17. Mar 2021 | Markets & Companies
“Strong platform for continuous growth for the entire South & East Asia region”
Danish coatings manufacturer Hempel has signed a purchase agreement for the acquisition of Australia-based Wattyl. As Hempel CEO Lars Petersson explains, this step is part of the company’s growth strategy for South and East Asia.
Hempel is “going for leadership positions in selected segments and geographies”. Why have you decided to expand your footprint in Australia and New Zealand?
Lars Petersson: As a company, we are aiming to double our revenue to EUR 3 billion by 2025. As part of our growth initiatives, we want to increase our presence, scale and production in South & East Asia. Wattyl runs a proven business model and the acquisition enables us to establish local production and distribution in Australia and New Zealand, as well as strengthen our portfolio and customer base.
With Wattyl as part of Hempel, we will create a strong platform for continuous growth for the entire South & East Asia region. The acquisition of Wattyl is in line with our Double Impact strategy and our growth ambitions for our Decorative segment as well as our Infrastructure and Energy segments. These segments are strategic focus areas, where we are going for market leadership positions. We expect that by 2025 more than 50 % of our total revenue will be generated in markets where we have a leading position.
How do you rate the market for decorative coatings in that region?
Petersson: Wattyl operates in an attractive decorative market in terms of both interior and exterior paint solutions. We anticipate steady growth in the market over the coming years and see this as an opportunity to build sales even further.
Hempel is relatively new in the decorative coatings business. To what extend has this business unit developed in regard to your expectations?
Petersson: Hempel has been a leading decorative brand since the early 1980s, with our own stores across the Middle East. With the acquisitions of UK-based Crown Paints in 2011 and German paint manufacturer J.W. Ostendorf, including Renaulac in France in 2018, Hempel established a strong foothold on the European decorative paint market. By adding well-known brands with many years on the market, we have gained a wealth of experience and maturity, which has driven the success of our decorative segment. We are profiting from extensive market knowledge, expertise and skills in both the branded and private label business.
Last year, our Decorative segment generated EUR 512 million in revenue and organic growth of more than 11 %. Growth was driven by strong demand in the Do-It-Yourself (DIY) segment across Europe, as the global pandemic gave many consumers time to decorate and improve their homes. Overall, we are satisfied with the current development in our Decorative segment, and we are looking forward to expanding it further with Wattyl Australia and New Zealand.
What potentials do you see for the protective coatings segment through that acquisition?
Petersson: Today, a small Hempel team serves our customers in Australia and New Zealand. Both markets are important for us, and we support and serve a number of major customers in the region.
With the acquisition of Wattyl, we are strengthening our footprint in these countries, which will allow us to grow our protective coatings segment even further and serve our Protective customers even better. Wattyl gives us access to nearly 100 stores and strategic distribution partnerships serving DIY and trade consumers, as well as local manufacturing capacity. This will shorten our lead time significantly.
We also believe that, combined with Wattyl Protective/Pro, we can bring even more quality and trusted solutions to our customers in Australia and New Zealand. Both existing and new Wattyl and Hempel customers will profit from a wider product assortment, better end-to-end solutions, and our continuing focus on sustainability, digitalisation and innovation.
The goal to double your revenue within five years to EUR 3 billion is ambitious. Will you only rely on acquisitions to achieve your target, i.e. we will see more purchases in the next period?
Petersson: To reach our goal outlined in Double Impact, we need to have a strong focus on growing organically through segment leadership and strategic growth initiatives. This will enable us to increase investment in innovation and capture the benefits of a scalable organisation, so we can develop the next generation of sustainable coating solutions and remain relevant to customers.
Additionally, we will grow through acquisitions. For example, the acquisition of Wattyl Australia and New Zealand will allow us to expand our decorative and protective businesses in new regions. In terms of acquisitions, we are prioritising companies that align with our strategy and are a good match with the Hempel culture and our goals for sustainability. As well as traditional coatings companies, we are also looking at leading suppliers of new technology or digital solutions. We are actively scouting the market for suitable candidates, and I hope to be able to welcome more companies in the near future.
This interview is part of the Top Industry Move article in the March issue of the European Coatings Journal.
More on the Asian coatings market
If you are interested in major asian markets and what regulations you have to comply with to conduct successful business there, have a look at the EC Webforum Regulations - Navigating chemical legislation in Asia. Aside from China you will get insights into important regulations in Japan and South Korea.
EC Tech Report Sustainability
Making coating systems more environmentally compatible is a burning issue for everyone in the industry, and one that is being fuelled by the European Green Deal. Learn all you need to know about sustainable coatings, how to produce coatings in a more environmentally friendly way and how to give coated products a longer service life. You will find an overview in the EC Tech Report of the many various approaches being adopted. We will dive deep into the European Green Deal, its key points and main purpose as well as consequences for the coating industry, see which new raw materials are being developed to replace or lower the content of products in the SVHC group and learn about different approaches to sustainable paint formulation.
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