Coatings - AkzoNobel

INDUSTRIAL COATINGS NORTH AMERICA
Solid platform for future growth
A positive business environment coupled with
intensified efforts to reduce raw material costs were the
ingredients in structural profitability. These results were
obtained despite the economic turmoil in Asia and
South America and a temporary price erosion due to
overcapacity in the U.S. coil coatings market.
Geographic expansion continued with the acquisition of
Oxylin Industrial Ltda, São Paulo, Brazil. This state-ofthe-art
and competitive industrial coatings production
facility will serve as a strategic bridgehead for our
industrial coatings business in South America.
In addition, a new production facility was commissioned
in García, Nuevo Léon, Mexico.
Wood Coatings performed excellently, strengthening its
position as a leading supplier of high-quality finishes to
the furniture industry.
The coil coatings industry worldwide will remember
1998 as a year of tough competition and price erosion.
We nevertheless managed to improve our market
position through high-quality products and innovation.
The process of integrating the former Courtaulds coil
activities will result in a strengthened market position.
Commitment to R&D continues to be vital for the
success of our business, yielding a stream of new
products that keep renewing and enhancing our
competitive position. For example, 1998 saw our
Ceram-A-Star® coil coating systems, with their
exceptional exterior durability and modest cost,
increase their market penetration. Our waterborne
Durasoft® soft feel coatings systems also gained greater
acceptance in both the automotive and truck markets.
In addition, we commercialized a new ultra-performing
system for wooden office furniture and dining room
tables, cured by ultraviolet light.
AKZO NOBEL ANNUAL REPORT 1998
37
COATINGS
CAR REFINISHES
Sales NLG 1,300 million (1997: NLG 1,270 million)
Onward and upward
Car Refinishes enjoyed another successful year, with
sales up from 1997 and an improvement in operating
income. We made good progress in pursuing our
fundamental strategy, which is to:
• consolidate and improve positions in established
businesses in developed markets;
• grow in new market segments;
• grow in emerging markets.
Performance in Western Europe was considerably
strengthened, as is reflected in gains in sales and
operating income and in a larger market share. In the
Sikkens® high-end segment, we successfully introduced
waterborne and high-solids products to meet growing
demand for products with a low VOC (volatile organic
compounds) content. Upgraded versions of
conventional products also sold well. In the middle
segment Lesonal® sales continued to grow in Western
Europe. We also achieved strong growth in
the commercial vehicles segment, especially in
emerging markets.
In North America we consolidated our Sikkens®
business in a highly competitive market that is being
transformed by the introduction of nationwide VOC
legislation. Lesonal® sales developed well, enabling us
to strengthen the distribution network. The commercial
vehicles segment has become a key part of our market
strategy in North America. The joint venture in Mexico
again gained market share with the Sikkens® product
lines, supported by the newly opened training center in
Mexico City.
In Asia we concentrated on extending our market
position. We took over operations from importers and
set up operations of our own in South Korea, Malaysia,
Singapore, and the Philippines. We also established two
new branches in India. In China we opened a new
training center and strengthened our sales force.