Changing of the guard: PPG No. 1 in 2014
PPG generated record sales in 2014 and also made a number of acquisitions. In this regard, the acquisition of Mexican company Comex (architectural coatings) for the equivalent of 2.1 billion euros was the second largest investment in the company's history and catapulted PPG into the number one slot in this important growth market. Further acquisitions included Hi-Temp Coatings Technology, Canal Supplies (both protective and marine coatings), and the Homax Group (architectural coatings). It would seem that PPG couldn’t put a foot wrong and is looking ahead to the current year with confidence and ambition: “As we look forward into 2015 we expect sales of our coatings businesses to approach 95 percent of PPG’s total sales”, said Charles Bunch, outgoing Chairman and Chief Executive Officer (to be succeeded from 1 September 2015 by Michael H. McGarry as PPG’s new President and CEO) in the 2014 annual report.
2014 was quite challenging for Akzo Nobel
Until the recent divestiture of its North American coating business, Akzo Nobel was the world’s largest paints and coatings company. In 2014, Akzo Nobel managed to grow its volume, but not its sales: decorative paints experienced a decline from 4.174 billion euros (2013) to 3.909 billion euros. Jeffrey Stafford, Senior Equity Analyst at Morningstar, noted in his analysis at the start of the year: “Recently, Akzo has struggled because of less-than-ideal end-market and geographic exposure. As a paint producer, the firm is heavily leveraged to the housing and construction market, which provides roughly 45% of company revenue. This market has hit a rough patch over the past few years, limiting Akzo's ability to grow. Further, heavy exposure to Europe has dented Akzo's growth and will probably continue to do so for at least the medium term, as the European recovery has been slow.”
Lack of growth in Euorpe
Ton Bücher, CEO at Akzo Nobel, has acknowledged the challenges that arose last year. “For the full year we achieved further improvements in our operational performance, visible in our return on sales and return on investment levels. The introduction of several commercial excellence initiatives will help us drive organic growth going forward. 2014 was challenging, evidenced by negative currency effects, a continued lack of growth in Europe and a slowdown in some of the Asian and Latin American economies.” You can find the AkzoNobel annual report here:
I'm curious to see how the race to be the world's largest paints and coatings manufacturers continues to unfold. As always, it will be a question of which company has the better growth strategy. Keep an eye out for third-placed Henkel – with sales of 9.22 billion euros, it is hot on Akzo’s heels.
Strong European companies
Further European companies among the world’s top 20 are BASF Coatings, Germany (3.29 billion euros; 8th place), Sika, Switzerland (2.63 billion euros; 10th), Jotun, Norway (1.63 billion euros; 16th), Hempel, Denmark (1.588 billion euros; 17th) and DAW, Germany (0.92 billion euros; 19th).