Welcome to Morgan Stanley Shanghai, 27 September 2010… · its biggest overseas developed country...
Transcript of Welcome to Morgan Stanley Shanghai, 27 September 2010… · its biggest overseas developed country...
• China at a glance
• AkzoNobel in China
• Q2 2010 highlights
• Decorative Paint
• Performance Coating
• Specialty Chemicals
• Outlook
Agenda
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Economic forecast up to 2020
• China will maintain its position as the world’s second
largest economy in 2020, with a GDP of 21 trillion USD.
GDP per capita will quadruple in comparison to 2000,
rising to 15,600 USD at market exchange rates.
• During the first half of the next decade, China will suffer
from the after-effects of its massive stimulus package.
• China’s export-orientated economy up to around 2015 is
likely to be affected by continuing financial turbulence in
its biggest overseas developed country markets
• Whilst China will have one of the largest and most
closely watched consumer markets,
• Expect coastal provinces to move up the value chain,
concentrating on service industries, as manufacturing
companies relocate inland.
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We expect economic structure to be more similar to developed countries by 2020
0
2,000
4,000
6,000
8,000
10,000
Real GDP
(Bn USD)
Private
consumption
Gross
investment
Government
consumption
Net exports8,017
47%
36%
5,782
37%
46%
3,793
35%
46%2,303
38%
43%1,458
44%
37%
2000 2005 2010 2015 2020
1. In constant 2005 USD termsNote: Gross investment includes both government Fixed Asset Investments and private investmentsSource: EIU, OECD, BCG analysis
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China market evolving rapidly as economy grows
20082009 2020
Cities / counties with 100,000 or more middle class and
affluent consumers Number of cities
2010
2015
2020
247
576
851
Source: BCG proprietary China Income Forecast Database
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Middle
Market
Low-end
The challenges in the Middle Market
Typical focus of local
competitors
• Low cost “local” value
propositions, low-end
technology, and business
models
Intense battle between
global companies moving
down and local companies
moving up
Top
Segment
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Typical MNC entry point
• “Global” value
propositions, technology,
and business models
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Strong high-growth markets potential
Source: Food & Agriculture Organization of the UN, 2005 data for paper and paperboard; Plastic Europe Market
Research Group (PEMRG) 2005 plastics data; Euromonitor 2007 coatings data; WorldBank population data
Paper
Plastics
Industrial and
Special Purpose
Coatings
Architectural
Paint
High-growth
Per Capita
Mature
Per Capita
8 liters
13 liters
< 2 liters
< 6 liters
~100 kg ~20 kg
~25 kg~170 kg
• China glance
• AkzoNobel in China
• Strategic ambitions and action plans
• Q2 2010 highlights
• Decorative Paint
• Performances Coating
• Specialty Chemicals
• Outlook
Agenda
8
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AkzoNobel in China
Performance Coatings
• AkzoNobel is the largest paint and coatings company in China
• 14 Production sites in China
• Activities: West to East gas pipeline ,Shanghai International Airport, Beijing 2008 Olympic Swimming Center, National Indoor Stadium,Qingdao International Sailing Center, Beijing Olympic Convention Centre
Decorative Paints
• AkzoNobel is the fastest growing decorative paints company in China
• 3 Production sites in China
• Well-known “Dulux” brand owned by AkzoNobel is one of the leading brands in decorative paints
Specialty Chemicals
• 6 Manufacturing sites in China
• Multi-site in Ningbo (€275 mln investment)
• Inauguration Industrial Chemicals site Taxiing, April 8
China GDP vs AkzoNobel Growth
The numbers are not adjusted for ex rate changes over the years 10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2012 2015
AkzoNobel Development vs Chinese GDP
AkzoNobel
GDP
AkzoNobel take
over of ICI
1.5 Bn US$
M&PC and
Wood l
New Vision
3Bn US$
Some
250 mill
US$
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AkzoNobel key facts
2009
• Revenue €1.044 billion (€1.054 billion in 20080
• 6.300 employees
• EBIT: €163 million (€144 million in 2008)
Revenue by business area
32%
35%
33% 32%
27%
41%
27%
48%
25%
Revenue 2009
Decorative Paint
Performances Coating
Speciality Chemical
2010
•We forecast a growth well above the GDP for the year
keeping us on course for the 2015 target
AkzoNobel in China
Decorative Paints
Performance Coatings
Specialty Chemicals
Guangzhou, Dongguan 广州,东莞
Suzhou
苏州
Shanghai 上海
Langfang
廊坊
Beijing 北京
Shenzhen 深圳
Ningbo
宁波Jiaxing
嘉兴
Tianjin 天津
Chengdu 成都
Taixing 泰兴
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Plants and Warehouses Mapping
Harbin:
Warehouse for Deco
Sheng Yang
1 OEM plant
3 warehouses
BJTJLF:
4 AN Plant
1 OEM plant
7 warehouses
Ji Nan warehouse for
Functional chemicals
Yan Tai warehouse for
Powder coating
Ning Bo
5 plants for multi BUs ,
1 warehouse
SHSZJS:
10 AN plants
3 OEM Plants
14 Warehouse
YZTX
2 AN plant, 3OEM Plant, 2
warehouse
Wu Han
1 AN plant
2 warehouses
GZDGSZ
5 AN plants
2 OEM Plant
9 warehouses
Wu Lu Mu Qi
Warehouse for Deco
Xi An
1 OEM plant for Deco
Warehouse for Deco,
Cheng Du
1 AN plant
1 OEM plant
2 warehouses
Chong Qing
Warehouse for Functional
Chemicals
Kun Ming
Warehouse for Deco
Yin Chuan
Warehouse for PC
NDG DG Total: 28 AN plants, 12 OEM plants, 48 delivery warehouses( if two location for one company/BU it counts only one) 13
• China glance
• AkzoNobel in China
• Q2 2010 highlights
• Decorative Paint
• Performances Coating
• Specialty Chemicals
• Outlook
Agenda
14
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Highlights in China 2010
15
• We expanded our MCA factory to 60,000 Tons in Taxing
• We started Chelates production in Ningbo (new multi-
site)
• We established a R&D Center for Powder Coatings in
Ningbo
• Science Award to China partnering with Chinese
Chemical Society in July
• We announced the New China Target in July
• Car Refinish acquired Prime in September
• We continue to invest to build the Ningbo project
Polymer investment some 25Mill Euro in July
• We will official open Ningbo 8 November
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Decorative Paints China
• Established in 1990, first JV with Swire Pacific
• 3 Factories and 7 Regional Sales clusters, +1,300
employees
• Key Player in Decorative Paint Market
• Channel: Traditional Trade, Modern Trade & Project
• Consumers: BIY, DIY, HID
• Category: Emulsion, Woodcare, HPC & Pre-Deco
• Major Competitor: Nippon
• Our Mission: we bring color to peoples lives
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• 10 years consecutive growth at over 3X market pace.
• Highly profitable. Negative operating working capital.
• Superior DULUX brand innovating Super Premium to
Mid Tier.
• Expansive Controlled Distribution model covering Tier1
to Tier 3 cities;
• Traditional, Modern, Projects channels.
• Managed by a highly capable team accustomed to
“winning”.
• Business Conduct/Control/SSHE standards and
performance are high.
Decorative Paints China
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Our Brands
• DULUX is the flagship emulsion and woodcare brand both in retail (Dulux) and project channel (Dulux Pro)
• MAXILITE is a economical emulsion brand
• LEVIS is the key retail brand of both emulsion and woodcare focus on professional customers
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Geographic Presence
• 3 Factories
• Shanghai
• Guangzhou
• Lang Fang
• 7 Clusters
• East – Shanghai
• South – Guangzhou
• West – Chengdu
• North – Beijing
• Central – Wuhan
• NorthEast – Shenyang
• NorthWest – Xian
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Our Business Portfolio
Traditional TradeModern Trade
Professional
Project
Channel
Our business is retail
focus with majority
business contributed by
Traditional Trade,
particular the Dulux
Control stores.
Premium
Mid-Tier
Low-End
Woodcare &
Others
Products
We have a balanced
product portfolio to
meet difference
customer’s need with
focus on Premium
segment.
Tier 1
Tier 2
Tier 3
Geographic
We have covered +600
cities in China, focus on all
T1, T2 and big T3 cities.
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Accelerated Control Store ExpansionSome Key Initiatives
• For end consumers,
DDCN (Dulux
Decorative Centre
Network) is a trusted
place to experience
Dulux brand
promises through
simplified paint
purchase process,
decoration
inspiration,
simplified color
decisions and post
sales services
Store positioning:• Store design follows the consumer shopping
route of Inspiration, Visualization, Selection,
Service
Visualization
Service
Selection
Inspiration
Double the number of our Dulux Control Stores in 5 Years
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New DDCN design will be deployed in H2 of 2010
Initiated the new store
design in 2010 to:
• Strengthen color
leadership
• Inspire consumers
for decoration
• Be more interactive
with consumers and
enhance conversion
rate
• Better integrate
emulsion and
woodcare
• Be flexible to handle
real store situations
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Easy Paint Service Some Key Initiatives
Differentiate
service
content
• Create new business opportunities by speeding up the
repainting cycle
• Value-added and differentiated service offering incl:
- Aesthetic finish eg. Wall drawing
- Color consultant service
- Air quality check service
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Performance Coatings 2010
• Marine and Protective coatings are expected to have a
tougher year in 2010 following many years of high growth
• Wood Coating and Adhesive are back to a growth pattern
after the collapse of the US housing market (export
furniture) and are making some inroad to the local market
• Industrial Coating are having good growth in packaging
and other segment
• Car refinishing will have a very good and busy year with
the latest acquisition
• Powder will also have a good year
* Industrial finishes have been reorganized to Coil and Extrusion Coatings, Specialty Plastic
Coatings and Packaging Coatings.
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Specialty Chemicals 2010
• Industrial Chemical is active in our MCA business set to have
a very good year
• Functional Chemical is also looking out to a very good year
and the milestone in the Ningbo opening. This is their key site
• Pulp and Paper is also set for a good year (special
presentation) and are adding new capacity in GZ
• Surfaces Chemistry have recovered from some early supply
issues and are on market for growth in 2010
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Eka is a very strong brand in the global
pulp and paper industry
Biggest brands, per business area - % of 2009 revenue
18% of Specialty Chemicals
23% of Performance Coatings
25% of Decorative Paints
• China is No.1 paper global producer – overtook US in 2009
• 2010 China paper capacity – 86million tpa
• Apparent consumption – 66kg/person/year
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Eka in pulp and paper
Coating
AZC
Rheology
modifiers
Defoamer
Coating
Wet & dry
strength
High filler
Paper machine
Water treatment
Colloidal
silica
Polymers
Starch
Purate® microbiological control
Polyaluminum chlorides
AKD
Rosin size
ASA
Surface size
Retention Sizing StrengthFunction
Products
Application Pulp manufacturing
Sodium chlorate
Chlorine dioxide
Hydrogen peroxide
Sodium hydroxide
Emulsions
Soaps
Bleaching Deinking
Pulp
Recycled fiber
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Wet-end
• Compozil retention/drainage
• Sizing
• Dry/dry strength high filler
• Purate biocide
• Defoamer
Press section Coating
• Cross linking
• Rheology modifiers
• Defoamer
Dewatering
Water treatment
Dryer section
• Surface sizing
The paper machine
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Eka in China
Eka Chemicals (Suzhou) Co. Ltd
Located in Suzhou Industrial Park (SIP)
Started operations in 1999
98 fulltime employees:
Production capability; Eka CR/DR, EkaAZC, Purate & Expancel
R&D & technical service labs
Eka Chemicals (Guangzhou) Co. Ltd
Located in Guangzhou Economic Technology Development District (GETDD)
Started operations in 2006
34 fulltime employees:
Production capability; Eka CR & Eka DR
Eka NP project : 2010-2011
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Guangzhou silica sol project update
Colloidal silica sol for Compozil system
– our core competency
Global technology leader – must protect IPR
Strategic project to meet future domestic demand &
secure regional supply needs
GZ site location critical due to proximity of future large
integrated paper mill projects
Initial capacity – 26,000tpa. Expect to double capacity
within 5yrs
1st pile driven June 13th, 2010
Target to start production March 30th
Project on-time and under budget
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China strategy overview
- continuous customer driven innovationFocus on modern Chinese paper industry & new projects
Segment & target customers where technology fit is strongest:
Coated and uncoated fine paper – top priority
White/coated cartonboard – 2nd priority
Liner/medium – 3rd priority
Focus on our core competencies & innovative technologies with sustainable competitive advantage and/or patent protection
Priority is Compozil, Sizing, Coating & Purate sales
Establish local production positions for Eka NP in Guangzhou
Explore opportunities for local production of AKD, ASA & chlorate
Utilise world class supply chain and industrial IT – Eka VMI
Train, develop, motivate and retain our key people
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09/03/2010 Winner of the 2009 AkzoNobel RD&I
Innovation Award announced.
BU Pulp & Paper’s Compozil Fx has pipped Decorative Paints’ Ecosure and Car
Refinishes’ HS Clearcoats to win this year’s AkzoNobel RD&I Innovation Award.
The panel, comprising Bob Taylor, Frank Sherman and Jeremy Rowe, Jenifer
Midura, Andre Veneman, and chaired by Graeme Armstrong, had a tough time in
picking an overall winner. “We were impressed by all three BA Award winners,
said Graeme, “And it was only the sustained growth of business that Compozil Fx
has achieved over the past three years that differentiated it as the overall winner.”
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10yr outlook - target market segments
2638
17
30
25
13
23
10
0
20
40
60
80
100
120
2010 2020
Pro
du
cti
on
cap
acit
y,
mtp
a
Coated fine paper
Uncoated fine paper
White/coated board
Liner/medium
* Expect strong growth for size, retention, coating & biocide
130% growth
92% growth
76% growth
46% growth
Customer segmentationStrategic customers - A
• Already classified as BU strategic account
• Sales potential >3m€ pa in SBU or BU
• Good technology fit with our product portfolio
• Value Eka as preferred & important supplier
• Must have expansion plans for new capacity
• Acceptable payment history
APP, APRIL, UPM, Stora Enso, L&M, IP/Sun & Oji
Key
Selection
Criteria
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APP Gold East PM3 - world’s fastest
fine paper machine runs Compozil
• Gold East - 2,300,000tpa
coated fine paper output
• Compozil Fx account
• PM3 output 800,000tpa &
1,800m/min world record speed
• Startup May 2005
• New target – 2,000m/min
• Innovation targets & projects;
Eka NP 2180
On-site G-PAM dry strength
Purate
PCC high filler system
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UPM Changshu – success story
PM1 started up 2005 – 500,000tpa
Worlds 2nd fastest fine paper machine –
1710m/min
Took Compozil business in Jan 2009
Innovation targets & projects:
1. Purate biocide target
2. GCC high filler project update:
– Trial on offset grades in mid Oct
– Major drivers; energy & fibre savings
– Target 3-4% filler increase
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APP Jinhai – worlds biggest paper machine
• Hainan Island – integrated pulp & paper
• 1,600,000tpa coated fine paper – Voith
• 1,800m/min design speed
• 11.7m width
• Stock on wire – April 20th 2010
• Sheet on real – May 18th 2010 at 18.18
• Other product/innovation opportunities;
Coating
GCC high filler
Dry strength
Purate
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Eka Purate innovation & strategy
Suzhou production with local RM’s for lowest VMC
New patented ClO2 innovation
Leverage big Compozil accounts as primary targets:
– Target large fine paper machines >100ktpa
– Strong established relationships
– Detailed knowledge of customers wet end
– Cost SAR cost due to existing service cost
Strongly market – Compozil Fx/Purate synergy
Target generator fabrication in China to achieve:
– 50% cost reduction (<50keuro)
– Reduced lead times
– Fully protect IPR
– Maintain existing quality and safety
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The world’s best paper
machines run Eka’s Compozil Fx!!
UPM Changshu PM1 APP Gold East PM3
APP Hainan PM2 Oji Nantong PM1
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• China glance
• AkzoNobel in China
• Q2 2010 highlights
• Decorative Paint
• Performances Coating
• Specialty Chemicals
• Outlook
Agenda
45
4646
AkzoNobel values
• Focusing on our customers’ future first
• Embracing entrepreneurial thinking
• Developing the talents of our people
• The courage and curiosity to question
• Integrity and responsibility in our actions
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AkzoNobel Chemical Sciences Award in China
• Commitment to investing in research and in business
infrastructure we have more that 500 scientists and
technical support staff working in China
• Ambition to connect with Chinese scientist communities
and promote science advancement in China
• This new award was well received in China we had good
coverage of the event
• The Science award is in Partnership with Chinese
Chemical Society
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Our sustainability commitment has been recognized externally
2004 No ranking
2005 Top 10%
2006 2nd Place
2007 Super sector leader
2008 Joint 2nd place
2009
2010
2nd place
Super sector leader