Coatings - AkzoNobel

Phosphorus chemicals earnings continued to improve.
Exports from the new plant in Bitterfeld, Germany, were
strong, especially to Asia. Integration of the former
Courtaulds flame-retardant business, including the
production plant in Spondon, United Kingdom, is well
under way.
Ethylene amines reversed the declining trend of recent
years, producing improved results. An agreement was
reached with Bayer to take over their ethylene amines
business in combination with a tolling agreement.
This has resulted in a strong leadership position in
Europe and a full product range of both lower and
higher ethylene amines.
SURFACE CHEMISTRY
Sales NLG 1,220 million (1997: NLG 1,200 million)
Further efficiency improvements in
European surfactants business
Despite a weak market in Asia and unfavorable
exchange rate developments at the end of the year,
Surface Chemistry duplicated the previous year’s
earnings performance, reflecting improved results for
surfactants in North America. Paint and building
additives were still at a good level in the face of a
slowdown of the market.
The European surfactants business, however, suffered
from continued overcapacity, necessitating further
restructuring to achieve cost reduction. The full effects
of this restructuring program, which is expected to
affect some 200 jobs, will be evident by the end of
1999. A substantial part of fatty amines production in
Stockvik, Sweden, will be moved to Mons, Belgium, and
Littleborough, United Kingdom, resulting in more
efficient use of available capacity.
The investment program in Stenungsund, Sweden, is
proceeding according to plan and will be completed
during the first half of 1999. In addition to increased
capacity and safety, improvements include more
efficient handling of raw materials and end products.
AKZO NOBEL ANNUAL REPORT 1998
49
CHEMICALS
Investments in modernization of the North American
production facilities are also progressing well. These will
come into operation during 1999 and will be completed
by the end of 2001. These investments and
rationalizations are designed to ensure that the
business can perform well, even in adverse economic
circumstances.
During the year, our participation in the joint venture,
Akzo Nobel Oleochemicals Sdn Bhd in Pasir Gudang,
Malaysia, was raised to 65 percent to gain better
control of the fatty acid business. The joint venture
recently completed a major production expansion
program.
The surfactants business of Akcros Chemicals was
transferred to Surface Chemistry.
R&D focuses on environmental compatibility and
improving our product range. New products, more than
half of which are developed in close cooperation with
customers throughout the world, are contributing
strongly to earnings.
POLYMER CHEMICALS
Sales NLG 1,150 million (1997: NLG 1,110 million)
Growth sustained
The results of Polymer Chemicals exceeded the previous
year’s record performance. Earnings grew mainly in the
first half of 1998, leveling off in the second half.
A weaker U.S. dollar had a dampening effect. Demand
from polyolefin producers, our major customers, was
stable, although they suffered from overcapacity, as too
many plant expansions came on stream at the same
time. Volume gains in Europe and the Americas
compensated for declining demand in Asia. Cost control
and greater efficiency counterbalanced increased
pressure on pricing from customers.
The two Japanese 50-percent joint ventures, Tosoh
Akzo Corporation and Kayaku Akzo Corporation,
continued to suffer from the weakness of the Japanese
domestic economy and reduced export opportunities in
Asia. The new Tianjin Akzo Nobel Peroxides Co. Ltd.
73-percent joint venture in China did well in its first full
year of operation.