“Instead they are being used to build up
cash reserves. A lot of coatings and other
companies are still extremely nervous
about the future. They don’t want to
have to rely on the banks at a time of
credit shortages.”
Coatings producers are also targeting
higher value-added segments in the search
for higher margins in Europe, such as spe-
cialist niches in architectural and indus-
trial coatings.
In the UK while coatings output has
been sliding in the post-2008 period,
paints producers have been maintaining in
recent year a gross value added (GVA)
revenue minus input and raw material
costs of around 30 percent of turnover.
“Coatings companies have been able
to take advantage in the UK of sectors like
automobile manufacture which has been
doing well through higher exports and offers opportunities to suppliers to gain improved margins,” said Eastwood.
The latest second quarter and half-year
results of European coatings companies
show evidence of the financial benefits of
existing or previous cost cutting initiatives. But they also indicate how much
paint producers have been striving to take
advantage of variations in economic conditions in Europe.
With the help of additional supplies
from the opening of a new state-of-the-art
factory at Sandefjord in its home country
of Norway, Jotun achieved record decorative paint sales in the first four months of
the year in Sweden which in the first half
had had one of the fastest GDP growth
rates in Western Europe.
Kingfisher Group of the UK, one of Europe’s largest DIY retail chains, has been
increasing sales in its depressed domestic
market during its second quarter by
launching a marketing campaign to persuade customers to switch to internal repair projects during the wet summer. In
Russia, whose energy-based economy has
been boosted by continuing high oil and
gas prices, the company’s sales went up by
19 percent.
Tikkurila of Finland pushed up its
sales in Russia by 15 percent in the first
half with operating profit in the country
jumping by 60 percent. In Central Eastern
Europe, in which its main market is
Poland, sales and operating profit both
went up by 10 percent. In its home mar-
ket of Finland, the company, mainly a dec-
orative paints producer, managed to raise
margins to almost 16 percent on an im-
proved operating profit of 9. 7 percent de-
spite a slowdown in the economy.
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