Europe
Jotun, which reported a 5 percent
and 21 percent rise in sales and operating profit respectively in the first four
months of this year, has been investing
during the period 6 percent of revenue
in the Middle East and Asia, mainly in
new factories.
Opportunities for takeovers in
Europe, particularly of the bolt-on variety, are thought likely to become more
numerous as the less financially robust
producers are unable to benefit much
more from low interest rates, static labour costs and cheaper raw materials.
Medium-sized and even small coatings companies are seeking openings to
move into new national market and into
niche segments in end-use sectors in industrial and protective coatings.
Organic growth has become more difficult to achieve in Europe at a time of
continued slow rises in GDP. In the
17-country euro currency area, GDP is
forecast to go up by only 1.5 percent this
year. In countries like Italy growth is predicted to be below 1 percent, whereas it is
forecast to be close to 3 percent in Spain.
In some non-euro countries the picture is relatively bright with the economies of Sweden expected to expand by
3. 5 percent and Poland by 3. 3 percent.
However a recession in Russia, stemming
from the fall in the prices for oil and
gas, its main exports, is having a negative effect on some neighboring Eastern
European economies.
Much of the acquisition, divestment
and marketing and sales strategies of
coatings businesses in Europe are being
shaped by these variations in the performances of national economies as well as
different trends in end-use markets.
Tikkurila, whose revenues declined by
close to 1 percent in the first half of the
year despite a growth in volume sales
in its main Scandinavian and Eastern
European markets, is maintaining market and sales expenditure in its growing
Scandinavian outlets.
However it is pursuing a decentralizing policy in parts of Eastern Europe. It
concluded in June the sale of its Ukraine
and Belarus operations to local management, which will continue to distribute
Tikkurila’s products in the two countries.
Tikkurila expects that the greater freedom given to local managers will help
boost sales. “Based on the good experience from a similar type of change in our
business model in the Czech Republic,
Hungary, Romania and Slovakia in
2012, we have decided to develop and
streamline our operations in Ukraine and
Belarus with an entrepreneurial distribu-tor- driven model,” said Erkki Järvinen,
Tikkurila’s president and chief executive.
The economic downturn in Russia has
not deterred foreign coatings companies
investing in the country. AkzoNoble has
been increasing production capacity for
protective coating at Lipetsk.
The expansion, which will mean
that production is concentrated on
fewer, larger sites in Russia, will bolster
AkzoNobel’s supplies of protective coatings to regional oil and gas, mining, power and infrastructure markets, as well as
marine coatings for ship building, maintenance and repair.
Teknos, the Finnish industrial and
decorative coatings producer, acquired
last year the Russian metal coatings business OOO Trading Company Massco. In
June this year it strengthened its position
in the German industrial coatings sector
with the takeover of Feidal Coatings’ industrial coatings operation.
Feidal, based in Duisberg, Germany, is
effectively being broken up after its pri-
vate owner revealed the business did not
have the resources to keep the company
“in its existing form.”
Meffert AG, Bad Kreuznach,
Germany, announced in August it was
acquiring the German decorative paints
business of Feidal. Meffert, which has
annual turnover of around €330 mil-
lion ( $373 million), is an example of
a company which is now putting more
emphasis on growth by acquisition.
Klaus Meffert, the company’s chair-
man, told staff in July that he was opti-
mistic about the second half of the year
because of the number of consolida-
tion initiatives currently being negoti-
ated by Meffert.
One strategy being followed by
some companies is to extend the reach
of distribution channels by expanding
retail chains and other outlets like car
body shops.
CIN Group, the Portuguese decorative, industrial and protective coatings company, now has around 120
decorative paints stores including six
megastores and around 20 superstores
after new openings in Spain, France
and Belgium.
In the automotive refinish sector,
Axalta announced in August it had taken over the Dutch distributor Geeraets
Autolak. The company has also opened
in Germany a European technical support centre for vehicle refinishing.
Axalta, formerly DuPont’s performance coatings business which after
being sold to the equity fund Carlyle
Group in 2013 is now 95 percent
owned by financial institutions, has
centralized its European operations by
establishing a European headquarters
in Basle, Switzerland.
Europe’s coatings sector will now
be bracing itself for the impact of the
Sherwin-Williams / Valspar merger on
the region. Just before Sherwin-Williams
announced its planned takeover of
Valspar earlier this year, Valspar itself had
acquired the Italian coil coatings operator ISVA Vernici to expand its coil activities in southern Europe, North Africa and
the Middle East.
There could be similar moves in a variety of coatings sectors in Europe by the
combined company once the Sherwin-Willams/Valspar acquisition is wrapped
up, due early next year. CW
“Opportunites for
takeovers in Europe,
particularly of the
bolt-on variety, are
thought to likely
become more
numerous...”
