coatings business did particularly well by being able to
achieve higher sales with higher prices. The marine coatings operation improved its margins while raising volume sales by ten percent.
“Across Europe the priority for coatings
producers and their chemical suppliers
is effective margin management so that
the problems of decreasing sales and
the necessity to make up for earlier
rises in raw material costs do not cause
drastic falls in profitability.”
Hans Wijers, AkzoNobel’s CEO, said that the company’s objective is to raise its EBITA margin from 12% last
year to 14% in 2011 by “driving margin management programs across the company.”
Tikkurila of Finland, whose parent company Kemira
has postponed a stock market floatation because of the
recession, made an operating loss of € 12. 6 million ($17
million) in the fourth quarter of last year. A decline in
sales volumes reduced profits by € 7 million while variable costs, including raw material costs, went up by € 6
million compared with the same period in 2007. During
the whole year variable costs rose by € 22 million, which
is equivalent to three percent of total sales.
The company has embarked on a cost-reduction exercise aimed at saving € 25 million annually through measures including job reductions, temporary lay-offs and
retraining.
BASF, which is a producer of coatings, dispersions and
raw materials, partly blamed higher material costs for a
65% drop in operating profit last year in its functional
solutions business, which includes its coatings activities.
BASF Coatings suffered a profits fall because of the crisis in the automotive industry, its main customer, and
“the continued pressure on margins resulting from higher raw material costs,” the company said.
Altana AG of Germany, which produces coatings, adhesives and effect pigments, claims that it is curbing the
impact of raw materials despite rises in their costs. In the
five-year period 2004-08, raw material costs as a percentage of sales has remained at approximately 60% in
its coatings and sealants business and at approximately
32-34% with its Eckhart effect pigments operation.
International Coatings Scene
EUROPE
Matthias Wolfgruber, Altana’s CEO, said that the company is focusing on margins and cash flow by taking
steps like reducing personnel costs, freezing recruitment
and cutting the investment budget.
After a decline starting in the fourth quarter of last
year, raw material prices could soon start to go up again.
In a trading statement issued in February, Nuplex, the
New Zealand-based company with a large coatings resins
operation in Europe, warns that raw material costs are
likely to increase “above current lows as surplus capacities
are removed,” although it believes that they will probably
not return to “former record highs” in the near term.
“As demand picks up again, there could be fairly sharp
increases in raw material prices but not across the
board,” said Thomas. “It will happen in fairly specialized
products where there may already be signs of impending
shortages.”
However other analysts believe that the increase in
raw material costs will be much broader with prices of
oil, metals and agricultural commodities already starting
to climb. CW
