Akzo Nobel N.V. · EURONEXT:AKZA
Akzo Nobel — Investor Day (September 2010)
106 slides from Akzo Nobel's investor day presentation, Sep 28, 2010
Slide 1: Capital Markets Day: Tomorrow's Answers Today
London, September 28, 2010 Capital Markets Day Tomorrow’s Answers Today Making it happen
Slide 2: Agenda
Agenda 1. Making it happen Hans Wijers 2. Financial strategy Keith Nichols Q&A 3. Research, Development & Innovation Graeme Armstrong Q&A Coffee break 4. Specialty Chemicals Rob Frohn 5. Performance Coatings Leif Darner 6. Decorative Paints Tex Gunning Q&A 7. Wrap up & closing Hans Wijers Lunch Akzo
Slide 3: We want to be the world's leading Coatings and Specialty Chemicals company
We want to be the world’s leading Coatings and Specialty Chemicals company AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 2
Slide 4: Our medium term strategic ambitions
Our medium term strategic ambitions Value – accelerated growth Values – sustainable growth • Grow to €20 billion revenues • Top quartile safety • Increase EBITDA* each year, performance maintaining a 13-15% margin • Top 3 in DJSI*** level • Top quartile performance in • Reduce OWC percent of diversi
Slide 5: Delivering on our 2011 strategic ambitions
Delivering on our 2011 strategic ambitions 9 EBITDA margin target reached • 14% EBITDA margin delivered, 1.5 year ahead of schedule • Performance driven by margin management, ICI synergies and additional restructuring measures 9 ICI fully integrated, synergies achieved • €340 million structural cost
Slide 6: We are embarking on the next chapter of our journey to industry leadership
We are embarking on the next chapter of our journey to industry leadership Accelerated and sustainable Integration and growth restructuring Portfolio transformation 2003-2008 2008-2010 2010-2015 AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 5
Slide 7: How global megatrends affect our industry
How global megatrends affect our industry Population growth from 6.8 billion people today to >9 billion in 2050* is a strong driver for global demand Quality of life will improve for a new middle class of around 3 billion people emerging over the next 20 years* Climate change will increase the need
Slide 8: We are very well positioned to benefit from megatrends
We are very well positioned to benefit from megatrends • Strong portfolio with leading positions • Excellent geographical spread and ambitious growth plans • Exciting RD&I pipeline with innovative solutions for key market segments • Clear sustainability focus • Growth agenda to be supported by funct
Slide 9: Strong portfolio with leading positions
Strong portfolio with leading positions 2009 Revenue 2009 EBITDA* No. 2 or 3 No. 2 22% or 3 35% No. 1 position No. 1 59% position Other 63% Other 12% 3% Leading market position results in superior level of profitability * Before incidentals AkzoNobel Capital Markets Day - Making it happen - 28 Septe
Slide 10: Excellent geographic spread of both revenue and profits
Excellent geographic spread of both revenue and profits High-growth markets are important (37% of revenue) % of 2009 revenue 39% ‘Mature’ Europe 7% 21% ‘Higher-growth’ Europe North America 4% 20% ME&A Asia Pacific 9% Latin America High-growth markets profitability is above average AkzoNobel Capital
Slide 11: How we will grow in both mature and high-growth markets
How we will grow in both mature and high-growth markets Organic growth • Expand focus from high to mid market segments • Fuelling growth in high-growth markets Innovation pipeline • Spend of around 2.5% of revenue makes us the clear peer group leader in absolute spend • Emphasis on focused, bolder,
Slide 12: Aspirations for high-growth markets
Aspirations for high-growth markets Double revenues in China • Grow from $1.5 to $3 billion of revenues • Make a step change in people development Create significant footprint in India • Grow from €0.25 to €1 billion of revenues • Increasing footprint for all business areas Outgrow the competition i
Slide 13: High-growth markets will become significantly more important
High-growth markets will become significantly more important % of revenue, indicative 32% ‘Mature’ Europe 9% 18% ‘Higher-growth’ Europe North America 25% 5% Asia Pacific ME&A 11% Latin America High-growth markets will be around 50% of revenue in this decade AkzoNobel Capital Markets Day - Making it
Slide 14: Exciting RD&I pipeline with innovative solutions for key market segments
Exciting RD&I pipeline with innovative solutions for key market segments Current innovation strategy Revenue by key market segment delivering: • 9% of revenue from “breakthrough” innovations* 12% • 20% of revenue from Eco-premium solutions** 13% 43% How innovation will support our growth agenda: 32%
Slide 15: Clear sustainability focus
Clear sustainability focus Current sustainability strategy Accelerated sustainability delivering: strategy will deliver: • Safety at 3.6 injuries/ million • Safety at 2.0 injuries/ million hours hours • 20% of revenue from Eco- • 30% of revenue from Eco- premium solutions premium solutions • Energy
Slide 16: Growth agenda to be supported by functional excellence
Growth agenda to be supported by functional excellence • Strong HR function to optimize support to our business • Facilitate “One AkzoNobel” culture HR • Employer of choice • Capitalize on diversity; 20% executives from high-growth economies • Sourcing, manufacturing & distribution integrated in one
Slide 17: Strong executive leadership team
Strong executive leadership team Sven Dumoulin Keith Nichols General Counsel CFO Hans Wijers CEO Werner Fuhrmann Supply Chain Rob Frohn BA Specialty Chemicals Graeme Armstrong RD&I Leif Darner BA Performance Coatings Marjan Oudeman HR & OD Tex Gunning BA Decorative Paints AkzoNobel Capital Markets D
Slide 18: Strategic and financial reasons to accelerate growth in mature markets
Strategic and financial reasons to accelerate growth in mature markets EBITDA margin vs. market share Decorative Paints mature market example Focus on EBITDA margin increase Focus on market share increase Pursue additional restructuring Invest in brand building Downsize lower margin stores Invest in
Slide 19: In high growth markets such as India, focusing on the mid-tier is crucial
In high growth markets such as India, focusing on the mid-tier is crucial India market relevant for AkzoNobel, 2009 Decorative Performance Specialty Paints Coatings Chemicals 100 Premium ~20% 80 Typical focus for AkzoNobel (and other multinationals) % of market 60 Mid-tier ~50% Intense battle betwee
Slide 20: EBITDA margin vs. market share issue in the mid-tier segment
EBITDA margin vs. market share issue in the mid-tier segment EBITDA margin vs. market share AkzoNobel (all Business Areas) high growth market example Focus on EBITDA margin increase Focus on market share increase Stay in the premium segment Pursue higher volume mid-tier Restrict cost growth business
Slide 21: We want to be the world's leading Coatings and Specialty Chemicals company
We want to be the world’s leading Coatings and Specialty Chemicals company Our medium-term strategic ambitions are: Value – accelerated growth Values – sustainable growth • Grow to €20 billion revenues • Top quartile safety • Increase EBITDA* each year, performance maintaining a 13-15% margin • Top
Slide 22: Thank you
Thank you AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 21
Slide 23: Financial Strategy
Financial Strategy Keith Nichols AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 22
Slide 24: Focus on Customers, Costs and Cash has paid off
Focus on Customers, Costs and Cash has paid off … • Delivery of cost reduction programs • Strong balance sheet position maintained • Pro-active pension risk management reducing volatility • Prudent financing strategy ensuring liquidity • Capital efficiency improvement on-going • Significant improvem
Slide 25: Making it happen: supporting the growth agenda
Making it happen: supporting the growth agenda • Maintain EVA and cash focus • Delivering further operating working capital improvement • Disciplined capital allocation for organic growth • Selective acquisitions • Building capabilities and processes to support “leading” ambition • Prudent financing
Slide 26: Operating Working Capital % of revenue to reduce towards 12%
Year-on-year Operating Working Capital % of revenue to reduce towards 12% OWC € million 3000 19.1% 20% 19% 18% 2500 16.4% 16.2% 17% 15.6% 15.0% 16% 14.6% 2000 15% 13.7% 14% 13% 1500 2,185 2,341 2,238 2,007 1,691 2,037 2,346 12% 11% 1000 10% 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 OWC OWC as % of LQ reven
Slide 27: Sustainable supply of raw materials underpins growth
Sustainable supply of raw materials underpins growth • Cooperate with our key suppliers on innovation and sustainability • Leverage key supplier agreements to secure raw material volumes • Further integrate the supply chain between our key suppliers and our company Around 5% inflation expected 2010
Slide 28: Capital expenditure prioritization for growth
Capital expenditure prioritization for growth • Capex 2010 expected to be around 3% of revenue (excluding Ningbo €100 million and €40 million National Starch) • Medium term: Capex level to be around 4% of revenues Capex as a % of revenue 5 4 3 2 1 0 2008 2009 2010 E 2011E Base capex Ningbo National
Slide 29: Unchanged ambition to maintain strong balance sheet
Unchanged ambition to maintain strong balance sheet € million Jun 30, 2010 Dec 31, 2009 Total Equity 9,444 8,245 Net debt* 2,339 1,744 • Credit ratings confirmed in August at BBB+/Baa1, outlook improved to stable • National Starch proceeds will fund growth and potentially partly be used to further o
Slide 30: Successful extension of debt duration will be further optimized
Successful extension of debt duration will be further optimized over time Debt maturity € million (nominal amounts) 1.200 800 400 0 2010 2011 2012 2013 2014 2015 2016 € bonds $ bonds GBP bonds Significant liquidity headroom • Undrawn* revolving credit facility of €1.5 billion available (2013) • €1.5
Slide 31: Incidental charges, pension top-ups and Other
Incidental charges, pension top-ups and “Other” • Existing mature markets footprint drives restructuring charges • Unchanged 2010 incidentals guidance of around €150 million • Cash pension top-ups around €350 million in 2010, similar in 2011 • Outflow for legacies to reduce over time Free cash flow
Slide 32: A stable to rising dividend
A stable to rising dividend We are simplifying our dividend policy* We intend to pay a stable to rising dividend: • a cash interim and a final dividend will be paid 2010 interim dividend €0.32 per share - up 6.7% from 2009* • Interim dividend to be paid on 3 November, 2010 • We intend to grow the 20
Slide 33: 2010 Outlook
2010 Outlook “Cautiously optimistic” Reasons for caution • Global economic outlook • Construction and housing markets remain soft in mature markets • Potential bubbles in high growth markets Reasons for optimism • Leading positions, scale and diversified markets • Strong balance sheet to fund growth
Slide 34: Q&A
Q&A AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 33
Slide 35: Research, Development & Innovation
Research, Development & Innovation Graeme Armstrong AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 34
Slide 36: Agenda
Agenda RD& I in AkzoNobel • Ambition • Progress Growth accelerators Summary AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 35
Slide 37: Innovation highlights from 2009/10
Innovation highlights from 2009/10 Dulux® Weathershield SunReflect™ Lowers the temperature of external walls by up to 5° C and reduces the need for air conditioning by reflecting up to 90 percent more infrared radiation that comparable exterior paints. Compozil® Fx A wet end management system for th
Slide 38: The RD&I journey
The RD&I journey In progress … Growth Well underway • Deep insight Transformation • Bolder innovations • Capability building Completed • Focused innovation • Scale advantage portfolio Integration • Open innovation • Model to leverage One • Merging Akzo Nobel & ICI AkzoNobel • Innovative culture • Si
Slide 39: How it works
How it works Three key elements Bigger innovations Expert centers in six core sciences Expert Capability Novel Environmentally In-line mixing and Groups powder friendly dispersion of coatings polysulfides slurries Business Resources Communities of Practice Networks to leverage knowledge Sustainabili
Slide 40: Delivering results
Delivering results Medium KPIs 2008 2009 2010E Term ambition Innovation % Revenue from Breakthrough Innovations* 5 7 9 >15 R&D Expenditure % Spend on ‘Big R + D’ 39 40 46 >60 Sustainability % Revenue from Eco-Premium Solutions** 18 20 22 >30 • Major innovations that result in a significant competiti
Slide 41: Growth accelerators
Growth accelerators • Insight into global trends & innovation needs • Right balance of bolder innovation with incremental development • Capitalizing on AkzoNobel’s scale and building global capability & talent • Open innovation & strategic partnering • Inter-dependent collaborative culture AkzoNobel
Slide 42: Insight into global mega-trends
Insight into global mega-trends Mega-trend example The world’s population grows and wealth increases, with significant mid-market development in emerging economies • A more sustainable planet • Social accountability & transparency • Global economic & population Serving the needs of growth the global
Slide 43: AkzoNobel Solution Promises
AkzoNobel Solution Promises Serving the needs of the global mid-market Surfaces to control vector-borne Bringing products for diseases well-being and identity Rapid curing and Achieving zero footprint totally water-borne Saving you time Coatings and energy and effort management Creating new horizons
Slide 44: Market Insight into Sustainable Construction
Market Insight into Sustainable Construction Insights Innovative Solutions Materials Seasonally responsive coatings ‘Release-on-command’ bonding Energy Management materials Design, Maintenance & Therapeutic/mood-controlling End-of-Life color scheming Self-repairing coatings Health & Wellness Thin fi
Slide 45: Scale & capability
Scale & capability ‘Big R & D’ in global laboratories: • Deventer (NL) • Felling (UK) • Sassenheim (NL) • Slough (UK) • Songjiang (CN) • Strongsville (USA) 150 labs performing incremental ‘little d’ for regional & local customers 11% of R&D capability in China Planning global R&D center in India Akz
Slide 46: Open Innovation
Open Innovation AkzoNobel Networked Innovation ANNI A structured approach to acquiring solutions to unmet technology & know- how needs from within and outside AkzoNobel (with NineSigma, global leaders in open innovation) Strategic Partnerships with Key Suppliers Establishing long-term relationships
Slide 47: Summary
Summary • Strategic ambitions defined and innovation is a key driver for top- and bottom-line growth • Transformed organization in place – and working • Right balance of bold innovation with incremental development • We have a clear innovation project agenda • Trend insight and Solution Promises are
Slide 48: Q&A
Q&A AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 47
Slide 49: Specialty Chemicals
Specialty Chemicals Rob Frohn AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 48
Slide 50: Making it happen in Specialty Chemicals
Making it happen in Specialty Chemicals • Demographic trends support our business • Excellent “Innovator and operator” profile • Capitalizing on technology and market positions • Sustainability embedded in our approach AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 49
Slide 51: Functional Chemicals to deliver on Ningbo Chelates and Ethylene amines startups
Functional Chemicals to deliver on Ningbo Chelates and Ethylene amines startups AkzoNobel’s new €300 million site offers ideal opportunities for future growth AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 50
Slide 52: Innovation success in phosphate-free dish wash cleaning – Dissolvine GL
Innovation success in phosphate-free dish wash cleaning – Dissolvine GL Market requirement for a readily bio-degradable chelate Close cooperation with big soapers AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 51
Slide 53: Specialty Chemicals Achievements 2008 – 2010
Specialty Chemicals Achievements 2008 – 2010 Completed portfolio optimization • Sold National Starch and PTA • Well balanced portfolio – all units contributing Integrated ICI chemical businesses • Elotex, Personal Care, Alco Improved margin management and OWC Responded quickly to recession • Site cl
Slide 54: Our Specialty Chemicals portfolio
Our Specialty Chemicals portfolio Functional Chemicals Surface Chemistry Pulp and Paper Chemicals Industrial Chemicals Chemicals Pakistan AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 53
Slide 55: The chemical industry value chain
The chemical industry value chain Chemical Performance/ Mining, oil, Base ‘End’ inter- functional biomaterials chemicals products mediates chemicals Industrial Chemicals Pulp and Paper Chemicals Functional Chemicals Surface Chemistry Chemicals Pakistan AkzoNobel Capital Markets Day - Making it happe
Slide 56: We built many market leadership positions in attractive niches
We built many market leadership positions in attractive niches Chelates, sulfur Ethylene 1 1 products, amines, Functional polysulfides, Salt 2 3 metal alkyls, Chemicals organic Specialties Elotex, peroxides, (N. Europe) Bermocoll 5 CMC 1 1 Industrial Chlorine merchant, 2 Monochloro- Caustic merchant
Slide 57: Serving many market segments, driven by higher per capita income
Serving many market segments, driven by higher per capita income 2/3 of revenue driven by Revenue by key market segment consumer demand • Varying from cleaning products to paper products 6% 16% • Innovative sustainable 12% solutions • Strong position in high-growth markets 66% 1/3 of revenue driven
Slide 58: Attractive operating margins over the cycle
Attractive operating margins over the cycle € billion 6 20% 18% 5 16% 14% 4 12% 3 10% 8% 2 6% 4% 1 2% 0 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 H1 revenue EBITDA margin AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 57
Slide 59: Different business approaches
Different business approaches Industrial Chemicals • Strategy: Protect and selectively grow Pulp and Paper Chemicals • Strategy: Grow, preferably in high-growth markets Surface Chemistry and Functional Chemicals • Strategy: Aggressively grow AkzoNobel Capital Markets Day - Making it happen - 28 Sept
Slide 60: Pulp & Paper is the specialist in chemical islands, also in Brazil
Pulp & Paper is the specialist in chemical islands, also in Brazil Tres Lagoas opened in April 2009; one of more than 20 successful Eka Chemical Islands AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 59
Slide 61: Industrial Chemicals to consolidate in Europe: acquisition Frankfurt site
Industrial Chemicals to consolidate in Europe: acquisition Frankfurt site Taking advantage of the economic down turn Adding to the network AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 60
Slide 62: Surface Chemistry to expand Rediset WMX concept
Surface Chemistry to expand RedisetTM WMX concept Reducing emissions and saving energy as well as improving road durability and lifetime AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 61
Slide 63: Summary
Summary • “The trend is our friend” • Leadership positions in market and technology • Excellent “Innovator and operator” profile • Sound financials in terms of growth and returns • Well positioned for further growth AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 62
Slide 64: Performance Coatings
Performance Coatings Leif Darner AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 63
Slide 65: Making it happen in Performance Coatings
Making it happen in Performance Coatings • Leading positions • Global Network • Technology differentiation • Exciting growth drivers AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 64
Slide 66: Growth opportunities in construction
Growth opportunities in construction AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 65
Slide 67: Growth opportunities in transportation
Growth opportunities in transportation AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 66
Slide 68: Growth opportunities in consumer goods
Growth opportunities in consumer goods AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 67
Slide 69: AkzoNobel is the world's largest Coatings supplier
AkzoNobel is the world’s largest Coatings supplier 2009 revenue in € billion 10 8 6 4 2 0 AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 68
Slide 70: The global coatings market is €70 billion
The global coatings market is €70 billion Decorative Paints Performance Coatings € 30 billion € 40 billion Marine Wood/ Coil/ Packaging (OEM) Protective Vehicle refinish Powder Automotive OEM General industries Country/ regional markets Global market segments serving the • Transportation • Construct
Slide 71: Performance Coatings has a balanced exposure to different end markets
Performance Coatings has a balanced exposure to different end markets Revenue by key market segment General industrial Transportation Marine Packaging Non-residential Automotive construction OEM Powder Consumer goods Vehicle Refinish Wood Coil Protective AkzoNobel Capital Markets Day - Making it hap
Slide 72: AkzoNobel's competitive portfolio leaves room for growth
AkzoNobel’s competitive portfolio leaves room for growth Global Global market Market segments market size Position share % (€ billion) Marine 3 20 – 25 1 Wood/ Coil/ Packaging 7 15 – 20 1 Protective 6 10 – 15 1 Vehicle refinish 5 10 – 15 3 Powder 5 10 – 15 1 Automotive OEM 6 <5 <5 General industrial
Slide 73: We will grow using different approaches for both mature and high growth markets
We will grow using different approaches for both mature and high growth markets High growth Mature Organic Geographic Segment based expansion growth Innovation based Mid-tier expansion Functional/ sustainability improvements Selective Covering geo white Consolidation acquisitions space or mid-tier o
Slide 74: The Protective Coatings case
The Protective Coatings case Market share (%) Oil & gas Power 100% = €6 billion AkzoNobel Mining Water & waste Next 4 competitors Others High value infrastructure Regional markets Market growth rate 3-5%, driven by high-growth countries AkzoNobel Capital Markets Day - Making it happen - 28 September
Slide 75: Growth in Protective Coatings
Growth in Protective Coatings Segment focus • Engineering/Specification selling • RD&I investment • Selective acquisitions Geographic expansion • Sales & service • Distribution • Expand manufacturing footprint AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 74
Slide 76: The Vehicle Refinish case
The Vehicle Refinish case Market share (%) Premium 100% = €5 billion Others No. 1 & 2 competitor Mid-tier No. 3 & 4 competitor AkzoNobel Market growth rate linked to GDP growth and miles driven AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 75
Slide 77: Growth in Vehicle Refinish
Growth in Vehicle Refinish Mid-market expansion • Prime acquisition (China) • ICI acquisition (India – local brands) • Organic growth (Brazil: Wanda) Leading edge technology • Color measurement (6i) • Stickerfix • Self healing paint (Autoclear LV) AkzoNobel Capital Markets Day - Making it happen - 2
Slide 78: The Powder Coatings case
The Powder Coatings case Market share (%) Appliance Architectural 100% = €5 billion AkzoNobel Automotive Functional Next 4 competitors Others Furniture General Industrial IT Trade Coaters Market growth rate linked to GDP in high-growth markets AkzoNobel Capital Markets Day - Making it happen - 28 Se
Slide 79: Growth in Powder Coatings
Growth in Powder Coatings China expansion • Opening new factories and new laboratories • Automotive OEM opportunity Dow Powder – consolidation • Market share gain and rationalization in Europe and North America • Adding new technology for wood • and automotive AkzoNobel Capital Markets Day - Making
Slide 80: Summarizing our growth agenda
Summarizing our growth agenda High growth Mature Organic Wanda, Car Refinish Performance coatings (Brazil) engineering & Powder (China) Specification selling Protective Coatings manufacturing (China) Innovation Mid-tier expansion in Adding new powder based China technology for wood and Investment in
Slide 81: Continue our operational excellence
Continue our operational excellence Track record Current focus Increasing share of Margin Sourcing higher value management Pricing segments Restructuring Focus mature Expense control program markets Capital management Capex OWC Sustainability Behavior Based Operational improvement Safety eco-efficie
Slide 82: Summary
Summary Well balanced portfolio Strong market positions Proven track record Positioned to grow AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 81
Slide 83: Decorative Paints
Decorative Paints Tex Gunning AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 82
Slide 84: Making it happen in Decorative Paints
Making it happen in Decorative Paints AkzoNobel Decorative Paints Leadership • We are the clear global market leader in Decorative Paints • We will extend leadership in greater Europe • We will build leadership positions in China, South East Asia, Brazil, Russia and Poland AkzoNobel Decorative Paint
Slide 85: We are the clear global market leader in Decorative Paints
We are the clear global market leader in Decorative Paints Decorative Paints 2009 revenue € billion 5 4 3 2 1 0 * 2008 figure AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 84
Slide 86: Europe is the biggest market for Decorative Paints
Europe is the biggest market for Decorative Paints % of Decorative Paints market* 100 % = €22 billion 4 1 11 6 100% 80 Consumer 60 40 Professional 20 0 By-it-yourself Asia Latin Europe North America America * Only includes markets where AkzoNobel is active. Does not include non-paints sales or integ
Slide 87: Europe will continue to be the biggest market for decorative paints
Europe will continue to be the biggest market for decorative paints Decorative Paints market* € billion 30 25 North America 20 15 Europe 10 Latin America 5 Asia 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 * Only includes markets where AkzoNobel is active. Estimates made in 2009. Does not include
Slide 88: We have a strong overall leadership position in Europe
We have a strong overall leadership position in Europe Total Europe 2009 (%) 100% = €10.1 billion AkzoNobel Others 19 8 PPG 4 62 DAW 4 3 Tikkurila Materis Relative market share to our nearest competitor is 2.5 times * Italy, Germany, France, United Kingdom, Spain, Netherlands, Belgium, Sweden, Switz
Slide 89: We will strengthen our leadership position in Europe
We will strengthen our leadership position in Europe Gain market share in “mature” Europe • UK, Benelux, France, Spain, Greece, etc Capture market growth in “higher growth” Europe • Poland, Russia, Turkey, etc We are leveraging our global scale, brands & best practices AkzoNobel Capital Markets Day
Slide 90: Build leadership position in China
Build leadership position in China A strong AkzoNobel competitive position Strong second overall Market leadership today in the 4 ‘Tier 1’ cities Market leadership today in the premium segment + Large market today 2010 market ~ €2.5 billion + Strong growth potential 2010 growth rate = 9% 2010-2015 g
Slide 91: Aggressive investment in China to capitalize on potential
Aggressive investment in China to capitalize on potential • Increase positioning into the mid-tier markets and cities • Continue to build our Dulux brand • Extend distribution through ‘controlled stores’: grow around 700 annually (year-end 2009: 3,000) 5 years ago Today 5 years from now 382 Tier 2 a
Slide 92: Build leadership position in Brazil
Build leadership position in Brazil Above average market Strong AkzoNobel competitive growth (>5% p.a.) + position • Expand distribution from 7,500 outlets to 17,500 • Invest in brand building for Coral (Dulux ‘brand cluster’) • ‘Own’ point-of-sale Significant organic growth potential in Brazil Akzo
Slide 93: Building global leadership in R&D
Building global leadership in R&D Global innovation The ‘Big 17’ • Functionality • Affordability Simplification • Sustainability Reducing complexity • Limited architectures Organization and • Considerable raw process material, SKU, and cost Repeatable reduction models • Sharing best practices & peop
Slide 94: We are leveraging our scale through global brand positioning
We are leveraging our scale through global brand positioning Validated global segmentation Brand clusters Dulux Consumer Dulux/Sikkens Pro Mid-tier Wood care specialist Pre-deco specialist Metal paint/ specialist paint Scale leverage in advertising and promotion AkzoNobel Capital Markets Day - Makin
Slide 95: The ICI integration is a major success
The ICI integration is a major success End Area Beginning 2008 End 2010 (Generally 2012) Cost reductions N/A > €190 million > €220 million FTEs* 25,800 -/- 3,800 ongoing Brands 100 75 <50 SKUs >90,000 75,000 <60,000 Raw materials >8,000 6,000 <3,000 Factories 80 58 <50 Warehouses 160 130 <110 Packag
Slide 96: The US turnaround challenge 2008
The US turnaround challenge 2008 Turnaround % of gallons sold. . . AkzoNobel AkzoNobel AkzoNobel The Home Lowes Independent Company-owned stores Depot dealers Wal-Mart Retail channel size Market structure and dynamics drove need for a turnaround AkzoNobel Capital Markets Day - Making it happen - 28
Slide 97: The US turnaround story
The US turnaround story Turnaround . . . Integrate Grow • Take $150 million costs out of the business • Relaunch Glidden through ‘Glidden Gets You Going’ • Quality • Packaging • Campaign film • Strengthen relationship with The Home Depot including Martha Stewart • Relaunch Glidden Pro and increase S
Slide 98: Glidden at Wal-Mart puts us ahead in the retail channel
Glidden at Wal-Mart puts us ahead in the retail channel • Wal-Mart opts for icon brand Glidden to strengthen its paint category at all of its 3,500 stores • Wal-Mart is a major player in total US DIY market, including paint • Complete program including, over time, all interior and exterior paints fo
Slide 99: Making it happen in Decorative Paints
Making it happen in Decorative Paints AkzoNobel Decorative Paints Leadership • We are the clear global market leader in Decorative Paints • We will extend leadership in greater Europe • We will build leadership positions in China, South East Asia, Brazil, Russia and Poland AkzoNobel Decorative Paint
Slide 100: Winning globally
Winning globally AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 99
Slide 101: Q&A
Q&A AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 100
Slide 102: Wrap up
Wrap up Hans Wijers AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 101
Slide 103: 2010 Outlook
2010 Outlook “Cautiously optimistic” Reasons for caution • Global economic outlook • Construction and housing markets remain soft in mature markets • Potential bubbles in high growth markets Reasons for optimism • Leading positions, scale and diversified markets • Strong balance sheet to fund growth
Slide 104: We want to be the world's leading Coatings and Specialty Chemicals company
We want to be the world’s leading Coatings and Specialty Chemicals company Our medium-term strategic ambitions are: Value – accelerated growth Values – sustainable growth • Grow to €20 billion revenues • Top quartile safety • Increase EBITDA* each year, performance maintaining a 13-15% margin • Top
Slide 105: Thank you
Thank you AkzoNobel Capital Markets Day - Making it happen - 28 September 2010 104
Slide 106: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements which address such key issues as AkzoNobel’s growth strategy, future financial results, market positions, product development, products in the pipeline, and product approvals. Such statements should be carefully considered, and it should be