Under the epidemic, mergers and acquisitions are cooling down, and coating giants strengthen their advantageous businesses
Industry integration has always been a key theme in the world's coatings industry. However, due to the relative shortage of funds caused by the COVID-19 epidemic, the current level of integration in the world coatings industry has not recovered. Sherwin-Williams, PPG and Akzo Nobel are all looking for other growth points, seeking to prioritize the development of advantageous businesses. Recently, three coating giants announced their 2020 financial reports. The financial report shows that the performance of their advantageous business is different, but without exception, the performance of the three companies is very impressive.
Sherwin-Williams: Focus on architectural coatings
Sherwin-Williams is the world's largest coatings company. Under the epidemic, the company is particularly focused on the architectural coatings business in the Americas. In 2020, Sherwin-Williams sales will be approximately US$18.4 billion, 70% of which will come from architectural coatings.
Under the epidemic, Sherwin-Williams still has a strong performance, thanks to the company's strong customer base in the professional painter and home builder market in the United States, mainly concentrated on the large-scale store network. Eric Linnack, executive director of IHS Markit, pointed out: “These stores are mainly for contractors and professional painters. Sherwin-Williams provides services to 18 of the top 20 home builders in the United States.” Despite the epidemic, professional paint customers Brings challenges, but overall, Sherwin-Williams architectural coatings demand continues to grow. According to recently released data, Sherwin-Williams Americas sales increased by 2.1% in 2020 to approximately 10.4 billion U.S. dollars. In the fourth quarter of last year, the company's DIY business continued to maintain an unprecedented growth rate, the residential repainting business achieved double-digit growth, the steady expansion of new residential buildings, and the slight improvement in commercial and property management. Overall, Sherwin-Williams net profit increased by 9.1% year-on-year to US$407 million, and net sales increased by 63.4% to US$4.49 billion. The DIY boom has boosted the sales of almost all architectural coating manufacturers. In 2020, consumer brand sales will increase by 14.0% to US$3.05 billion. With the rebound in the U.S. residential construction market, Sherwin-Williams is optimistic about the market outlook this year.
For businesses outside of the American building materials field, Sherwin-Williams still needs to acquire through acquisitions. The long-term goal is to expand through the acquisition of industrial coatings and business outside the Americas.
PPG: Value automotive coatings
Despite the impact of the epidemic, PPG's performance will generally remain good in 2020. Annual sales fell by about 9% to US$13.8 billion, and annual net profit fell by about 8% to US$1.1 billion. In the fourth quarter of last year, the company's sales and adjusted profit again showed year-on-year growth, reaching 3.76 billion US dollars and 272 million US dollars respectively. For PPG, the new automotive coatings business has always been its business focus, and under the influence of the epidemic, this has become even more important. PPG has always been a global leader in the field of automotive OEM coatings. The development of new technologies, together with the industries it serves, can help the company maintain this position. Under the epidemic, PPG is particularly focused on coating materials for electric vehicles and autonomous driving systems, including lithium-ion battery packs and sensor-specific reflective coatings, which are also an important part of the company's product development work.
In addition, PPG did not relax the opportunity to expand its strength through business acquisitions. From the end of last year to the beginning of the year, as the economic situation improves, the company has made 4 business acquisitions. In November last year, the company acquired Ennis Flint, a manufacturer of transportation coatings, for $1.15 billion. In January of this year, PPG announced the acquisition of industrial coatings manufacturers Worwag and VersaFlex, adding new end markets and technologies. The largest transaction was the US$1.8 billion acquisition of Nordic decorative paint manufacturer Tikkurila, which was finally sold in early February. This enhances the company's market position in Northern and Eastern Europe.
Akzo Nobel: Committed to diversified growth
Akzo Nobel is also one of the leaders in the coatings industry. The financial report shows that in 2020, the company's net profit will be 630 million euros and sales of 8.53 billion euros. Like PPG, the company is diversified in the development of coatings business, manifested in the full bloom of a variety of products in multiple regional markets. Akzo Nobel's decorative coatings business revenue in the fourth quarter of 2020 increased by 4% year-on-year to 901 million euros.
Akzo Nobel CEO Thierry Vanlancker said: "Our transformation is only halfway through. Akzo Nobel's new Grow & Deliver strategy marks the second phase of the transformation plan that began in 2017 to achieve the goal of doubling profits. The company’s transformation strategy began in 2017. Its main goal is to narrow the profit gap with its peers and become a company that truly focuses on coatings.” Despite the impact of the epidemic, the company achieved a return on sales (ROS) last year. 15%, return on investment (ROI) more than 20% performance.
In 2020, Akzo Nobel will continue to be active in the M&A market. In September 2020, the company acquired the high-performance powder coating business of Stahl in the Netherlands and its thermal-sensitive substrate series products. In October, it acquired the decorative coatings business of Spanish Industrias Titan, and in December, it acquired yacht coating production. Enterprise Seahawk. The company said that from 2021, the company will turn to business growth while further improving profitability.
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