Paint companies report worldwide downturn

The world’s major paint refinishing companies have all reported declining results as they wrap-up activities for 2009.

The BASF Group’s automotive refinish is part of the coatings division within the "functional solutions" segment of the organisation which reported a fall in sales as a result of a dramatic decline in demand from the key customer industries – construction and automotive.

The coatings division however increased earnings as a result of better margins and cost cutting measures.

Sales in the coatings division in 2009 were €2163m ($3243m) a decrease of €333m ($500m)compared with 2008

The overall decline in demand in the economy affected all product lines in Europe North America and South America. Lower sales resulted in particular from the deterioration in the market environment for the automotive industry in Europe and North and South America as well as the company's divestitures in its industrial coatings activities in North America in 2008.

The rapid recovery of the automotive industry in China led to sales growth for automotive coatings in Asia.

In contrast as a result of the difficult business environment we posted a slight decline in sales of automotive refinish coatings.

Demand for coatings for tractors and other agricultural machinery weakened dramatically.

Income from operations exceeded the previous year's level because we were able to reduce fixed costs through personnel adjustments and strict cost discipline while margins remained stable.

Special items were lower overall than in 2008.

They were related to restructuring projects in Europe and Asia: Here we responded to changing market conditions by selling our production sites in Ako Japan and Verbania Italy.

In addition to these divestitures we optimized internal processes and streamlined our product portfolios.

Akzo Nobel’s worldwide car refinish sales were down 12 per cent. Total revenue in 2009 was down to €809m ($1212m) as a result of volumes but this was partly compensated by strong margin management and favourable mix effects. It reported volumes in the last quarter of 2009 improved.

The company reported that in the vehicle repair business, the mature markets saw a significant reduction in miles driven and a corresponding reduction in repair claims causing continued overcapacity in the repair market.

In Europe the commercial vehicle segment experienced a recovery in the fourth quarter with volumes above the previous year.

In the fourth quarter, demand in the vehicle repair segment in Western Europe and North America remained stable compared with earlier quarters while in the high growth markets signs of recovery were visible.

In Asia demand mainly grew due to higher volumes in the Chinese vehicle repair and commercial vehicle activities.

PPG’s 2009 results revealed a drop in the company’s Performance Coatings sales to $US621m ($682m) or 13 per cent in 2009.

Sales declined as a result of lower sales volumes, particularly in the automotive refinish business and architectural coatings used in the Americas and Asia/Pacific businesses.

The volume decline in automotive refinish was most pronounced in the U.S. and Europe while the decline in architectural coatings was mainly in the U.S. and Latin America. Weaker foreign currency also reduced sales by three per cent, however, sales increased three per cent as a result of improved pricing.

DuPont was the same, reporting a 21 per cent drop worldwide for its performance coatings.

In 2009 and 2008 the segment experienced a significant decline in sales mainly to the OEMs markets due to the impact of the global economic recession in the automotive industry.

In addition the North American automotive industry continued to experience structural changes including the loss of US market share by US automakers.

In its report, DuPont highlighted that in 2009 the global production of automobiles and light trucks declined by 14 per cent, reflecting declines of 33 per cent in North America and 10 per cent in the rest of the world which was partially offset by an increase in production of 44 per cent in Greater China.

The industry production forecast for 2010 projects a global increase of about nine per cent with increased production in all regions.

DuPont reported sales of $US3.4b ($3.7b) by Performance Coatings, down 21 per cent when compared with 2008.

The decline in volume reflects the impact of fewer motor vehicle and industrial truck builds of motor vehicle OEMs and lower sales of industrial and after-market products in all regions.

Sales to OEMs improved substantially during the second half of 2009 mostly due to the impact of government incentives programs and higher sales in Asia Pacific.

For 2010 the segment expects sales increases that will exceed the OEMs build growth due to expected recovery of OEMs and light truck markets and positive currency impacts.