Spotlight on Decorative Paints Amsterdam, 1 December 2011

Spotlight on Decorative PaintsAmsterdam, 1 December 2011,

Keith Nichols

Welcome

Spotlight on Decorative Paints – 1 December 2011 2

1. Introduction Keith Nichols2. Spotlight on Decorative Paints Tex Gunning3. Marketing Sucheta Govil

Today’s program

4. Innovation David O’BrienLunch

5. Europe, Middle East & Africa Richard Stuckes6. North America BobTaylor

Q&ABreak

7. South East Asia & Pacific Jeremy Rowe8. India & South Asia Amit Jain9. China & North Asia Liangqi Lin10. Latin America Benito Berretta

Q&A11. Wrap up & closing Tex Gunning


AkzoNobel key facts

2010• Revenue €14.6 billion• 55,590 employees• EBITDA: €2.0 billion*

33%33%

• Net income: €0.8 billion• 39 percent of revenue from high growth markets• A leader in sustainability

Revenue by business area EBITDA* by business area

30% Performance Coatings33%

34%

33%

* Before incidentals

26%

44% Decorative Paints

Specialty Chemicals


We want to be the world’s leading Coatings and Specialty Chemicals company

• Top quartile safetyperformance

• Top 3 position in sustainability

• Grow to €20 billion revenues

• Increase EBITDA each year, maintaining 13-15 percent margin

• Reduce OWC/revenues by 0 5

• Top quartile performance in diversity, employee engagement, and talent development

• Top quartile eco-efficiency improvement rate

• Reduce OWC/revenues by 0.5 p.a. towards a 12 percent level

• Pay a stable to rising dividend


Lowered 2012 global growth expectations

6,5%

6 0%

7,0%

Downward revisions in growth forecasts globally

3,6%

2,0%

6,0%

2 0%

3,0%

4,0%

5,0%

6,0%

Fore

cast

GD

P g

row

th

1,5%

0,4%

0,0%

1,0%

2,0%

EU US EM

Source: Deutsche Bank research, Oct-11

July 2011E October 2011E


Economic headwind in Europe expected

3,1%

3,0%

3,5%The market is expecting a European recession

Annual GDP growth

0,6%

0,2%

0,8%

1,7%1,8%

0,5%

1,0%

1,5%

2,0%

2,5%

GD

P ()

% Q

-0-Q

, ann

ualis

ed)

2011E: 1.5%2012E: 0.4%

(0,4)% (0,4)%

(1,0)%

(0,5)%

0,0%

Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12

Source: Deutsche Bank research, Bloomberg


AkzoNobel has strong fundamentals

Our key strengths:

• Leading market positions and brands• Scale

10%4%

Mature EuropeEmerging Europe

• Strong balance sheet• Diverse geographical spread• High operational leverage

Diverse geographical revenue spread

9%Raw materials, energy & other var. production cost Fixed production cost

High operational leverage

39%

6%21%

20%

Emerging EuropeAsia PacificNorth AmericaLatin AmericaOther countries

47%

12%

32%

Fixed production cost

Selling, advertising, administration, R&D costEBIT margin


Our performance improvement program: the next step in the evolution of AkzoNobel

Portfolio transformation

Integration & restructuring

Accelerated and sustainable

growthg

• Divestiture of fibersand pharma

• Restructuring of chemicals portfolio

• Acquisition of ICI• Building global scale

in paint and coatings• Onward sales of

• Integration of ICI• €340 million structural

synergies achieved by Q2 2010

• Footprint rationalized, key people retained

• More than €200 million in cost savings f t t i

• New Value and Values growth strategy Sept. ‘10

• Performance improvement program logical next step

• Combination of driving operational excellence and restructuring underperforming parts ofNational Starch

completedfrom restructuring underperforming parts of

the business


Stepping up operational and functional excellence

Underpin our growth and margin objectives• Enhance our ability to grow• Expected to bring us at or above the mid-point of our 13-15 percent EBITDA

i idmargin guidance.

Deliver structural competitive advantage• Leveraging scale, simplify support structures, reduce cost base• Transfer best practices, standardize key processes• Restructuring of underperforming parts of the portfolio

Full EBITDA impact of €500 million in 2014• Expected total incidental costs €425 million• 2012: €200 million EBITDA, incidental costs of €200 million• Reporting on program deliverables every six months


A comprehensive program

• Comprehensive – all functions, all businesses

• Margin management, R&D and restructuring (~50%)

Decorative Paints

Perf. Coatings

Specialty Chemicals

• Supply Chain and Sourcing projects (~40%)

• Improvements implemented over three years (2012 to 2014)

• All business areas contribute to delivering the €500 million

• >40 percent Decorative Paints

Finance

Human Resources

Information Management

Research, Dev’t & Innov.

Integrated Supply Chain

Margin Management40 percent Decorative Paints

• >30 percent Performance Coatings

• Close to 25 percent Specialty Chemicals

Academy


Performance improvement initiatives examples

Supply Chain – Creating a sustainable, customer-driven supply chain thatoperates at world-class safety, operational and customer service levels:• Improve the efficiency of all of our 225 factories

R d th t f h i d t t ti• Reduce the cost of warehousing and transportation

RD&I – Delivering bigger, bolder, better and faster innovation by focusingon four key areas: • Rationalizing RD&I’s footprint in Europe and North America • Reducing the number of raw materials we use • Improving the efficiency of our manufacturing processes• Linking customers’ needs more effectively to our research activities

Decorative Paints – Restructuring will continue in mature markets:• In North America and Europe, focus will be placed on reducing product

complexity, optimizing distribution and increasing employee productivity


Organization and governance

• Joint responsibility of the Executive Committee, led by CEO• The Executive Committee Support Office (ESO) will operate the

implementation to track progress, intervene where necessary and support th ll

20Masterplans • Set priorities and identify improvement potential from design stages, build into a business case and action plan

• ExCo members to lead each plan

• Defined measures to address priority opportunities• Clear objectives and deliverables identified

the overall program

100Initiatives• Clear objectives and deliverables identified• Risks and dependencies identified• ExCo member still accountable, execution assigned to

operational management


Decorative Paints 2010 key financials and regional breakdown

2010• Revenue: €5.0 billion• 21,950 employees

EBITDA* €548 illi• EBITDA*: €548 million• 38 percent of revenue from high growth markets• Operating ROIC: 32%

7%6%4%

Europe, Middle East and Africa

Revenue by business area

* Before incidentals

52%

21%

10%Europe, Middle East and AfricaNorth AmericaLatin AmericaChina and North AsiaSouth East Asia and PacificIndia and South Asia


Decorative Paints EBITDA* margins excluding US are in group ambition range

14%15%1000

€ million

4%5%6%7%8%9%10%11%12%13%14%

300

400

500

600

700

800

900

0%1%2%3%

0

100

200

2008 2009 2010

Total EBITDA* Total EBITDA* margin* Before incidentals

EBITDA* margin excl. US


Raw material pressure is currently holding back Decorative Paints EBITDAEBITDA* bridge Q3 2010 – Q3 2011

€ million

(89)

1,964

98

198148

Q3 10 Currency Volume Price Raw materials

Mix Other Q3 11

Increase Decrease* Before incidentals


Year-to-date trends in Decorative Paints continue into seasonally weak Q4

14%15%1000

€ million

4%5%6%7%8%9%10%11%12%13%14%

300

400

500

600

700

800

900

0%1%2%3%

0

100

200

FY 2008 FY 2009 FY 2010 FY 2011E

Total EBITDA* Total EBITDA* margin* Before incidentals

EBITDA* margin excl. US


Decorative Paints is low in capital intensity and high in operating ROIC*

35% 31.5% • Attractive operating

10%

15%

20%

25%

30% 26.9% 26.0%ROIC*

• 2010 capex around €154 million

• Capex requirement going forward around 4% of revenue

0%

5%

2008 2009 2010

Total ROIC %

Operating ROIC* %

4.7%5.6%

9.7%

* Operating ROIC is calculated as EBIT before amortization divided by average invested capital excluding intangible assets

5.2%


Spotlight on Decorative PaintsTex GunningTex Gunning

The Decorative Paints market is attractive – it is big and it will get bigger

Global Decorative Paint sales,

30 32 33 34 36 37

1015202530354045

,2010 to 2015 (€ billions)

Asia PacificLatin America

• Demand growth closely correlated with GDP growth, consumer expectations

• In high-growth markets, tends to outstrip GDP growth by up to 1.5x

• Used for decoration as well as protection

05

10

2010 2011 2012 2013 2014 2015

Latin AmericaNorth AmericaEMEA

well as protection

• Consumption per capita driven primarily by the frequency of repainting

Source: Orr & Boss, AkzoNobel analysis Spotlight on Decorative Paints – 1 December 2011 20

There is still significant market upside in the high growth markets

100%2.3 2.2 3.0 6.8 6.8

Current = 10 BlnHigh case = 21 Bln

Global paint market by volume (billion litres)

20

40

60

80

100%

CurrentMedium caseHigh case

• As high growth markets approach mature-market consumption levels, paint consumption per capita could eventually grow to double or triple their current levels

• Construction activity

Source: AkzoNobel analysis

0North

AmericaWesternEurope

LatinAmerica

& EasternEurope

China &South East Asia

India & South Asia

6.8 5.8 4.0 1.5 0.8Per capitacons. (litres)

340 380 605 1,363 1,368Population (mlns)

Note: Medium case is based on bringing consumption up to 2.5 litres per person (e.g. Taiwan is currently 2.6); high case is based on bringing consumption up to 5 litres per person. Based only on markets where AN has a presence.

Construction activity will continue apace, driven by population growth and by changing demographics


The next stage of value creation will be in the mass markets

Absolute paint market revenue(Asian country example) Asian country example:

• Spending power of the middle

2010 2015 2020

PremiumMassEconomy

100%

Relative paint market revenue by segment(Asian country example)

Spending power of the middle class in high-growth markets will increase dramatically through the decade

• Middle class estimated to go from around 40% of total household expenditure to nearly 60% by 2020

• We estimate mid-tier revenue will account for 48% of the

Source: Euromonitor, AC Neilsen, Perbanas, management estimates

0%20%40%60%80%

100%

2010 2015 2020

PremiumMassEconomy

will account for 48% of the total by 2020

• Similar picture with mid-tier contribution which will grow to 45% by 2020


This is a profitable market to be in, despite current economic climate

M t iTotal EBITDA (€m) EBITDA %

• Most companies are generating returns above 10% (green lines)

• AkzoNobel is generating the greatest absolute EBITDA

200

400

600

5

10

15

20%548

321

199

100

Source: Annual reports and company presentations

0 0AkzoNobel

SherwinWilliams

Asian Paints PPG DecoEMEA

100

Nippon Paint

75

DAW

43


It is also a market in which brand strength really matters

Consumer Drivers of Consideration for Paint(Asian market example)

0%

5%

10%

15%

20% • Brand reputation is the single most important category of factors driving consideration in this Asian market example

• The Emotion and Colour categories are also best addressed by strong brands

Source: Millward Brown factor analysis of consumer drivers of consideration for paint, 2011

* Factors that fall into the Emotion category include statements like “Inspires me to paint and decorate more often”, “Helps me to achieve my dreams”, and “Understands/meets my needs”** Factors that fall into the Colour category relate mostly to making both colour selection and painting easier

brands


AkzoNobel has solid positions in some of the most exciting markets in Asia

CHINAPopulation: 1.34 billion(world ranking: 1)

GDP per capita (PPP): $8,620( ld ki 70)(world ranking: 70)

GDP 2011 Growth rate projection: 9%

2010 Paint market size: €3.4 billion

Paint consumption per capita: 1.4 ltr

AkzoNobel position: #2

INDONESIAPopulation: 238 million

VIETNAMPopulation: 86 million(world ranking: 13)

GDP per capita (PPP): $3 380

Source: EIU, AkzoNobel analysis

(world ranking: 4)

GDP per capita (PPP): $4,560(world ranking: 80)

GDP 2011 Growth rate projection: 6.5%

2010 Paint market size: €300 million









We have outpaced our competitors in the biggest market in Latin America

BRAZILPopulation: 191 million(world ranking: 5)






ARGENTINAPopulation: 40 million


(world ranking: 31)





AkzoNobel position: #1Spotlight on Decorative Paints – 1 December 2011 26

We are the leader in Europe and have exciting positions in its fastest-growing markets

EUROPEPopulation: ~600 million

RUSSIAPopulation: 143 million(world ranking: 8)

GDP per capita (PPP): $16 710

TURKEYPopulation: 74 million

p

GDP per capita (PPP): $34,810*


2010 Paint market size: €9.2 billion








(world ranking: 18)







* Eurozone only (Eastern Europe: $17,960)


None of our competitors has the global scale or position that we do

4

5

6 2010 Global Decorative Paints revenues*Top 14 companies (€ billions) • We are the clear leader in

EMEA (biggest market), and either #2 or #3 in the

0

1

2

3

4 other main regions (North America, Latin America and Asia)

• Only 2 of our major competitors have a significant presence in more than one region; neither has the global scale of AkzoNobel

Concentrated in 2 or 3 regions

Concentrated in 1 region only

Strong positions in all 4 major regions

• Our primary competitors in the emerging markets of Asia and Latin America are regional or national only

• Estimated for competitors where data is not disclosed• Source: Company presentations and annual reports, AkzoNobel analysis


AkzoNobel has the people, brands and competencies to win globally

• We can offer the best development opportunities in the industry, helping us to Peopleattract and retain the best talent

• We can invest more to develop and support more powerful brands and global brand identities and industry-leading, game-changing innovations

Brands

• We can build and leverage experience and learning across markets and develop repeatable models to increase efficiency and effectiveness

Competencies


We have built a very strong leadership team at the top end

Amit JainIndia &

South Asia

Jeremy RoweSouth East

Asia & Pacific

Bob TaylorNorth America

Jaap KuiperLatin America

Liangqi LinChina &

North Asia

Richard StuckesEurope, Middle East & Africa

Sucheta GovilMarketing

David O’BrienBusiness Innovation


We have also brought in the expertise we need at more operational levels

Senior* appointments split by origin

• Of all the senior management appointments made within Decorative Paints since the beginning of 2009, over half were external hires

– One third of these came from the Consumer Packaged Goods industry20%

40%

60%

80%

100%

– Another 8% came from the Retail industry0%

EMEA North America

Latin America

China & NA

India & SA

SEAP BA

InternalNon CPG/TotalCPG/Total%* Appointments at one and two levels

below Business Unit Managing Director


We have many strong brands in trade and retail, and in multiple product categories

• We have a number of powerful, relevant b d ibrands occupying a number of positions across different markets

• Examples include Dulux (consumer), Sikkens(professional), Coral (Brazil), and Sadolin(woodcare)

• Where it makes sense, ti li iwe are rationalizing our

brand portfolio –concentrating our investment behind fewer, bigger, better brands


Strong brands generally command a price premium (multiple categories example)

Average price premium for manufacturers’ brands relative to store brands

• Even where consumers think store branded

10%20%30%40%50%60%

brands relative to store brands think store-branded products are better than manufacturer-branded products (Qm < Qs), the average manufacturers’ brand premium is 21%

• This premium jumps to 56% where consumers think manufacturer-branded products are

0%Qm < Qs Qm = Qs Qm > Qs

Note: Based on a study of 3,900 French consumers across 75 consumer packaged goods categoriesSource: N. Kumar and J-B. Steenkamp, Private Label Strategy, Harvard Business School Press, 2007 (p 98)

Qm – perceived quality of manufacturers’ brandsQs – perceived quality of store brands

superior in quality to store-branded products (Qm > Qs)


Part of leveraging our scale is having a single global identity where possible


We are supporting our brand and growth ambitions with increased A&P spend

Advertising & Promotion spendas a percentage of revenue

• We have increased our overall A&P spend in

6%

8%

10%

12%as a percentage of revenue overall A&P spend in

proportion to revenue

• Higher spend % in the markets with the greatest growth potential

• Investing in the North American market as part of our US turnaround / Glidden

0%

2%

4%

EMEA NA LATAM ASIA Global

200920102011 (Est)2012 (Est)

turnaround / Glidden relaunch strategy


Our scale means we can outspend our competitors on Research and Development

Research & Development spend (total and %)

• AkzoNobel’s R&D spend in 2010 higher than that of our major competitors

• We leverage technological capabilities across Business Areas

Source: Company annual reports and presentations Spotlight on Decorative Paints – 1 December 2011 36

We combine in-house technology and 3rd

party supply to best advantage

Core Technological Ingredients in paint manufacture

• Having in-house technology gives us

Latex

Resins

Colourants

With in-house technology:

With external supply:

both product and cost advantages

• Unlike most paint companies, we do not rely heavily on third-party suppliers for our technological ingredients

• We can produce to the specification of our

• We can take advantage of price

Opaquepolymers

the specification of our end formulations

• We can develop AkzoNobel patented, truly differentiatedproducts

advantage of price opportunities


We address and solve end-user problems common to multiple markets

• Different markets have more innovation

“I want to be sure that all products I use are

“How can I get the right colour for my room when there are so many to choose from…?”

requirements in common than they do differences

• Coming up with a solution in one market and then leveraging it into others makes our innovation process faster and more efficient

• We have made this ibl b f l i

I want to be sure that all products I use are safe for my family and for the environment”

“I want my home to look unique and reflect who I am, but I’m not sure where to start”

“I would love to paint my bedroom, but I don’t

“I want to use products that are kinder to the

i t b t I d ’t possible by reformulating some 80% of our product base, reducing the number of formulations and raw materials

y bed oo , but do tdo DIY and can’t afford a decorator”

“Painting the outside of my home is expensive and difficult so, when I do a job, I want it to look good for at least 10 years”

Source: Consumer research across 28 countries

environment but I don’t want to compromise on quality”


We are building global competencies by codifying and rolling out our best practises

Sales • Category management• Pricing excellence

S f ff

Research & Development

• Stage Gate process for pipeline management

Repeatable models within specific functions

• Sales force effectiveness• Global glossary

p

Marketing • Insight generation• Communications

development & evaluation• Point-of-Sale marketing

IntegratedSupply Chain

• LEAN methodology for manufacturing excellence

• Purchasing back-end processes

Storesoperations

• Stores management• Estate management

Support • Project management• Underlying culture of high

performance and employee engagementg g

• The multi-year implementation of a global ERP system, to be completed by early 2013 (70% rolled out already)

Key enablers

• Product Market Review process for prioritizing and reviewing innovation projects

• Integrated Business Planning for aligning short and medium term sales forecasts with manufacturing planning

Cross-functional repeatable models


These efforts are a critical aspect of the journey we have been on since our transformational merger in 2008

the ICI business (eliminate overlap reduceIntegrate the ICI business (eliminate overlap, reduce complexity, build a common culture)

underperforming businesses (e.g. US, Germany)

from our multi-local, fragmented history into a global company with global scale

Turnaround

Transform

By growing market share in both mature and emerging markets

Grow


We are transforming from a multi-local to a global company

Multi-local company (our past)

Global company(our present and future)

• Full-function country organizations operate largely independently from one another and compete locally

• A global company develops and deploys global people, brands and competencies to win in local markets


This involved reducing complexity to support fewer, bigger and better assets

Area Beginning 2008 End 2011

Cost reductions n/a ~ €210 millionCost reductions n/a ~ €210 million

FTE reductions* 25,800 ~ 4,000

Brands 100 75

SKUs >90,000 75,000

Raw materials >8,000 5,000

Factories 80 55

Warehouses 160 120

Packaging types >900 500

* Clearly, we are adding FTEs, particularly in the high growth markets, to support growth. The reductions are estimated reductions due to integration, complexity reduction and related restructuring


Our productivity has also improved steadily in all regions

Personnel cost as a % of revenueIndex 100=2009 Q2

O d ti it i

70

80

90

100

110

EuropeAmericasAsia

• Our productivity is increasing in all three major regions

• Increase is highest in Asian markets, reflecting higher pace of growth

• Increase in 2010 Q2 Americas reflects in estment in

602009 Q2 2010 Q2 2011 Q2

investment in Walmart account


We have integrated our mature markets businesses and sharpened our focus in Asia

• We have further consolidated our mature

Decorative Paints Business Units

2009

Decorative Paints Business Units

2011market businesses to maintain our drive for synergies and streamlining

• Having the Asian business split out into different units keeps the focus on positioning and investing for growth

• Overall there is a clear shift

UK, Ireland and South Africa

Northern and Eastern Europe

Continental Europe

Canada

EMEA

North America

Latin America

China and North Asia

in emphasis from mature markets to high growth markets

United States

Latin America

Asia

South East Asia & Pacific

India and South Asia

Largely mature market businessesLargely high-growth market businesses


The Performance Improvement Program is the logical next step in our transformation

• Decorative Paints will account for some 40% of the overall target of €500m

• The bulk of that will come from EMEA and North America

• 90% of the EBITDA improvement will come from cost savings, and the rest from revenue and margin growth


Current trading conditions are tough

Mature markets High growth markets

Demand factors • Macroeconomic factors (GDP, growth, employment)

• Consumer confidence• Housing slowdown

• GDP growth & consumer confidence

• Urbanization and economic development, which drives construction and mobility

• One exception may be China,as government acts to cool d t k tdown property market

Supply factors • Raw materials pricing • Raw materials pricing• Squeeze on talent


Regional TiO2 Pricing – in USD/tonne

TiO2 prices are a challenge

4.000USD/Tonne

H1 2011 Decorative Paints raw material spend

(Total = €1.1 billion)

3.500

2.500

3.000 +91%

2.000

1.500

1.000

500Europe

Asia

North America

29%

17%20%

16%

8%10%

Resins & BindersPackaging MaterialsTitanium Dioxide

Source: ICIS Pricing

2003 20112009200720010

2005

• Pricing has gone up steadily in USD over the last decade, across all regions

• TiO2 accounts for 1/5th of our total raw materials spend (up from 17% in 2008)

Titanium DioxideAdditivesSolvents & DiluentsOther


There has been a lag in new extraction capacity coming onstream

Global supply & demand outlook for Ti mineral 2000 – 2020F

Alth h th i• Although there is no shortage of feedstock in the ground (mostly ilmenite and rutile), the market fears an expected shortage in TiO2 supply

• High current prices are bound to drive

Source: TZMI

new investment in capacity – we have already seen ample evidence of this, particularly in ChinaConsumption

Likely new projects (not yet approved)

Approved new projects

Existing production


We are actively working both to increase security of supply and reduce dependence

• Leveraging strong relationships with major suppliers, including the

• Using our formulating science expertise and our high-throughput experimentation

Sourcing Research & Development

major suppliers, including the emerging suppliers in China

• Maintaining a safety margin of stock

• Partnering with China-based Guangxi CAVA Titanium Industry to manufacture and distribute titanium dioxide

– With this deal a new titanium dioxide facility will be developed in Qinzhou with

g g p pcapability to reduce our TiO2 dependence in 3 ways:

– Using existing replacement technology

– Working with key suppliers to develop new technology

– Increasing efficiency of use through formulation improvements

• Combined, these initiatives mean we can d t t l TiO2 hilfacility will be developed in Qinzhou with

a production capacity of 100,000 tons, slated to begin operation in the beginning of 2014

– Further guarantees security of supply for the Asian market

reduce our total TiO2 usage while maintaining cost efficiency and product attributes


Raw material inflation drives price increases

10 Quarterly price development in % year-on-year(excluding mix effect)

2

0

2

4

6

8( g )

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3-2

2008

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2009 2010 2011


We expect to emerge from the current storm with an even stronger position

• With industry-leading R&D and innovation, we are delivering the right products and services to meet the needs of consumers better and faster than our competitorsand faster than our competitors

• We are implementing focused and powerful marketingprograms, strengthening our brands’ positions in every major region of the world

• We continue to invest in the quality, extent and distribution of our production and distribution capacity

• We are continuously developing our people for personal growth• We are continuously developing our people, for personal growth and community engagement as well as business growth


In Summary – Winning Globally

• Our markets will continue to grow, especially in Asia, Eastern Europe and Latin America

• AkzoNobel is the best placed to benefit from this growth

– We have solid growth platforms in all key markets

– We have a very attractive position in EMEA, the world’s biggest market

– We have the best people, brands and competencies

We can leverage our global scale in way others cannot– We can leverage our global scale in way others cannot

• We will pursue share growth in all major markets, through superior functional execution and with opportunistic market consolidation


MarketingSucheta GovilSucheta Govil

Our vision & plans

• Adding Colour to People’s Lives through inspiring and enabling decoration

• Fewer, Clearly Positioned Stronger brandsSpotlight on Decorative Paints – 1 December 2011 54

End the tyranny of grey, dull spaces


Adding Colour to People’s Lives


What business are we in?

BEAUTIFUL HOMESSpotlight on Decorative Paints – 1 December 2011 57

Our brands will inspire beautiful homes, spaces

To Increase Penetration and

Access for our Brands so Improving Spaces

becomes easy

To Increase Frequency of Painting and Decoration with

Our Brands

“We will Inspire Consumers and Painters to Create Beauty and fight the opportunity cost of grey and shabby”

Source: 3D qualitative research, July 2009 Spotlight on Decorative Paints – 1 December 2011 58

Consumers and professionals are equally important to us

Res. New Build 11%Residential re‐painting 70% Public

7%Commer.

12%

Non‐Residential

Consumers 53% Professionals 47%

What’s being painted

Who’s specifying

HID 17%


Let me introduce you to some home makers…

Sarah from Bristol

Kajol from Mumbai Fabi from Rio

Meili from Beijing

Noor from Lahore

Jeni from TorontoIneke from Indonesia


All say "me and my home are one"

Improving our home is important to feel better

Home is an extension of ourselves

“For all cultures, the home is an expression of the people who live there”

Source: 3D qualitative research, July 2009 Spotlight on Decorative Paints – 1 December 2011 61

Deep consumer insight: one universalpoint in the decorating journey For all:

pride/satisfaction in final end result

Decision to decorate

Finding inspiration,

gathering ideas exciting

Anticipatio

HO

PES

ARS

to decorate

PPR

DMVHMFMS

Satisfaction in doing something you’re good at or that appeals to

your nature

Anxiety about making the

right style/colour

Recognition that there is

physical work

Anticipation of a job well done

Source: Based on Global 3D qualitative research, July 2009

FEA y /

choice

Realisation of everything that could go wrong (buy the wrong product, bad colour choice, lack of

physical skill, disruption, family dissatisfaction)

More difficulties emerge as job starts:

prep, colour looks wrong, takes longer than anticipated, etc.

p ys ca o(boring/

difficult/disruptive) to do

Segment namesDMV: Deliver My VisionPPR: Perfect Professional ResultsHMFMS: Help Me Find My Style


The fundamental elements of our global brand strategy

Strong Visual Identities

Be easily thought of

Be easy to buy

Be accessible

Build distinctive mental assets

Our vision : Addingcolour to people’s lives

Our products and communications


We leverage our global scale and we keepthe customer at the center

GLOBAL MARKETING LOCAL MARKETS

Global Brand Objectives Local Business Objectives

Brand Idea Comms Platform

Campaign Idea

Comms and Activation

Plan

Universal Market

Relevant Insight

(B d

Brand Guidelines

(Brand Territory)

Comms Guidelines


Our main competitive advantage: a greatglobal brand

• Dulux (cluster) sold in more than 50 countries in the world

A l b l b d lAs a global brand we can leverage:• A powerful positioning & strategy• Strong brand assets• Global Big Idea• Innovation products and concepts


Fewer powerful,

Our brands will also be the preferred partner of the professional painter

Fewer powerful, insight driven, business winning brands:• Sikkens

‘Sensations’• Dulux Trade ‘No.1• Herbol – ‘Schnell

Sicher Prod cti ’Sicher Productiv’


Our vision and plans

Adding Colour to People’s Lives through inspiring and enabling decoration• Leadership in Colour• The Art, Science, Delivery • Lock-in• Bigger innovations• Leveraged faster• Sustainability Leadership


InnovationDavid O’BrienDavid O Brien

Innovation will play a major part inachieving our growth objectives

• Growing our share through competitive advantage

• Growing our categories by encouraging frequency and penetration

• Locking professional users and specifiers into our brands

• Improving our margins by adding value and enabling us to compete

‘More people, More often, More money......’


Strategic context

• Consumer/user insight at the heart of innovation

• Major progress on leveraging our scale by moving f lti l l t l b l hfrom a multi-local to a global approach

• Focus of our resources on key initiatives (fewer, bigger, better and faster)

• Short term AND long term perspective

• Delivery of our sustainability objectives


Beautiful homes


Long lasting performance


Future Now


Developing the Trend Bank

Stage 1Research AkzoNobel and Research

Stage 2Validate

Your Future Research

Expert Panel

Stage 3Identify

Trend


Developing the platforms

Stage 3

Stage 4

Trends

Strategic Imperatives

Stage 5Innovation Platforms


Walk around

Three rooms:

1. Inspiring People Globally

2. Leading through Innovation

3. Winning in Professional Markets


Europe, Middle East & AfricaRichard StuckesRichard Stuckes

Decorative Paints EMEAKey facts

• Revenue: €2,585 million• 11 200 Employees at year end

2010

Revenue by business region

6%

• 11,200 Employees at year end• 530 stores across Europe at year end• 34 Countries in 4 Regions• Main brands include Dulux, Sikkens, Levis, Herbol,

Marshall, Glidden

Revenue by channel

23%27%30%

24%23%

17%NorthernWesternSouthernEastern & AfricanBuilding Adhesives

23%

50%

27%Large-scale outlets (LSOs)Small-scale outlets (SSOs) & otherOwn stores


EMEA will continue to represent a large proportion of the global market

Global Decorative Paint sales,2010 t 2015 (€ billi )

• Although growth will be higher in Latin America and Asia than in North America and EMEA, these will still represent a very significant proportion of the overall market

• EMEA is forecast to10152025303540

2010 to 2015 (€ billions)

Asia PacificLatin AmericaNorth America

€30 B

€37 B

EMEA is forecast to represent just under 40% of the global market by 20150

510

2010 2015

North AmericaEMEA

Note: Includes all markets, not just ones in which AkzoNobel is present

Source: Orr & Boss, management estimates Spotlight on Decorative Paints – 1 December 2011 80

There is still significant opportunity to grow share in EMEA

AkzoNobel’s Decorative Paints Market in 2010*100% = €12 billion

• Top 4 markets in pEurope represent 46% of the EMEA total

• Western Europe represents 77% of the EMEA total

• Only France and the UK are more than 50% consolidated to the top 3 players

* Markets where AkzoNobel is active. Does not include non-paints sales or integrated distribution

p y

• Opportunities to grow share include organic growth, distribution consolidation and potential opportunistic M&A

Source: Management estimates Spotlight on Decorative Paints – 1 December 2011 81

AkzoNobel have a solid overall leadership position in EMEA

2010 Decorative Paints revenues100% = €12 billion*

AkzoNobel

PPG

DAW

TikkurilaOthers

RMS = 2.4 • AkzoNobel is the largest paint manufacturer in EMEA, at more than double the size of our nearest competitor

• The top 6 competitors still only account for just under 40% of the total market

*Notes: Only includes markets where AkzoNobel is active.Does not include non-paints sales or integrated distribution.

TikkurilaJotun

Materis

total market

Source: Management estimates Spotlight on Decorative Paints – 1 December 2011 82

We hold a range of positions across individual markets

• Belgium• France retail• GreeceMarket leader

• Switzerland• Tunisia• Turkey

• AkzoNobel is the market leader in a number of countries,

• Italy trade• Netherlands

• Poland• Russia

Market leader

Competingvery closely

y• UK

• South Africa• Spain

,together accounting for nearly 40% of our total EMEA market

• Significant growth opportunities in key markets like Turkey, Poland and Russia

• In some markets we are up against strong,

• Germany• Middle East• Scandinavia

Challenger position

p g g,mostly local incumbents like Tikkurila in Russia, DAW (Caparol) in Germany and Jotun in Scandinavia and the Middle East


We are facing significant economic headwinds at the moment

Housing starts(Index 2005 = 100)

• Although construction is not the major driver of

6080

100120140160180200

(Index 2005 100)

BelgiumDenmarkFrancePolandSpain

paint demand, it reflects the broader economic environment including consumer sentiment

• Housing starts in a number of EMEA markets have yet to recover to their peak levels

• Other issues dampening

0204060 Spa

SwedenUK

consumer confidence are uncertainty about the Euro and expected cuts in government spending

Source: OECD Spotlight on Decorative Paints – 1 December 2011 84

We have already made excellent progress over the last 3 years on the integration, simplification and cost reduction agenda

Cost reduction

FTE reduction

Brand reduction

SKU reduction

Factory footprint

Reduced by >€90 million

Reduced by over 2,100 FTEs

19 brands discontinued

16,000 SKUs eliminated (nearly 30%)

11 closed sites (nearly 30%)

ImpactArea

Factory footprint

Warehouse footprint

11 closed sites (nearly 30%)

19 closed warehouses (20%)


Further operational improvements will release additional funds to invest in growth

Performance Improvement ProgramKey EMEA initiatives • Complexity reduction is a

key driver of improvement• SKU reduction to reduce cost of

complexity both in selling and at manufacturing sites – generates margin opportunities and Opex / OWC savings

• De-layering in the organisation –countries focus on selling and marketing activation and BU organisation will focus on Integrated Supply Chain and supporting processes

key driver of improvement

• The integration and simplification program have created the necessary foundation for us to transform our business further

• This further transformation willsupporting processes

• Building on SAP platform to optimise processes across the region – less complexity and more efficiency

transformation will support our growth ambitions by releasing funds to invest in production, distribution and brand strength


We have world-class assets in EMEA, strengthened by our scale

People• Unparalleled industry depth combined with exciting new

hires that bring us critical category management expertise

Brands• Market leading brands in both the Trade and Retail

segments in several markets• Strong woodcare brands in UK, Scandinavia, Russia• Marketing organization restructured to leverage scale

Distribution infrastructure• 3 mega-sites (UK, Poland and France) to produce the bulk

of our volume at highly competitive rates of efficiency• Opportunity to find distribution synergies across the

AkzoNobel portfolio


A fantastic management team has brought great retail & consumer goods experience

Guy Williams (North)• 8 years in the business• Led UK Stores turnaround in 2005/6• Pre-AN experience at major retailers p j

including Woolworths and Aldi

Peter van Campen (South)• 1 year at AkzoNobel• Brings Category Management and

Kees Ekelmans (West)• New appointment, joining from Hunter

Douglas’ Division Components & Programs• Extensive finance, ops and management

experience from nearly 20 years at Unilever

branded consumer goods expertise from Shell, Heineken and LVMH

Jan-Piet van Kesteren (East)• 18 months in AkzoNobel• Brings emerging markets

marketing expertise from 14 years at Unilever in various international roles

Frank van Buchem (Marketing)• 6 months in AkzoNobel• Brings marketing and GM

experience at Unilever, Coca-Cola and Sara Lee


The phased roll-out of the new Let’s Colour brand identity is already underway

From: To:

• Phased rollout beginning in 2011 with Austria, France and the Netherlands

• Continuing though to Q1 2013

• Combination of modes: Launch, Phased and Hybrid


We continue to implement world-class technology in our mega-factories

Pilawa, 2006

Montataire

Ashington, 2014

Mobile vessels are moved to automatic dosing and mixing stations before progressing to filling

Montataire

A purpose-built, Agile plant in the North East of England making a complex range of products for the North West of Europe• Based on the Universal

Leading-edge technology ensures accuracy and reliability in quality

€4m of investments have nearly doubled the volume of product coming out of this site

Blending Plant design developed in Pilawa

• This £100m plant will represent a step change in technology, improving energy efficiency by 60% and reducing waste by 60%


Our plan for winning in this market is based on five critical elements

Have the most

powerful & meaningful

brands

Win in stores

Be the preferred

partner of the professional

painter

Attain industry

leadership in all aspects of sustainability

Be the best employer to

work for

Areas of focus for today


There are several components to our plan for winning in stores

• Stores Excellence Making our own stores best-in-class for the channel

• Category Management Helping our biggest customers grow the category

• Point-Of-Sale competence Capturing the sale at a critical point in the buying decision

• Distribution expansion Recruiting independent store owners to join our network of soft franchiseesto join our network of soft franchisees

• Sales Excellence Developing repeatable sales models and rolling them out across the region to drive cost efficiency and revenue effectiveness


We directly operate 530 stores in Europe, and soft-franchise more than 1600

• The number of stores in our network is growing

• 1/3 of our EMEA employees• 1/3 of our EMEA employees work for our own stores

• Over 1/4 of our revenue comes from our stores

• With independent distribution channel under pressure, manufacturers’ owned/controlled stores become an increasingly

AkzoNobel owned and operated storesAkzoNobel branded stores (soft-franchised)

become an increasingly important route to market

• Stores are an excellent way to introduce and manage new product, marketing and sales initiatives


Our Stores Excellence programme will increase total EBITDA significantly

Hig

h

P1P2 • Priority areas for improvement (shorter term, higher impact)include Pricing, Assortment/ S i S t ti /

Short-term Long-termRealization of impact

Impa

ctM

ediu

m

P5P6P4

P8

P9

Specific improvement projects:

Sourcing, Segmentation/ Customer management and Outlet operations

• Organizational confidence is high due to very successful program run with the current management team in the UK in recent years

P9

Specific improvement projects:P1

P2

P5

P4

P3

P6

P7

P8

Estate managementLogisticsPromotionsCRM (including promotions)

Store coverage managementOutlet operationsSegmentation / customer management (sales)

Assortment / sourcingPricing


Turkey is a great growth platform for our business

• Total market size in 2010 of about €500m• Growing at approximately 2x GDP growthMarket

• Distribution to SSO via Wholesale is around 75% of the market• Other channels are LSOs and construction• SSOs are a competitive place without exclusivity• Mainly ready-mix paint, limited color variety

Distribution

• Extremely competitive: 5 players have between 10 and 25% share • Mainly ‘Buy-It-Yourself’

Market

• AkzoNobel operates with a single brand: Marshall• Marshall is the oldest and most well known paint brand• We are the market leader• Largely local supply chain, operated from Gebze (80 km from Istanbul)

AkzoNobel presence


We are pursuing an aggressive roll-out strategy with 1,000 stores in 2011 including in-store tinting equipment

From a fragmentedand messy look

To a revolutionary, exclusive store


Proven results will drive our momentum for further expansion through 2012

YTD Revenue uplift is significant, up to 50% whilst tinting sales in

Continuous upgrades of our concept provide even more strength

store increased by 500%

30

50

44

25

Realized %Target %

10

15

Corner StoresStore in StoresPerfect Stores


Operating sustainability across all aspects of our business is critically important to us

• Is the right thing to do, and protects the long-term health of the business

• Additional short-term benefits include:

• Top-line growth: revenue from our eco-premium products represent 22% of total sales and outgrew the market by a factor of 3

• Reduced costs: we have already reduced our energy use per tonne of production by 9% in two years, and by 4% in absolute terms

• Improved margins: eco-premiumImproved margins: eco premium R&D helps drive innovations

• Employee engagement:Employees have identified and pursued literally hundreds of small-scale improvement projects in every area of the business – these add up to big impact

Our ‘5 Pillar’ approach to Sustainability

Combines economic, environmental and social sustainability


We are proud of our achievements with sustainability and the recognition we have received for them

AkzoNobel is supplying London 2012’s Olympic Village2012 s Olympic Village

• Olympic Delivery Authority aiming to make 2012 “the most sustainable Games to date”

• Dulux Light & Space Diamond Matt was chosen because it combines very high durability with the ability to reflect more light back intoto reflect more light back into the room

• This allows up to 22% less light energy to be used and requires less frequent maintenance


We have leveraged a successful eco-premium product across multiple markets

• Ecosure product line developed and launched in the UK in 2007

• Carbon impact evaluated with the support of an independent agency Forum for the Futureindependent agency, Forum for the Future

• Embodies sustainability improvements while maintaining premium product quality

• Less embodied carbon (10% to 30%)

• Packaging includes at least 25% recycled material, up to 50% in some products

• Reduced VOC* content, by a minimum of 40% and as much as 80%

• Water-based

• Has received a number of industry awards

• Revenue growing at double-digit rates

• Now rolling out into multiple markets across EMEA

We call Ecosure a ‘Step Towards Greener’ because while these are the most sustainable products we have today, they are only a step on our journey toward a more sustainable future – so we need and intend to have even more sustainable products in the future

* Volatile Organic Compounds


In Summary

• EMEA is the heartland of our business and will continue to be so• We will continue to pursue significant growth opportunities:

h i i t k t d b t ti l th i E tshare gain in mature markets and substantial growth in Eastern Europe, Turkey and Africa

• Tough trading conditions will generate opportunities to drive consolidation in the market

• We have everything we need to win here: the scale, the assets, the experience and the determination

• We will not only weather the storm of current market conditions – we will emerge stronger than many of our competitors

• We can do this while still protecting the best of our experience and our heritage in local markets


North AmericaBob TaylorBob Taylor

Decorative Paints North AmericaKey Facts

• Revenue: €1,029 million• 5,100 employees at year-end

13 f t i / di t ib ti f iliti

2010

• 13 manufacturing / distribution facilities• 550+ company-owned stores• 5,000 independent dealers

24%8%5%

Revenue* by business lineRevenue* by geography

24%

35%5%

11%

17%Home DepotCompany Owned StoresCaribbeanWalmartDiversified Brands - CanadaDiversified Brands - US

62%

33%

USACanadaCaribbean**

• Charts are based on 2011 Estimates** Including Puerto Rico. Charts are based on 2011 Estimates


Executive Summary

• Relentless Focus:

− Drive profitable growth with an intense focus on margin, cost and innovation

• How:− New management team with clear priorities− Margin management – price, procurement, formulations− Capitalize on robust innovation pipeline− Drive cost synergies across North America− Invest in portfolio of strong brands− Leverage cross channel presence− Continue delivering solid Canadian performance

• Build upon strong customer relationships & retail partnerships

• A culture change underpinned by AkzoNobel’s core values


Unfavorable North American Market Trend

Economic Triggers• Prolonged US housing

750-33%

• Prolonged US housing depression also weakened Canadian market

• Persistent high unemployment

• Weak consumer confidence

250

500

MM

Gal

lons

Source: 2010 AkzoNobel Estimates

02007 2008 2009 2010e 2011e

2012 market volume expected to be flat


Market Structure

ResidentialCommercial

35% 65%

Where PROs Buy:• Stores 78%• Independent

Dealers 16%N ti l

End User: PRO (100%)

End User: DIY (70%)

PRO (30%)Where DIYers Buy: • National

Retailers 72%• Stores 16%• Independent• National

Retailers 6%


• Independent Dealers 12%

•


Effectively Leverage the Glidden Brand Across All US Channels

Others

AkzoNobel

Oth

AkzoNobelOthers

AkzoNobel

AkzoNobel

SWPPG

BenjaminMoore

Valspar

BenjaminMoore

Others

PPG

Sherwin-Williams

PPG

Sherwin-WilliamsBehr

PPG

Vals

par

Behr

n sAk

zoN

obel

Sherwin-W

% o

f gal

lons

sol

d Others

AkzoNobel

Independent dealers

Company-owned stores

Sher

win

Willi

ams

Home Depot

Lowes

Wal

mar

t

Source: 2010 AkzoNobel Estimates Spotlight on Decorative Paints – 1 December 2011 107

The Glidden Portfolio:Customer and Channel-Centric Brand Promise

Portfolio Role

Hero Product

C titi

Simple Solution

Glidden Brilliance

Project Helper

Glidden Premium

Approachable Expert

Glidden SpredComplete

Valued Partner

Glidden Professional

DEALER STORES

Competitive Edge

Compares to

Step-saving products at an excellent value

Valspar Signature

Quality paint for projects big or

small, at an exceptional value

OlympicSherwin Williams

Best-in-class quality at the

most competitive price

Benjamin Moore Aura

Sherwin Williams

Customized service to deliver

solutions for every need

Sherwin WilliamsPPG


Relative Market Position - Canada

obel

Others

% o

f gal

lons

sol

d

AkzoNobel

Home Hardware

BenjaminMoore

BenjaminMoore

OthersPPG

Sherwin Williams

AkzoNobel

Behr

Oth

Akzo

Nob

el

General Paint

Cloverdale

Akzo

Nob

el

Akzo

Nob

el

Akzo

No

Independent dealers

MooreMoore

Company-owned stores

General PaintOthers

Masco

Home Depot

Rona

Wal

mar

t


Can

adia

n Ti

re


Our Journey To Date

Rebuild brand

2008-2011

position


2008 – 2011 Rebuild Brand Position

Glidden reinventionreinvention

Irreplaceable partner at The Home Depot

Specialty Businesses

Stores transformation

Total cost redesign

Rebuild brand

position

New growthprograms

Focus on people and

culture


Our Journey Going Forward

Accelerate

2013-2014

US: Breakeven at EBITDA level

Rebuild Brand

Accelerate Profitable Growth

2008-2011

2012

Position


2012 – 2014 Strategy:Leverage Scale & Scope to Accelerate Profitable Growth

Changeculture

• Clear priorities & accountability

• Sense of urgency

• New management team

Protect investment

in our brands and

innovate

Drive growth

• New growth programs at The Home Depot

• Target core Walmart shopper

• Expand retail partner base• Drive PRO strategy• Expand Dulux stores in

Improve margin

• Aggressive margin management

• Improve mix• Commercialize new

products

team

• Expand Dulux stores in Canada

• Drive Caribbean growth

Reduce cost base

• Deliver supply chain & back office efficiencies

• Reduce product complexity

• Improve processes and systems productivity

• Drive North American synergies


Solution:

A collection of new Glidden programs that simplify painting for

Provide The Home Depot with industry-leading innovation

programs that simplify painting for the DIY & PRO end user

Color Palette


Solution:

A differentiated paint program for 3 400 Walmart stores in the US

Grow share among Walmart’s 140 million weekly shoppers

3,400 Walmart stores in the US


In Summary

• Relentless Focus− Clear priorities – sense of urgency

− Aggressive margin management

− Drive structural cost reduction

− Improve productivity

− Fuel growth thru innovation

• Decorative Paints North America’s strong cross channel market position is key to delivering profitable growthp y g p g



Q&A:Keith NicholsKeith NicholsTex GunningRichard StuckesBob Taylor

South East Asia & PacificJeremy RoweJeremy Rowe

Decorative Paints South East Asia & Pacific – Key Facts

• Revenue: €279 million• 1,400 Employees at year end

7 f t i it d 15 000 t il i t d

2010

Revenue by BrandRevenue By Country

• 7 manufacturing sites and 15,000 retail points served• #1 or #2 in every market served and #1 overall• High profitability• A Dulux business• JV’s in Indonesia with PT DWI Satrya Utama (AN share 55%) and in Malaysia with

Amanah Raya Berhad/Skim Amnanah Saham Bumiputra (AN share 60%)

10% I d i

70%

30%

DuluxNon-Dulux

30%

25%20%

15%

10% IndonesiaVietnamMalaysiaThailandOthers


A large, growing region

• Over 600m people, growing at around 1% per annumaround 1% per annum

• Almost 30% of the population <14 years old

• Historic GDP growth of 7-8% likely to continue in the medium-term

• Wide range of incomes, with GDP/Capita ranging from US$800 to US$43


A dynamic, colourful region

• A dynamic, fast developing iregion

• Where colour is ingrained in the spirit of many diverse cultures

• With a short painting cycle of 3-5 years due to factors including the climate andincluding the climate and the importance of home renewal for festive events


A large and profitable paints market

Market Value By Category

15% • A market of around 1 billion litres and €1.5 billion value

Market Value By Country

6%

40%

30%

15%InteriorExteriorTrimOthers

• 70%+ of the market in Decorative Paints

• Relatively low consumption of ~ 1.7 litres/capita and pricing of ~ €1.50/litre

• High proportion of exteriors due to habits and climate

28%

20%16%

17%

13%6%

IndonesiaThailandMalaysiaPhilippinesVietnamSingapore & Others

• Five countries represent more than 90% of the region

• A profitable market


A market that is expected to grow in the medium term

10%• More urban households

6%

• A move from non-permanent to permanent, and unpainted to painted houses

• Increased percentage of disposable income spent on decoration

• Continued development and infrastructure investment

Inflation & price gro th

Volume Value

Expected Market Growth2010 – 2015 CAGR

• Inflation & price growth

• Highest growth in the mass market

• Growth spread across Tier 1, 2 & 3 cities


But challenged in the shorter-term

• Flood situation in Thailand will take 6 th t6 months or more to recover

• Political instability remains a feature of the region, but is improving

• Vietnam’s recovery from economic overheating will reduce growth prospects in 2012prospects in 2012

• Continued raw material price inflation

• Indonesia is best placed to weather any global recession


A consumer-driven, colour-loving but fragmented market

Market Value By Channel

21%

• A market of mostly “Buy It Yourself” (BIY) and “Have It Done” (HID) consumers

Consumer By Type

49%

19%

11%

TraditionalWholesaleModern RetailProjects & Others

( )

• High use of colour

• >55% on residential repainting

• A highly fragmented, mostly traditional channel

• In-store tinting established and growing strongly

60%

40%

BIY & HID (Use a Painter)DIY

• Modern retail only growing slowly


A market where AkzoNobel is the leader

Estimated Value Market Size and ShareTop 6 markets in South East Asia

100%

Th Th Th

28%

18%12%

42%AkzoNobelNippon PaintsTOAAll Others20

40

60

80

#1 #2 Joint#1 #1

Joint#1

#2Player

#1Player

Joint#1 #1

Player

#2Player Joint

#1

The Rest

The Rest

The Rest

The Rest

The Rest

The Rest

0Indonesia Thailand Malaysia Philippines Vietnam

Singapore

# #1

AkzoNobel

AkzoNobel also has #1 position in Brunei, Joint #1 in Papua New Guinea, and #3 in Cambodia


Leadership built on the Dulux brand

• 70% of business behind Dulux

• A well-known and highly regarded brand in terms of:- Leading- Premium- Quality

• Especially strong in- Premium segmentPremium segment- Exteriors market

• Well-know Dulux propositions such as Dulux Weathershield, the leading brand for exteriors in the region


Our winning objectives

• Ensure volume and revenue growth > 10%> 10% per annum

• Build to a Relative Market Share of 2.5x to the nearest competitor

• Continued superior profitability from brand, scale, mix and global leverageleverage

• Strong ROIC


Investment centered around the brand and winning the consumer

Mass Market Penetration Embedded Sustainability

Product Offer & Portfolio

Deep Distribution

Brand Visibility

Advertising

Partners & Advocates

One-on-One Interaction

Activation

Colour Delivery

Deep Distribution

Society

Partners & Advocates

Investment


A renewed and focused product offerand portfolio

• Focused product portfolio aligned toportfolio aligned to consumer needs

• Renewed livery across the range

• Regular innovation and renovation

• Simplification and harmonisation of product, positioning and execution


A dramatic and successful entry into the mass market

• Mass market shaped historically by competitorscompetitors

• Benchmarking to find the right price and positioning for entry

• Invest in product quality at the right price

• Leverage the Dulux brand

• “Beauty that lasts” and “easy choice” for consumers

• Dramatic success in Indonesia and Thailand to date


Embedded sustainability in all of our major products

• Low-Odour Low VOC implemented across the productimplemented across the product range and underpinned by the Singapore Green Label Standard

• Weathershield Keep Cool for exteriors

• Dulux Pure air-purifying concept for interiorsfor interiors

• Water-based versions of trim and woodcare products

• Eco-premium % well above 30%


Supported by locally-relevant and specific advertising and activation

• Increased brand investment levels towards 10% oflevels towards 10% of revenue

• Brand campaigns based on global position within a local context

• Deep local activations paround festive painting occasions


Including significant one-on-one consumer interaction

• One-on-one colour design and cons lting ser ices inand consulting services in many markets provide individualised brand experiences

• Rolled-out at scale, visiting and producing consultations for tens of thousands of consumer perthousands of consumer per year with high conversion rates

• Measurable brand and sales impact


LiveryOutdoor Shops

Print

Brand visibility across all touch points

Shops

TintingMachines

Events

TVClubs

Collaterals

Machines

Web Sites Facebook

Clothes

Design CentresSpotlight on Decorative Paints – 1 December 2011 136

Increasing distribution depth and capability

• Increasing numeric and weighted distrib tion be ond o r c rrentdistribution beyond our current 15,000 end points

• Engaging professional distribution partners for large geographies –increasing numeric reach by 15% and weighted reach by 10%

• Improvements see in market shareImprovements see in market share, customer service, distributor stock, range completion, and overdues

• Creating enhanced in-store experiences


Deep delivery of colour through theDiscovery low-cost tinting machine

• Superior colour marketing, le eraging global capabilitiesleveraging global capabilities such as ColourFutures

• Conversion to tinting for colourdelivery, Already over 5,000 tinting machines in place across the region

• The Discovery tinting machine isThe Discovery tinting machine is an important enabler of deep rural penetration into small shops


Building professional partners & brand advocates

• Continued investment in:

- Painters

- Architects

- Professional Specifiers

- Interior Designers

- Developers


And taking the brand into society


An engaged, creative, local team supported by global capabilities


In summary

• The South East Asian and Pacific markets are attractive and offer significant growth potentialsignificant growth potential

• We are the leading Decorative Paints company in the region, with a #1 position in key markets such as Indonesia and Vietnam

• We are re-launching and further developing the Dulux brand to secure long-term leadership for AkzoNobel

• This is an integrated investment program covering our brands, capabilities and people and leveraging on global capabilities for

i i dcompetitive advantage


India & South AsiaAmit JainAmit Jain

Decorative Paints India & South AsiaKey facts

• Revenue: €185 million• 900 Employees at year end• Production Units : 3

2010

16%

Revenue by price tier

• 75 warehouses servicing 7500 retailers nationwide • Strong position in premium segment• Undisputed market leader in Sri Lanka• Main brands Dulux and ICI Paints• India : Publicly listed, AN holding 56.4%, 3 Business Units (Decorative Paints largest)

16%

Revenue by country

62%22%

PremiumMassEconomy

84%

Sri Lanka

India


We operate in the fastest growing decorative coatings market in the world

India & Sri Lanka Decorative Paints Market Progression Th k t i t d t

1,6

2,5

3.1

1

2

3

4Market Progression

(€ billions)• The market is expected to

double in the 5 years from 2009 to 2014

• Growth drivers include:• Buoyant economy• Greater prosperity• Infrastructure

investment• Consumers trading up• GDP/capita increase

CAGR ~14%

0

1

2009 2012 2014

• GDP/capita increase 3.5x by 2020

• This growth rate is sustainable – 75% of the market is for re-painting

Source: Internal Market Analysis Spotlight on Decorative Paints – 1 December 2011 145

The market is trading up to superior products

India & Sri Lanka Decorative Paints Market Progression

• The Indian market is some hat ins lated from the

1

2

3

4Progression

(€ billions)

Premium

somewhat insulated from the global economic slowdown, given the nature of its demographics and economic structure

• The premium segment is expected to grow much faster than other segments due to:• Accelerating middle class

growth• Increasing number of

18%

15%

CAGR

1.6

3.1

0

1

2009 2014

PremiumMassEconomy

Increasing number of nuclear family households

• Rapid rise in income levels• Housing demand and

outlay• Services / manufacturing

10%


Metro vs. Semi UrbanDecorative Paints Market Progression

(€ billions)

Growth is faster in the Semi-Urban Towns segment than in Metros

• One of the main drivers of growth in the semi-urban market is the incentives offered by state agencies to invest in these cities, and the economic prosperity this engenders

• This segment is largely an unaddressed market1

2

3

(€ billions)

Semi‐Urban

18%

CAGR

13%1.6

3.1

• Main operational challenges relate to supply chain / distribution0

1

2009 2014

Metro


100%Market size by segment and by manufacturer

AkzoNobel’s Dulux is a strong # 2 in the Premium market

Ak N b l h100%

Dulux(>20%)

ICI (5%)

Dulux (6%)

BergerBerger

Others OthersOthers

NerolacNerolac

NerolacBerger

• AkzoNobel has a presence in all three of the main segments of the market

• Our highest share is in the Premium end

• We are also a distinct leader in Sri Lanka with

Economy(30%)

Mass(39%)

Premium(32%)

Asian Paints Asian Paints Asian Paints

Source: Internal market analysis

Sri Lanka, with >40% market share


We have a high margin and are growing faster than our competitors

30%Q3 YoY growth %

0%

5%

10%

15%

20%

25%

RevenueGross Profit

* Estimated for non-AkzoNobel companiesSource: Published Quarterly Result

0%AkzoNobel India Ltd.

Asian Paints

Berger Kansai Others Industry

Decorative Paints share of total Revenue*

~90% ~ 90% ~80% ~55% n/a n/a


We are aiming for significant growth

• We plan to increase revenue 2.5x in 5 years while ensuring good margins

We are aiming for a strong #2

Net Revenue(€ Millions)

400

500 CAGR ~20%

• We are aiming for a strong #2 position in the market overall, and a #1 position in the Premium category

• Our strategy is based on three components:

• Being selective about where we will aim to grow (Premium and Mass)

185

~ 340~ 470

0

100

200

300

2010 2013 2015

35%Premium Category Market Share

• Changing the rules of the game in distribution

• Leveraging our global repeatable models in innovation and marketing (Let’s Colour)

20% 24% 28% 30%

0%5%

10%15%20%25%30%

2011 2013 2016 2018Spotlight on Decorative Paints – 1 December 2011 150

Using breakthrough innovation we are creating a new proposition in Premium

• We have leveraged a global innovation to address a clear market need / opportunity

• Weathershield has been certified by India’s Centre of Energy Studies & Research

• It has won the Economic Times Acetech Green Innovation of the Year award

• North Delhi Power Ltd uses Weathershield in its facilities to save on electricity spend

Advertisement…

• 24 of 28 states in India are hot for more than 8 months in a year

• Temperatures regularly reach 40 to 48°Celsius

• Even a marginal respite from heat is of great benefit


Our volume growth with WeatherShieldhas more than doubled since launch

25%

WeatherShield volume growth

10%

21%

10%

15%

20%• We launched the

improved Weathershieldproduct featuring the innovative SunReflecttechnology in May 2010

• As a result we have gained 1% share in the Premium Exterior category in the last 12 months

0%

5%

12 months pre-launch 12 months post-launch

May ‘09 – April ‘10 May‘10 – April ‘11


We are raising the bar substantially in terms of the mass market offering

• The number of middle class households is expected to reach

100 illi b 2015over 100 million by 2015

• This market tends to be treated as one homogenous mass by competitors

• This class is made up of value conscious consumers – they are not willing to compromise on finish, colour and the final economics of usage

• We are addressing this marketWe are addressing this market with new propositions:

1. Promise of great finish, high coverage and no colour fade

2. Magic of emulsion finish at price of distemper (economy paint)

Source: NCAER, SOI, India, EIU market dat, BCG analysis Spotlight on Decorative Paints – 1 December 2011 153

Our mass market launches are growing at 3-4x category growth rates

60%

Dulux Promise Exterior Paint Annual volume growth • We have launched two products in

the mass market this past year

ICI Paints Magik Interior PaintY Y l th

‐3% 5%

60%

2009 2010 2011

€1.50/ltr

Launched Jan 2011

the mass market this past year

• Dulux Promise is growing 3x as fast as the category (mass exterior emulsion), and has gained 1% of market share this year

• ICI Paints Magik has been placed in 50% of retailers in just 3 months, and is present in 700 towns across India (growing 4x as fast as the economy interior market)

YoY volume growth

‐1% ‐11%30%

€1.00/ltr

Launched Aug 2011 Q1 Q2 Q3


Innovation helps us create a product ladder to maintain brand relationship with consumers as they evolve

> € 5

€ 2.50

€3

• We have innovated &

Price per Ltr < € 1

€ 1.30

€ 1.50 • We have innovated &

renovated 70% of our portfolio over last 1.5 years

• We align the brand to consumer needs and then ensure we have the right value equation behind specific offerings at each price point


• More than 500 Semi-urban towns with over 50 million households

• Growing faster than larger towns

We are changing the rules of the game in distribution: expanding our footprint with a differentiated model

• Growing faster than larger towns

• Located far from major warehouses (service a need)

• We are setting-up a ‘Distribution Network’ to expand availability to 400 towns – for the first time in the paints industry

• Pilot Test: 2010 – 2011

• These exclusive AkzoNobel distributors will i 2000 t il tl tservice over 2000 retail outlets

• This raises the customer service benchmark

• AkzoNobel delivers in 1 day versus competitors taking 2 -3 days

• We are building an IT system to manage stocks of our distributors


50%

Semi-urban towns revenue growth(year on year)

Our plan is to grow at double the rate of the Semi-Urban market

21%

35%40%

10%

20%

30%

40%

50%• We entered 200 new towns

in 2011 through 16 new distributors

• We will enter into 200 new towns in 2012 through another 16 distributors

0%2010 2011 Plan 2012


Our growth profile is gaining momentum

35%

Decorative Paints revenue growth(year on year)

30%

25%26%

18%

14%

5%

10%

15%

20%

25%

30%

‐5%

0%

5%

H1 2009 H2 2009 H1 2010 H2 2010 Q1 2011 Q2 2011 Q3 2011


AkzoNobel India shareholder value has doubled in the last 2 years

600Market Value

(€ millions)

200

300

400

500

600 (€ millions)

-

100

Mar/2009 Mar/2010 Mar/2011 Oct/2011

External shareholders

Akzo Nobel


In Summary

• The Decorative Paints market in India & Sri Lanka is very attractive, embedded in a broader economic context driven by demographics and i t l tiinternal consumption

• Within this market, we remain focused on the premium segment while also building share in the growing mass market of South Asia

• Over the past 18 months we have built a strong foundation through

− Innovative product portfolio offering strong & distinct consumer proposition

− Breakthrough service proposition for retail g

− Distribution expansion

• This translates into a profitable growth model which positions the business to grow ahead of market growth rates


China & North AsiaLiangqi LinLiangqi Lin

Decorative Paints China & North Asia Key Facts

• Established in 1990 as a JV with Swire Pacific (AN share 70%)• Revenue: €377 million• 1,600 Employees at year end

2010

1,600 Employees at year end• High profitability with negative OWC• 4 factories (3 in China and 1 in Taiwan) • Leading business in Hong Kong & Taiwan• Strong Dulux Brand

16%

Revenue by channel

31%23%

Revenue by segment

73%

6%5%

Traditional*Modern**ProfessionalProject

31%

28%

18%

PremiumMassEconomyWoodcare & Others

* Small-scale outlets selling to both consumers and professionals** Larger -scale, ‘big box’ retailers, more consumer-oriented


The market for Decorative Paints in China measures some €3.4 billion

• Strong project market d i b i f t t

2010 China Decorative Paints market(€ millions)

Project Market37%

driven by infrastructure investment

• Retail market driven by Emulsion

• Woodcare is shrinking due to increasing of pre-fabrication in wood

• Growth in redecoration will increase market

Retail woodcare

909 Project1.239

Source: Internal market sizing analysis

Retail Market63%

will increase market size

• AN/Nippon relative market share is 0.7

Retail emulsion

1.210

Note: This figure differs from previous market size estimates given because we are now addressing a broader market in terms of cities and projects.Exchange rate: 1 Euro = 9.05731RMB


The central government has imposed measures to cool down the property market

• Extended curbs on home purchases

– 42 more cities imposing property-purchasing restrictions in Septemberrestrictions in September

– Growth turning negative in property transaction volumes and prices

• 5-year residency requirement for Beijing before non- permanent residents can buy

• Central bank interest rate increases

– Further 0.25% in July

– Third rate hike this year fifth since October– Third rate hike this year, fifth since October 2010 (total 125bps)

– Capital reserve ratio raised in June, for the 12th time since 2010


GDP growth expected to remain strong while paints market growth falls behind

12%China growth expectations

• Overall GDP growth in China expected to remain in the high single digits

• Paints market growth expected to be dampened in 2011/2012 and then recover in 2013

0%

2%

4%

6%

8%

10%

GDPPaint market

Note: Paint market includes exterior paints, interior paints, floor paints and roof paints.Exchange rate : 9.05731

Market Size 3358 3428 3528 3775(€ millions)

2010 2011 2012 Est. 2013 Est.

Source: Oxford Economics, China National Coatings Industry Association & Industrial Research Institution with adjustment (1)外墙涂料，(2)内墙涂料，(3)顶棚涂料，(4)地面涂料，(5)屋面涂料


Given challenging market conditions, redecoration is crucial for future growth

60 70%

RMB Billions % of total

Emulsion sales in China by end useAbsolute value and % of total

20

30

40

50

20

30

40

50

60

% Redecoration

0

10

0

10

20

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

RMB New build

RMB Redecoration

% New build

% Redecoration

Source: McKinsey, Synovate, internal analysis Spotlight on Decorative Paints – 1 December 2011 166

Revenue trend

We are investing to accelerate growth and further improve our position in the market

Past – Build the foundation for

growth

Now – Invest and build the momentum to further accelerate

the growth

Future – Sustain the momentum and increase profitability

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015


Paint generalist Woodcare Pre-Deco Other

specialist

We are focusing our investment on fewer, bigger, more powerful brands

• We are continuing to rationalize our brand portfolio to

Consumer –Super premium to Mass(Traditional & Modern channels)

Contractor / Painter (Professional channel)

B2B –

reduce complexity

• We have one major brand for each end user segment that cuts across the main product categories

Super premium to Mass(Project channel)

Consumer –Economy(Traditional channel)


This investment reinforces our mission: Adding Colour to People’s Lives

• We have used high profile, high-impact campaigns in 2010 and 2011 to introduce this mission to a range of stakeholder groups (customers, consumers designers architects and employees)consumers, designers, architects and employees)

• These have consisted of a number of coordinated projects across multiple cities, generating very high impact and driving brand preference


We will improve our position by focusing on a few ‘must-win battles’

• Depth of penetration

– We will aggressively drive increase share in the key high growth citieshigh growth cities

• Win in the mass market

– We will win with Dulux in the dominant mass segment by building winning value propositions for the mass market

• Educate the market & win in Redecoration

– We will grow the market & our share through inspiring people to redecorate and removing the barriers to doingpeople to redecorate and removing the barriers to doing so

• Aggressively grow the Project business

– We will achieve double market growth in Projects through being a professional solution partner for key customer segments


We have extensive geographic coverage across regions and city tiers

Geographic coverage City coverageRevenue by city tier

EastSouthNorthWest

5

Beijing

Chengdu

Shanghai

Guangzhou

36%

29%

27%

8%

Tier 1 (12 cities)Tier 2 (60 cities)Tier 3 (233 cities)Tier 4 (364 cities)

• Regional headquarters in each of China’s four main regions

• Highest growth in China is expected in the West, where we are increasing our capacity and investing in distribution and talent

• Expansive controlled distribution model covering Tier 1 to Tier 4 cities (670 cities)


The Dulux Decorator Center Network of controlled stores is at the heart of our channel strategy

• We initiated a new store design in 2010 to:

– Strengthen color leadershipg p

– Inspire consumers to decorate

– Be more interactive with consumers and enhance conversion rate

– Better integrate emulsion and woodcare

– Be flexible to handle real store situationssituations

• We aim to have ~400 DDC stores by 2016 (from 250 today)

• Overall we plan to expand our distribution from over 4,000 outlets today to ~7,000 by 2016 (with 2000 CSS and 4600 ISS)

Note: DDC is for Dulux Decorator Center; CSS is for ColourSolutions Store; and ISS is for Image Solutions Store


The mass market is the dominant segment in China, with 44% of total value

Market and Revenue by price segment, 2010(€ millions)

44%42%

29% 40%

Premium

3400 377 • AkzoNobel is weighted toward the premium segment

• The mass segment is slightly underrepresented in terms of share of our revenue relative to its share of the overall market

Th k t i th

Note: Total market size includes both urban and rural market and both retail and project channelExchange rate: 9.05731

28% 19%

Market AkzoNobel

PremiumMassEconomy

• The mass market is the fastest growing segment


Dulux is closing the gap with our competitor in the mass segment

• Mass market range (Guardian) launched in 2005 – 10 years after Nippon, though they still have substantial leading position

• Successful launch of Dulux Guardian odorless range in 2007 has gradually closed the gap with Nippon in the mass segment while building leadership in Super Premium and Premium

• Proposition for mass segment is clearly differentiated from Super Premium in terms of product portfolio, city and channel focus, minimizing cannibalization


We aim to win in the mass segment with product, communications & channel initiatives

Integrated communication to

Win in Mass Market

Continuous product innovation & price

rationalization

communication to drive preference &

purchase

Aggressive growth in Mass channel


We are driving the development of the redecoration segment

We will become the market leader in redecoration in both consumer and B2B markets, educating the market and delivering share growth through tailored repainting solutions

To do this we will:

– Grow the market & shorten repainting frequency through powerful & inspiring communication aimed at educating & inspiring consumers (category growth stimulation)

– Lock in those considering redecoration through targeted BTL activity and by providing hassle free, fast and reliable painting service through the Easy Paint Service (Brand p g g y (stimulation)

– Develop differentiated products and ranges designed for the redecoration market

This will all be developed through the Dulux & Dulux Pro Brands


Our Easy Paint service addresses this emerging segment

• A high quality, one-stop painting service from Dulux

Consumers call 400 hotline

400 hotline introduces EP service

• Makes re-painting hassle free and delivers the perfect end result with the minimum disruption

• Operating in 25 cities with highly trained surveying and painting teams

• Removes the barriers for consumers to repaint

Service clerk arranges site visit & consultation

Surveyor gives price & product / colour advice

consumers to repaint• High levels of consumer

satisfactionPainter conducts paint job on site

400 hotline calls back for service quality check


In Summary

• With great brand awareness and an extended distribution network, Ak N b l i ll iti d f l t d th & h iAkzoNobel is well positioned for accelerated growth & share gain– Balanced business portfolio & well positioned to deal with market uncertainty

– Clear focus on key opportunities & growth areas

– Development and positioning of product portfolio remains key

– Continued investment necessary in supply chain, brand & people


Latin AmericaBenito BerrettaBenito Berretta

Decorative Paints Latin AmericaKey facts

• Revenue: €513 million• 1,800 Employees at year end

Coral (Paints) and Sparlack (Woodcare) leading brands in the

2010

4%4%

Revenue by country

• Coral (Paints) and Sparlack (Woodcare) leading brands in the Brazilian Paints Market

• #1 position in Argentina and Uruguay with Alba and Inca brands• 4 production facilities in 3 countries, including the world’s largest

decorative paints factory (Mauá)

12%

Revenue by Channel

74%

18%

BrazilArgentinaUruguayOther

60%28%

Paint ShopsOther IndependentsHome Centers


Brazil is a largely consumer market, with a large share of ‘Mom & Pop’ stores

Brazilian market by value

• Roughly two-thirds of paint is purchased by consumers

• Independent paint shops account for the majority of the market

• Home Centres have a relatively small and stable share of the market

Consumers Paint shops

Builders' Merchants

Home Centres

40%

60%

80%

100%

Professionals

Source: Shopper research (2010)

0%

20%

By end user By channel


Middle class consumers in Brazil are growing as a proportion of the total

Number of consumers in Brazil by household income level

(millions) • The middle class in Brazil (‘C’ class consumers) is growing faster than any other segment

• Drivers of this include:• Sustained GDP growth• Reduced inflation• Government income

redistribution policies

(millions)

Source: IBGE / FGV Spotlight on Decorative Paints – 1 December 2011 182

The Brazilian market is largely driven by emotional / aesthetic considerations

• Roughly 2/3 of our consumers are emotional

Types of decorative paints market

buyers with aesthetic motivations; this is reflected in per capita consumption

• We are positioning ourselves clearly in the aesthetic / renewal space; historically, most brands have focused more on conventional / maintenance drivers.

Maintenance driven

Renewal driven

Emotional

3 litres per it

5-6 litres per capita

• We are aiming to grow the overall market and our own share by leveraging our distinctive brand assets

Conventional

capita

Colour as % of total market

Source: Shopper research (2010) and consumer segmentation research (2008) Spotlight on Decorative Paints – 1 December 2011 183

This fits beautifully with our mission: Adding Colour to People’s Lives


We have developed a powerful program to do this – Tudo de Cor


We started in the Bixiga neighbourhoodof São Paulo in August 2009

Houses painted20p

Employees involved

1502000


Litres of paint2000

We had a champion supporter from the community – Mr. Walter


The results we achieved with this first effort were phenomenal

High quality media coverage

Mayor of São Paulo support

ed a co e ageworth €1 million


Gilberto Kassab

Massive engagement from our people

We have since replicated it in a number of key markets across the countryBixiga‐SP Aug/09

Salvador‐BA Jan/10

Sta. Marta‐RJ Apr/10

Ouro Preto‐MG Oct/10

Florianópolis SC Jul/11

Fundição Progresso‐RJ Nov/09

Olinda‐PE Mar/10

Porto Alegre‐RS Aug/10

Porto Seguro‐BA Feb/11

Fortaleza‐CE Aug/11


We use our own footage of each event to produce TV advertising copy

Florianópolis SC Jul/11


258300

Copy Effectiveness Index Pre-Test

These advertisements significantly outperform the industry average

• People are more likely to58

50

100

150

200

250

Normative range

People are more likely to recall the Tudo de Corfilms than they are most other advertisements

• The advertisement scores extraordinarily high on Persuasion, which reflects its power to drive consideration of the brand in consumers’ next purchase

0Tudo de Cor film Paint market

averageRecall indexPersuasion index

138

187

93

66

• Measured impact of our Tudo de Cor program in terms of press coverage is estimated to be worth 3 TV campaigns*

* 6000 GRPs at 3+ frequency on 55% of coverageSource: Ipsos Next TV Research, Perspectiva, Digital Top Clip


Nearly two-thirds of the shopping decision is made in-store

37%31%

Consumer purchase intention at store entry

Skip

Switch

• Over 60% of consumer purchase decisions can be strongly influenced by the sales attendant’s recommendation in the store (Switch and Undecided consumers)

• This means that winning at the point of sales is the other side of the coin.

B ildi b d it d

32%

Undecided • Building brand equity and winning at the POS must be done hand-in-hand to drive revenue

Source: Shopper research (2010) Spotlight on Decorative Paints – 1 December 2011 192

We are converting brand equity into share growth by winning at the Point of Sale

Strong Brand

Winning at Point of

Sale

Strong BrandMake them

proud

Trusted Partner

Commercial policy

Trade marketing

Driving Customer

Growth

• We have an integrated program that leverages our brand equity with elements on the commercial, product and promotion side

• We are also progressing with our distribution expansion strategy, both deepening our existing relationships and

InnovationUnique

propositions

pbroadening our network


Our innovations have supported our offer across the main segments

Total market by value and by segment

• Coral has a solid position across all three of the major

Premium(~R$20)

Mass(~R$15) Economy

(~R$10)

CoralCoral

Coral

Segment and average price points per litre

three of the major segments, and is particularly strong in Mass

• A specific product offering for each segment allows us to operate across the spectrum while leveraging the benefits of a single brand

Main product offering for

each segment

brand


Our mass market product is the only one to offer up to 500m2 of coverage

• Our ‘Rende Muito’ product has been a great success with retailers and shoppers alike

• The graphic on the left shows the difference between how much can be painted with RendeMuito compared to a competitor product


Our brand equity has improved on every dimension with both shoppers and retailers

Consumer (shopper) brand equity Relative strengths and changes over time

Customer (retailer) brand equity Relative strengths and changes over time

Quality

RelevancePopularity

Solid

ModernMarketLeader

g g g g

20092010

DifferentiationFamiliarity

20082010

ConsumersAsk For It

Leader

A&PSupport

Source: Shopper research (2009 and 2010) and retailer research (2008 and 2010) Spotlight on Decorative Paints – 1 December 2011 196

The program has yielded substantial results in market share growth

20% 21%23%

25%

Coral market share

50%

Absolute revenue growth 2008 to 2011

2008 2009 2010 2011

26%

Market Coral


Financial results have been equally impressive

EBITDA in Brazil

100122

145

185

EBITDA in BrazilIndex 2008 = 100

2008 2009 2010 2011


Community sustainability is an important feature of the Tudo de Cor program


Edimar is a great example, someone who embodies what we are trying to achieve


In summary

• We have a great position in the biggest market in Latin America

• We are accelerating our growth by g g y

– building brand equity through the activation of our mission: Adding Colour to People’s Lives

– converting that brand equity into market share and profit through our superior Point-of-Sale and innovation execution

• The Tudo de Cor program is a compelling repeatable model that taps into a emotional and aesthetic markettaps into a emotional and aesthetic market


Q&A:Keith NicholsKeith NicholsTex GunningJeremy RoweAmit JainLiangqi LinBenito BerrettaBenito Berretta

In Summary – Winning Globally

• Our markets will continue to grow, especially in Asia, Eastern Europe and Latin America

• AkzoNobel is the best placed to benefit from this growth

– We have solid growth platforms in all key markets

– We have a very attractive position in EMEA, the world’s biggest market

– We have the best people, brands and competencies

We can leverage our global scale in way others cannot– We can leverage our global scale in way others cannot

• We will pursue share growth in all major markets, through superior functional execution and with opportunistic market consolidation


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 p p p p p ppshould be carefully considered, and it should be understood that many factors could cause forecasted and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies. For a more comprehensive discussion of the risk factors affecting our business please see our latest Annual Report, a copy of which can be found on the company’s corporate website www.akzonobel.com.


Spotlight on Decorative Paints Amsterdam, 1 December 2011

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