“The European national housing markets
which have been hit hard by the harsh financial
conditions have been those in the UK, Ireland
and Spain—all countries which for several
years have enjoyed a real estate boom.”
mits is expected to fall by 40-50%.
In the UK house prices were 11% lower in July than a
year ago. Some analysts are predicting they will have
tumbled by 20-30% by end of the year. Over the last 12
months the number of new homes being built in the country has fallen by 19%.
“We’re doing fine in Europe—except in the UK where consumer confidence showed a marked drop in the first half of
2008,” said an official at AkzoNobel, which has strengthened
its position as Europe’s leading decorative paints company
after last year’s acquisition of ICI of the UK.
AkzoNobel’s decorative paints sales in Europe dropped
by one percent in the first half of 2008 to €1.47 billion
mainly because of a three percent decline of sales in the
UK. This was not only due to the weak DIY sector in the
country but also a struggling professional segment hit by
the drop in new home starts.
The company has responded to the fall in volume sales
in countries like the UK with product innovations, price
rises and cost controls. It has introduced a new eco-friendly paint Ecosure with a reduced carbon footprint
and packaging with 25% recycled materials.
PPG Industries reported growing sales in the second
quarter of its newly formed architectural coatings division, mainly comprising the European operations of
Sigma Kalon acquired by PPG last year. Sales rose at a
double-digit rate in the quarter against Sigma Kalon’s
sales in the same period last year. This compared with a
low- to mid-single-digit increase in the first quarter.
The rise in PPG’s European decorative sales had been
helped by Sigma Kalon’s big presence in Eastern
European markets. Tikkurila, the coatings business of
Kemira of Finland, increased its paint sales by eight percent in the first half of the year with the help of its strong
position in the Eastern European decorative market.
Nonetheless Tikkurila’s performance showed the contrasting trends in decorative sectors even in neighboring countries.
International Coatings Scene
EUROPE
While in Baltic states like Estonia sales were under a lot of
pressure, they remained buoyant in neighbouring Russia.
“The new construction part of the decorative market in
Estonia has shrunk,” said Janno Paju, vice president of
Tikkurila’s Eastern European decorative business. “The
real estate boom over the last couple of years with plenty of new houses and apartments has ended because the
banks are being careful with credit.
“But in Russia purchasing power and living standards
are continuing to increase to an extent that Russian consumers now want to spend money on decorative paints
with higher quality materials,” Janno continued.
In the first half of the year Empils, a leading Russian
paint company supplying mainly the Russian and
Ukrainian markets, increased its decorative paints output by 12% in volume terms. Growth rates in decorative
sales in much of the rest of Europe are lagging well
behind those of the former Soviet Union but at least the
decline is not so steep as had been feared. CW
