIY demand from younger consumers. In China, positive momentum continues in our premium retail offering and geographic expansion. We see signs of recovery in South Asia where business has reopened after being heavily impacted by COVID-19 throughout the second half of 2021. In South America, we see continued strong demand.Demand for coatings is strong with a combination of continued growth and sequential recovery of businesses that were impacted to varying degrees by the pandemic. Growth trends for powder coatings are strong being driven by both increased demand and market share gains along with new applications such as electric vehicles. Demand for industrial coatings is also strong, particularly for metal and packaging segments. Automotive and specialty coatings trends are strengthening sequentially, especially vehicle refinishes and aerospace coatings. Demand for marine and protective coatings is showing strong recovery as marine and oil and gas investments and activities improve.
Raw material inflation and supply constraints were significant in 2021 for the entire industry. We are actively driving margin management, managing costs and supply chain initiatives to mitigate.
Wakatsuki
Our business in China and the other Asian countries has been the driving force behind the group’s growth, accounting for 53% of consolidated sales revenue. Among them, the paint market in China, which is the largest scale of our sales, is expected to continue to grow at a high CAGR of 5.3% from 2019 to 2024. In China, due in part to solid market growth and product price increases, in FY2021 we achieved significant increase in sales, with 35% up in DIY-related and 29% up in Project-related sales. In addition, by improved market share through sales measures and successful price increases, we achieved significant increases in sales and profit in other areas, mainly in Turkey and Oceania. The company will continue to achieve high growth by expanding product lineups and strengthening brands in these regions.Yannidis
There are signs of strong demand on the horizon. Plenty of new building permits, along with very high investments and a stimulus package that promote energy efficiency in buildings, add up to the expected tourism boom. In that respect, we see significant growth opportunities for our ETICS systems that are subsidized in order to obtain higher energy efficiency for old buildings and in general all the architectural paints. However, growth opportunities are threatened by the cost of raw materials and labor, and we already see hesitation by investors in starting projects that have been budgeted with lower cost that is already obsolete before even starting. Consumer spending has nearly stopped due to the energy bills. Our industry has to find ways to maintain the products’ affordability.
CW: What is your business strategy for growth in 2021 and beyond?
Bryant
Looking ahead, we are well-positioned to leverage our market-leading position to drive profitable growth across our entire portfolio. We will continue introducing new, innovative, and sustainable products aligned to customer needs and end-market trends, such as sustainability and electrification. We will also continue to expand our global footprint through targeted acquisitions that help grow our capabilities and product offerings.Crossman
The strategy for the next year, as it is every year, is based around our core principle of being the best coatings manufacturer & supplier that we possibly can be. By striving to improve ourselves, our coatings, our community and our company, we will be able to provide a wealth of benefits to our customers and develop long-term sustainable partnerships.Holzenkamp
Actively shaping the transformation toward sustainability and digitalization is an integral part of our strategy.We live our purpose “We create chemistry for a sustainable future” for many years. To fight climate change we target to achieve net zero CO2 emissions by 2050. This needs a lot of creativity and strong partnerships e.g. to use increasingly renewable energies, to develop more energy efficient processes and more sustainable products. Together with our customers and other partners in the value chain who have also set themselves ambitious targets we implement every day more steps towards a more sustainable future.
Digitalization has developed rapidly in many areas like operations and supply chain with more efficient processes, amazing visualization of colors and simulation of test methods like stone-chipping to accelerate product development – just to name a few. With the help of new and disruptive digital technologies, we will create exciting customer experiences, grow our business through new business models and make our and our partner’s processes even more efficient.
People create these transformations and make them reality. Our diverse team and the strong trusted cooperation with many partners is crucial. We need expertise, bold ideas, courage, the strength to implement and an inspiring culture. With the people I have met since becoming President of Coatings at the beginning of the year, I am very confident and excited to jointly make it happen.
McGarry
Currently, we continue to work to mitigate the impacts from COVID-19 and supply disruptions. This includes instituting productivity measures, diversifying our supplier base, and leveraging our latest acquisitions.PPG will also continue to prioritize digital offerings for customers of all sizes. In our architectural coatings segment, sales on a digital platform were up 20% over the year prior to 2021. Our partnership with The Home Depot provides another online ordering option as we strive to streamline the customer experience online and in-store.
A great deal of our research is focused on sustainability, both in manufacturing processes and in helping our customers deliver more sustainable solutions.
We launched several products that contribute to our goal of 40% of sales from sustainable advantaged products by 2025. These include PPG Copper Armor Antimicrobial Paint and COMEX Vinimex Antiviral and Antibacterial Paint, both of which reduce up to 99.99% of bacteria and viruses on the painted surface.
Electric vehicles represent another area for growth and sustainable research. PPG launched two new coating products for electric vehicle battery packs which provide fire protection, electrical insulation, and improve passenger safety. One of our new plants in China is exclusively focused on battery fire protection.
PPG has a vast wealth of knowledge of the materials used in Li-ion battery development, and we plan to share that knowledge with manufacturers to design and produce better, safer energy storage solutions. We recently began a partnership with Cellforce Group to develop sustainable battery cells free of dangerous solvents for automotive electro-mobility solutions.
In our packaging business, we are working towards a reduction in single-use plastic to alternative materials like metal packaging. We will be expanding our packaging capabilities with several new plants opening in 2022.
Petersson
2021 was the first full year of our five-year Double Impact strategy. Our ambition is to double our business by 2025 and to increase our positive impact in terms of sustainability and ESG – and we are on track. With size comes the opportunity to invest in innovation and capture the benefits of scale, enabling us to better serve and stay relevant to our global customers. In 2021, we welcomed over 1400 new colleagues to the Hempel family from our acquisitions of Wattyl in Australia and Farrow & Ball in England.As part of our Double Impact strategy, we have committed to doubling our revenue to EUR 3 billion through both organic growth and M&As by 2025; focusing the business so that Hempel will secure more leadership positions in our chosen sub segments and geographies; accelerating innovation both ‘within-the-can’ and ‘outside-the-can’ and making sustainability a key driver in our innovation.
Roy
Berger Paints will continue to work on creating innovative solutions for our customers while being a responsible employer and corporate citizen. With demand in most industry segments having revived we will work on maintaining our position as the fastest growing and one of the most profitable companies in the paints and coatings industry in India.Sabas
Beckers has the ambition to develop new sustainable solutions and to grow in its core business, Coil Coatings. The strategy is to create value for both our customers and Beckers. We want to accompany our customers on their sustainable journey. For this, we are investing in Innovation and R&D. We will certainly also develop new marketing capabilities.Regarding Industrial Coatings, the ambition is to grow in ACE (Agricultural, Construction and Earth moving equipment) and CDF (Consumer Design Finishes).
We put a special focus on China and some other countries in Asia. Nonetheless, we will remain active in Europe and Americas.
Vanlancker
AkzoNobel has been on a transformative path to reclaim our position as the reference in the paints and coatings industry since 2018. After achieving our 15% ROS target in 2020, we have turned our focus to our Grow & Deliver strategy which represents the second stage of our journey to double the profit of AkzoNobel.AkzoNobel targets to grow at or above its relevant markets, in line with its Grow & Deliver strategy.
Trends differ per region and segment, while raw material cost inflation and supply constraints are expected to gradually ease by mid-2022.
Plans are in place to deliver the €2 billion adjusted EBITDA target for 2023, and an average annual 50 basis points increase in return on sales over the period 2021-2023.
AkzoNobel targets a leverage ratio of 1-2 times net debt/EBITDA and commits to retain a strong investment grade credit rating.
Wakatsuki
In 2022, we expect record highs in both sales revenue and operating income; sales to increase by 20.2% YoY to 1,200 billion yen and operating profit to increase by 31.3% YoY to 115 billion yen. In addition to the consolidated effect of slightly below 100 billion yen in sales from Cromology, a European paint manufacturer whose acquisition was completed in 2022, sales revenue forecast is expected to grow by more than 10% in existing businesses.In FY2022, we are planning to invest in both growth and maintenance/renewal, and will aggressively invest in regions where we expect market growth, such as China and other parts of Asia.
Yannidis
This year we will escalate our investments in capacity growth as well as market share in our foreign markets. We will start up our new ready-mixed facade plasters facility in Q2 in order to support the growing demand for our ETICS systems. The new facility is a fully automated, high technology factory that will place us in the pole position of the relevant market segment. Moreover, we are investing in growing our logistics capacity with a warehouse due to start operation in Q4 and land acquisition for growth projects in the coming years. In parallel, we are raising our renewable energy production by 30% in order to cover our additional demand on our own means.
CW: In what areas are you focusing your R&D efforts?
Bryant
Innovation underpins everything we do at Axalta. We are constantly thinking of ways to deliver the most impactful, sustainable product solutions and benefits for our customers. In 2021, we invested about 4% of net sales in R&D and technical services to sustain our leading positions and grow into new white-space markets within Industrial coatings.
We are continuing to emphasize sustainability as the cornerstone of our business by ensuring more of our sales and innovation agenda are directly tied to delivering sustainable benefits. For example, we’ve been laser-focused on providing customers with next-generation offerings that enhance product performance, improve productivity, and satisfy environmental requirements since our inception. Sustainability is one of the four major categories that Axalta’s technology organization uses for innovation, along with color, productivity, and performance. In fact, as part of our 2030 ESG goals, we’ve recently committed that 80% of new technology and innovation developments will have a sustainability benefit. By ensuring that sustainable innovation informs our R&D efforts, we will be better positioned to address everyday problems, design processes, and apply forward-thinking to what’s coming next for our industry and our planet.
Crossman
Our focus will be on sustainable solutions by developing and implementing products and processes for specific markets. We have a rich history of innovation, such as our work with Graphene, and our R&D team are always looking at how new technologies can produce sustainable solutions which help solve coatings challenges for our customers and provide benefits for the wider community.Holzenkamp
Innovation is at the heart of our business. In close collaboration with our customers, we are continuously developing coatings and surface solutions that offer superior functional, economic and environmental performance. These includes high scratch resistance, improved corrosion protection, protection against environmental influences or innovative color solutions. A strong focus is on technologies with lower environmental impact like waterborne basecoats or shortened paint processes with less energy andmaterial consumption.
We also explore completely new business and technology areas. In our business unit ”Beyond Paint Solutions,” we target a variety of new markets by applying new coating technologies. We focus our research and development efforts especially on two technology clusters: Functional Coatings and Functional Films. In Functional Coatings, we concentrate on new functions and substrates for coatings, like optic applications or elastic substrates, e.g. foams.
In Functional Films, we enable new surface functions by new coating technologies. We also offer ready-to-use film solutions built on surface topologies that result in properties like drag reduction for aviation or wind energy applications - another sustainable solution.
Petersson
We have made sustainability the key driver for our innovation and product development, for instance by creating our innovation incubator, GrowHub. GrowHub seeks to increase the pace of potentially industry-transforming business opportunities. Sustainability impact is one of the key criteria used to evaluate projects that are proposed to GrowHub. We have also identified sustainability priorities for each of our segments – and are developing a product environmental scorecard.Technology and innovation really matter to our customers, because those enable us to come with superior solutions – particularly in the Energy and Marine segments. In the end, it’s a technology war. Ships want to reduce their carbon footprint, wind companies want to make assets last 35 years and not 25. Technology can solve that. Hempel’s R&D team – 400 people around the world – are the heroes of the group, innovating and creating new solutions. We still are very focused on chemistry ‘within-the-can’ and we are also investing ‘outside-the-can’ in services, digitalization and data.
Roy
Our R&D efforts are directed on special property emulsions, water-based wood-coatings, construction chemicals, protective coatings, and powder coatings. Existing efforts on developing environmentally responsible products, adopting green technologies, and achieving overall cost reduction will continue.Sabas
We drive our Sustainability Strategy through innovation. We have committed to 100% of new R&D products being net-sustainable by 2030. To achieve this goal, we have created a new global R&D organization and a global Innovation Governance structure.Our developmental R&D efforts are focussed on promoting a more sustainable and circular coatings industry by shifting to water-based, bio-based and recycled raw materials that can be used and re-used.
At Beckers, we are stepping up our work with steel and aluminium coil coating customers to help them to decarbonise their operations in a new holistic approach that includes upgrading our Life Cycle Assessment (LCA) capabilities and breakthrough technologies that reduce the carbon emissions of coatings, for example radiation ultraviolet or electron beam curing.
We are also looking beyond our immediate coil coater customers to understand what end users in the value chain need to stimulate demand for our products. A product example of how Beckers meets end-user demands is its Beckry Therm roof coating, which reduces heat absorption on building roofs and reduces indoor temperatures by up to 10°C in
warm weather.
Vanlancker
Innovation is an important component of our growth plan and we are proud that our Paint the Future ecosystem is expanding; our second global startup challenge was launched in mid-May 2021 and more than 240 submissions were received in circular solutions, customer experience, smart application, smart manufacturing and improvements to supply chains. A finalist bootcamp will be held in late-March 2022 in Amsterdam and winners will be offered a tailored partnership agreement to work with us on innovative and sustainable business opportunities.A regional startup challenge in China in 2021 generated 210 submissions and four startup winners were selected and are now collaborating with AkzoNobel.
We continue to build on our leading track record with our company purpose of People. Planet. Paint. and our approach to sustainable business. Around 40% of our revenue is already generated from sustainable solutions and we aim to increase this to more than 50% by 2030.
In 2021 we made progress and announced in our full year results a 21% carbon reduction compared to baseline in 2018 and we are on track to reach 25% carbon reduction in 2025. We will have 100% renewable electricity at our sites in the EU in 2022.
I’m proud to say we’re widely seen as the leader in paints and coatings and our sustainability performance has been recognized by key benchmarks, including receiving the Terra Carta seal in 2021 launched at COP26. We are the first paints and coatings company to commit to a carbon reduction of 50% by 2030 using 2018 as a baseline and verified by the Science Based Targets initiative.
Wakatsuki
We will focus on research and development of products and technologies to create innovations aimed at solving environmental and social issues. As an example, in the automotive field, we are developing “decorative films” for the next-generation automotive industry and decarbonized society, and in the marine field, “Next-generation environmentally friendly anti-fouling technology for ship bottoms,” the product which is gentle on the marine environment and contribute to reducing CO2 emissions.PROTECTON, an anti-viral and anti-bacterial paint & coatings brand in Japan, developed to address the global social issue of the spread of infectious diseases, embodies our group’s ESG statement: “Finding solutions to global sustainability challenges is our responsibility to future generations and is a driving force for our continued growth and success”. We will continue to expand our PROTECTON product lineup.
Yannidis
Exploration of our “colorful planet” is not only a task for the R&D department. We have realized and proven that innovation can come from any function and every person in our organization if we cultivate curiosity and promote creativity. Indeed, the thin film of paint is a vast universe for chemical innovation but the way it is applied, marketed and even shipped can also create customer and user value. Therefore, sustainability under the prism of digital transformation will be the main driver for our innovative journey and the task will be to promote the flow of ideas along the value chain we serve in order to come up not only with new products but also with new ways of serving the market.CW: What is your company’s long-term plans?
Bryant
Every day, Axalta employees worldwide are working to meet customers’ needs and achieve our vision of being the preferred coatings partner for customers seeking the most innovative products and services delivered by the most talented team in the industry.Axalta’s long-term strategy has not changed. Our focus is to:
• build deeper relationships with our customers, so we not only meet their needs but proactively anticipate them
• develop innovative, sustainable products
• expand our global footprint, especially in emerging and underserved markets
• drive organic and inorganic growth
• safeguard our operations and maintain high standards when it comes to safety, quality, reliability, and service
• cultivate a workplace environment that attracts and retains top talent needed to meet the challenges of today and envision the possibilities for tomorrow
Crossman
Further investment in our Riverside Works site will offer the best environment to produce coatings in and support our customers and partners. In addition, our people will always be at the heart of HMG and our long-term plans involve giving our employees the best opportunity to thrive and succeed. Our intention, as always, is to support and nurture our people whilst looking at ways to improve their work-life balance.Holzenkamp
The Coatings division of BASF will become an even more complete provider of surface solutions. In addition to our core business automotive paint, we will also focus on solutions beyond paint and digital business models to develop new markets. Our Digital Incubation Unit acts as a business model incubator. It offers an environment to ideate, prototype and scale-up innovative, digital business ideas from the area of Automotive and Surface Solutions.And, of course, sustainability will stay in our focus. We will consequently together with our partners implement the next steps to achieve our Net Zero targets and to create a more sustainable future.
McGarry
PPG always strives to anticipate the needs of customers and develop new technologies to meet their needs. We are constantly learning from the disruptions that have taken place over the last two years, from the initial lockdown phase of the pandemic to the variant spikes and supply chain challenges of 2021. As we overcome each challenge, we improve company operations to become more resilient and ready to assist in global economic recovery.We will pursue strategic acquisitions that allow us to grow in established and emerging markets. Our acquisition strategy is highly disciplined and focused on growing our technology advantage and delivering above market growth opportunities. We will strive to return to pre-pandemic peak operating margins, and eventually exceed them. Our teams will partner with other companies and researchers to advance sustainable technology and improve manufacturing processes. Our goal is to drive growth as a leader in our industry while making life better for our employees, customers, investors and communities.
Petersson
As we grow in size, so does our responsibility. As a company, we must play our part in tackling some of the biggest issues of our time: climate change and the depletion of the world’s natural resources. Putting sustainability at the heart of how we do business is the right thing to do. It is also the smart thing to do. To win key customers today, we must deliver solutions that help them achieve their sustainability agendas and ESG ambitions. As we double our business, we have to detach our environmental impact, a journey we have already embarked upon.As a company, Hempel has a responsibility, and the ability, to act and make a difference. We will radically advance our environmental and social performance over the next few years, with new products, partnerships and programmes. We will also expand our business and grow our profitability, so we can continue to fund the good work of our owner, the Hempel Foundation. We can only do this if we have a robust company, with financial stability and a diverse and talented group of employees, so we will continue to invest in our company and our people.
Roy
Berger Paints has been investing in building the capability required to break into the set of top-10 paint companies of the world. We are doing this by supplementing our production and distribution assets across markets. It is in our organizational DNA to be extremely consumer-centric, and our strong R&D and marketing capabilities will be deployed in solving problems for our consumers with new innovative solutions. Our principal strength is our large pool of talented and committed employees. This is a competitive advantage for us and Berger continues to be focussed on providing them a fulfilling and challenging work environment that allows them to grow professionally and personally.Sabas
We have completed our senior leadership team with the appointments of a CTO, a COO and a President for Northern Europe & Americas as we look to the future and towards becoming the most sustainable coatings company in the world.Our long-term view is one of sustained growth, balanced with value created for people and the planet. We are excited about implementing a new value creation model pioneered by our owner, Lindéngruppen, for measuring this overall value of what we do at Beckers. We will be using an impact weighted metrics applied across our People, Products and Operations streams to make business decisions in the future.
Vanlancker
Our new Grow & Deliver strategy announced in February 2021 represents the second stage of our journey – building on the strong foundation and positive momentum from 15 by 20 – to double the profit of AkzoNobel and reclaim our place as the reference in the industry. Going forward, we’ll balance growth and profitability improvement. AkzoNobel targets to grow at or above its relevant markets, in line with its Grow & Deliver strategy. Trends differ per region and segment, while raw material cost inflation and supply constraints are expected to gradually ease by mid-2022.Our ambitious targets – as part of our company purpose People. Planet. Paint. approach to sustainability – will ensure we remain the reference in our industry. We target a top quartile engagement score and at least 30% female executives by 2025. As announced in 2020, we’re also moving towards zero waste as a company and aim to cut our carbon emissions in half by 2030. We’ll do this by saving energy and using 100% renewable electricity. We also aim to generate more than 50% of our revenue from sustainable solutions by 2030.
Wakatsuki
Nippon Paint Holdings Group will promote organic coordination and collaboration among the companies under the group’s common guiding principle, “Purpose,” and will solidify sustainable growth by pursuing autonomous growth in each region and business.In March 2021, we announced a three-year “New Medium-Term Plan (FY2021-FY2023). It is important to always look five to ten years ahead in a rapidly changing business environment, so we have positioned this mid-term plan as a “milestone” on the way to our long-term goals. Our long-term goal for FY2024 and beyond is to set a CAGR of sales revenue in the high single digits, and also aim to achieve profit growth that exceeds sales growth.