Top companies facing hard times

Inside this issue you’ll find our annual Top Companies Report, our industry’s annual ranking of the paint market’s global leaders. As we have done since our first report back in 1996, we profile the leading manufacturers in the world, based on sales of paint, coatings, adhesives and sealants in 2008.

Companies in this report come from every corner of the globe and sell to markets both near and far. This year we profiled 64 companies and each year it seems our report continues to grow in terms of the number of companies and their geographic diversity.

As the largest companies in our industry continue to expand their global enterprises, it becomes more apparent that economic conditions in differing markets and currency fluctuations can dramatically affect their results.

2008 started out OK. Although firms battled “difficult” conditions due to “softened demand” and “escalating raw material/energy costs,” business seemed to be decent all around.

The bottom really fell out during the second half of the year when the U.S. housing market began its collapse. The paint and coatings market is greatly influenced by the end-use industries it serves, particularly automotive, building and construction. These industries have been hit badly by the recession and most production plants have had to shutdown or cut back on activity due to a major drop in production volumes.

By the third and fourth quarters, new home building and sales were at a virtual standstill, car lots were empty and double-digit sales dips and profit losses became the norm. Sharp revenue and profit declines were tempered a bit by a not-too-bad first half of the year, but still, some firms posted “good” numbers, fueled by recently completed acquisitions or by entering new markets. Other companies posted flat sales or numbers on par with what can be expected in a bad economy.

The first half of this year has been tough with more double-digit declines, but going into the second half of 2009, the key focus on most people’s minds is whether the massive rescue packages initiated across the globe can help keep these industries afloat.

This month you’ll also find the second part of, “Stimulus Spending: Where’s the Opportunity for Paints & Coatings?” The article was written by Chemark Consulting’s “Fast Track Solutions Team” and it provides a look into where the paint and coatings industry will benefit from President Obama’s spending plan. Let’s hope it works and this time next year we’re talking about revenue and profit gains, not losses.

Tim Wright
Editor