Top 10 Most Influential News in the Coatings Industry in 2024

Against the backdrop of the global coatings industry facing multiple uncertainties such as slowing world economic growth, high inflation in developed countries, geopolitical risks, rising energy costs, and intensified market competition, international coating giants are experiencing a challenging period. To maintain market position and competitiveness, they have adopted a series of measures, including selling businesses, divesting assets, closing factories, laying off employees, and bringing in strategic investors, with a particular focus on enhancing profitability.

At the same time, Chinese coating companies are striving to improve product quality and expand export shares amid a domestic market demand slump, overcapacity, and intensifying competition. They are also actively accelerating their internationalization efforts, including establishing manufacturing bases overseas. Whether through overseas investment in factories or exporting coating products, it shows that Chinese coating companies are consciously and actively expanding into international markets. Looking ahead, with further deepening layouts and continuous efforts in overseas markets, there is hope for a new round of growth in corporate performance.

To comprehensively review the development status of the global coatings industry over the past year, the professional financial media "Coating Industry" in China has selected 10 significant news events. These events include: “Kelly-Moore Stops Operations,” “PPG Sells Architectural Coatings Business in the U.S. and Canada,” “Hempel Sells 30% Stake to CVC Fund,” “AkzoNobel Plans to Sell Assets or Lay Off Employees and Close Factories,” “BASF Releases New Strategy and Plans to Sell Parts of Coatings Business,” “U.S. PPG Plans Layoffs and Factory Closures,” “Nippon Paint Acquires U.S. AOC for $2.3 Billion,” “Sherwin-Williams Replaces Dow in the Dow Jones Industrial Average,” “Chinese Coating Companies Actively Expand Overseas Markets,” and “The World’s First $100 Billion Valued Coatings Company is Born.”

In January, foreign media reported that Kelly-Moore Paints, a major independent paint company in the U.S. established in 1946 with annual sales exceeding $400 million and over 1,200 employees, has ceased operations and is orderly winding down all its businesses. The company faces cash flow loss due to asbestos legal settlements, legal liabilities arising from existing ownership, and supply chain challenges, which together have made it impossible for Kelly-Moore to secure funding for ongoing operations.

For nearly 20 years, Kelly-Moore has been troubled by asbestos claims, bearing a heavy debt burden. Over the past 30 years, the company has dealt with more than 48,000 asbestos-related lawsuits and paid $600 million in settlements. Nevertheless, the company anticipates facing an additional $170 million in asbestos lawsuit claims in the future.

In October 2022, Kelly-Moore was acquired by private investment firm Flacks Group, becoming part of its industrial companies and manufacturers portfolio. However, just over a year later, in January 2024, Kelly-Moore announced it was ceasing operations, closing its 157 stores and laying off 700 employees. By May 15, the Grupo Sayer paint company announced the successful acquisition of Kelly-Moore's intellectual property assets, marking Grupo Sayer's full takeover of all intellectual property of the former Kelly-Moore Paints, including trademarks and formulas.

On February 26, PPG Industries announced that it had hired Goldman Sachs as a financial advisor to review strategic alternatives for its North American architectural coatings business. Subsequently, on December 2, PPG announced the completion of the sale of all its architectural coatings businesses in the U.S. and Canada for $550 million to American Industrial Partners (AIP). This sale involved seven production bases in the U.S., two bases in Canada, 12 distribution centers, and over 15,000 distribution points, including 750 company-owned stores, 6,600 independent distributors, and 8,100 major home improvement centers and retailers. PPG emphasized that it still holds the number one or two position in major countries in Latin America, Europe, and Asia-Pacific, and these businesses remain core to the company's portfolio.

PPG's Chairman and CEO Tim Knavish stated that this transaction and the sale of its silicone products business will help improve the company's organic growth and financial return, optimize the portfolio, and enhance the company's ability to direct growth resources to areas most likely to win customers.

The Hempel Foundation and the Hempel board reached an agreement to invite CVC Fund to become a minority shareholder in Hempel to assist Hempel in accelerating its ambitious long-term organic and inorganic growth strategy. The Hempel Foundation will continue to be the majority shareholder. Hempel will benefit from CVC's experience in investment, organic growth, and strategic acquisitions. CVC will subscribe to new shares, ultimately holding up to 30% of Hempel. This investment will also strengthen Hempel's ability to develop new cutting-edge sustainable technologies, seize potential acquisition opportunities, and accelerate its pace of development to become a global leader in the coatings industry.

Hempel launched its "Double Impact" strategy in 2020, proposing an ambitious goal to double its sales revenue to €3 billion by 2025. To accelerate the achievement of this strategic goal, Hempel has taken several proactive measures, including implementing multiple acquisitions globally and investing in expanding coating capacity in China. The introduction of CVC as a strategic investor is expected to expedite the realization of Hempel's "Double Impact" strategy.

Throughout the year, AkzoNobel not only announced the closure of three factories but also announced layoffs and plans to sell assets. On May 23 of last year, AkzoNobel announced its intention to close three production sites in the Netherlands and Zambia and transfer production to other locations in the region. The company stated that the closure plan aligns with its strategic priorities and commitment to operational excellence. The company will focus on production units with scale and higher cost-effectiveness, aiming to streamline, upgrade, and optimize its industrial network to enhance competitiveness and drive sustainable growth.

Subsequently, on September 24, AkzoNobel announced the next steps to reduce costs and enhance efficiency. This initiative aims to simplify operations, accelerate decision-making, and streamline the company's management structure. A key element of this plan is the layoff of approximately 2,000 employees globally. The structural adjustment plan is to be completed by the end of 2025. AkzoNobel CEO Greg Poux-Guillaume explained: "Our goal is to become more agile in a turbulent market by optimizing our functional organization and offsetting adverse factors such as rising labor costs, thereby accelerating profit growth."

At the same time, on October 3, AkzoNobel announced that it is conducting a strategic review of its portfolio to redeploy capital and develop its core coatings business. The strategic review will explore various strategic options, including establishing partnerships and seeking mergers or asset sales, including plans to sell its South Asia decorative paint business. AkzoNobel CEO Greg Poux-Guillaume stated: "We focus on enhancing our global coatings business, supported by a strong combination of high-performance brands and technologies. This strategic review represents a critical step toward focusing on a diverse product portfolio in key coatings markets, which will help accelerate our profit growth."

On September 26, BASF announced its new "Winning Ways" strategy, which will focus on four strategic levers: focus, accelerate, transform, and win. To accelerate the implementation of the "four strategies," BASF has taken a series of concrete measures to actively promote the strategy's rollout, including business divestitures and asset optimization, increasing the proportion of new business investments, streamlining organizational structures and optimizing operational systems, actively utilizing new technologies, and cultivating a culture of strategic transformation.

Through the "focus" strategy, BASF will divide its main business into core and independent businesses and manage them differently. Independent businesses include environmental catalysts and metal solutions, battery materials, coatings, and agricultural solutions, which serve specific industries. BASF will provide them with more strategic and operational flexibility to meet specific market demands.

BASF's coatings division is a market leader, contributing significantly in terms of revenue and cash flow. With its superior market position, this division has high value. In this regard, BASF will explore a comprehensive strategy for creating value and is preparing to initiate divestment procedures for its decorative coatings business in Brazil. Reports also indicate that BASF is considering divesting its coatings business as an important option, which may include establishing a joint venture or completely selling this business. The automotive sector is the primary downstream customer for BASF's coatings business.

Reports from foreign media indicate that while BASF is gradually exiting its automotive OEM coatings business in South America, it is also establishing an e-commerce platform for its flagship decorative coatings product, Suvinil. Additionally, BASF plans to end its automotive OEM coatings production in Argentina and Brazil by mid-2025 but will continue to produce automotive repair paints in the region.

On October 17, U.S. PPG announced a comprehensive cost-cutting plan expected to save approximately $175 million in pre-tax costs annually upon full implementation, including $60 million expected in 2025. This multi-year plan primarily aims to reduce structural costs, focusing on European and other global business areas, as well as corporate costs following two recently announced agreements.

PPG noted that this plan includes closing several facilities and reducing other fixed costs. The company expects to record approximately $250 million in pre-tax expenses in the fourth quarter of 2024 and will record additional expenses in the following years based on actual circumstances. Overall, PPG anticipates that this cost-cutting plan will affect approximately 1,800 positions, primarily concentrated in Europe and the U.S.

PPG's Chairman and CEO Tim Knavish stated: "We are taking decisive actions to reduce the overall cost structure. While these decisions are challenging, adjusting our fixed cost base and reasonably resizing the company is necessary following the divestitures of these two businesses. These actions will not impact our ongoing investments or our focus on organic growth."

To accelerate the promotion of its "Coatings+" new strategy and expand its market share in coatings-related businesses, Nippon Paint has intensified its acquisition activities. On October 28, Nippon Paint announced plans to acquire the U.S.-based AOC company for $2.304 billion; AOC is a producer of coatings, colorants, and composites. This transaction is expected to be completed in the first half of 2025. The funds for this acquisition will come from available cash and loans from financial institutions, with no plans to issue new shares.

Nippon Paint stated that this transaction aims to maximize shareholder value (MSV). The company also considers CASE (Coatings, Adhesives, Sealants, and Elastomers) and composites to be industries with stable growth potential, anticipating steady market growth. After experiencing demand fluctuations due to the COVID-19 pandemic, inflation, and high interest rates, the CASE market is expected to demonstrate resilient growth in the medium to long term, particularly focusing on infrastructure investment. This transaction will help Nippon expand its market share in coatings-related businesses.

In recent years, Nippon Paint has actively promoted its "Coatings+" strategy, as the market scale of coatings-related sectors is approximately three times that of the coatings market itself, providing significant growth potential for Nippon. Nippon Paint Group Representative Executive Officer and Co-CEO Huang Shoujin previously stated that, in addition to the growth of its core coatings business, partner companies are also seeking growth opportunities by expanding into coatings-related areas in the medium to long term. Furthermore, if attractive potential acquisition partners are found in coatings-related fields, the group will actively recruit these companies as partners to accumulate competitive assets across a wider spectrum.

On November 1, the Dow Jones Index Company announced the inclusion of NVIDIA and Sherwin-Williams in the Dow Jones Industrial Average, with this decision taking effect before the market opens on November 8. The Dow Jones Company stated that this index adjustment aims to ensure higher representation of the semiconductor and materials industries in the index.

Analysts believe that the fundamental reason for this adjustment lies in the pursuit of representation and timely reflection of market trends by the Dow Jones Index. As a global leader in coatings materials development, Sherwin-Williams' inclusion undoubtedly enhances the index's weight in the materials sector. In recent years, Sherwin-Williams has achieved steady growth through continuous technological innovation, sustainable development strategies, and global market expansion. Against the backdrop of a recovery in the global construction industry, Sherwin-Williams' performance has continuously risen, especially with the increasing demand for green buildings and eco-friendly coatings.

Analysts also believe that this change not only recognizes Sherwin-Williams itself but also reflects the elevated status of the entire materials industry and market expectations for its future development. This adjustment to the Dow Jones Industrial Average is not merely a technical change but an important signal regarding future market trends. The inclusion of NVIDIA and Sherwin-Williams indicates a recovery in investor confidence in the semiconductor and materials sectors. Particularly in the context of a global economic recovery, both the technology and basic materials industries are poised to seize rapid new growth opportunities. Analysts further point out that the inclusion of NVIDIA and Sherwin-Williams in the Dow Jones Index fully demonstrates the importance of the technology and materials sectors in the future economy.

Thanks to the increasingly refined "going out" policy and intensified domestic market competition, a wave of international expansion among Chinese coating companies is sweeping in. Last year, Junzi Orchid's first overseas factory in Vietnam officially went into production; Bonafort, Hengxing shares, Jiangxi Cicolor, and Meijia New Materials planned to invest in establishing production bases in Vietnam or Thailand; Zhanchen's production bases in Indonesia, Mexico, and Ghana are expected to be operational in 2025, while plans are also underway to build factories in Europe... Currently, more and more Chinese coating companies are gradually shifting from "product going abroad" to "capacity going abroad" and "brand going abroad."

At the same time, numerous domestic coating companies, including Yatu Hi-Tech, Donglai Technology, Meijia Xincai, Huatu Chemical, and Kede Technology, have achieved varying degrees of growth in their overseas business performance. Additionally, Meijia Xincai has registered a wholly-owned subsidiary in Hong Kong, mainly focusing on overseas marketing and customer service, and is also planning to set up a new company in the UK to expand into the European market; Baide is planning to lay out its overseas market, intending to establish six overseas business divisions globally. A large number of domestic coating companies, such as Sankeshu, Yashi, Zijinghua, Dongfang Yuhong, Haolisen, Shichuang Technology, and Yutong Coatings, actively participate in various international exhibitions, using these platforms to delve into international markets and seek global business opportunities.

As the global coatings market continues to expand, Chinese coatings, leveraging strong industry chain advantages, technological innovation capabilities, and brand influence, are making continuous breakthroughs in their internationalization efforts, significantly increasing export volumes. According to the latest data disclosed by the China Coatings Industry Association, the export volume of coatings reached 244,700 tons in the first three quarters of 2024, a year-on-year increase of 27.80%; the export value was $774 million, an increase of 16.34% year-on-year.

The export data for coatings in the first nine months of this year not only reflects the overall positive trend in coatings product exports but also serves as strong evidence of the continuous enhancement of China's manufacturing strength. In the future, as the comprehensive advantages of China's coatings industry chain become increasingly prominent, coatings exports are expected to maintain a stable growth trend; moreover, Chinese coatings are gradually shifting from "product going abroad" to "brand going abroad," thereby enhancing the global influence of Chinese coating brands.

As the world's largest coatings company, Sherwin-Williams' stock price has repeatedly reached new highs over the past year, setting a new record in the history of the global coatings industry. As of the close on November 26, 2024, U.S. time, Sherwin-Williams was priced at $399.71 per share, with an increase of 2.94%; based on the latest closing price, its total market value has surpassed $100 billion for the first time, reaching $100.7 billion. Thus, Sherwin-Williams has become the first coatings company in the history of the global coatings industry to achieve a market value exceeding $100 billion.

Founded in 1866, Sherwin-Williams is the largest coatings company in the world today, with its business spanning over 120 countries and regions, including three major business divisions: Paint Store Group, Consumer Brands Group, and Performance Coatings Group. According to the "2024 Global Coatings Public Company Market Value Top 25 Rankings" published by "Coating Industry," Sherwin-Williams has once again topped the list as the coatings company with the largest market value in the world for five consecutive years, with a total market value exceeding the combined market values of six major international coatings giants: PPG, RPM, Nippon Paint, AkzoNobel, Axalta, and Kansai Paint.

According to annual reports, Sherwin-Williams' sales revenue has grown from $11.13 billion in 2014 to $23.05 billion in 2023, an increase of 107.12% over nearly a decade, with a compound annual growth rate of 8.76%; net profit has risen from $866 million in 2014 to $2.389 billion in 2023, a growth of 175.87% over the same period, with a compound annual growth rate of 8.76%; net profit has risen from $866 million in 2014 to $2.389 billion in 2023, a growth of 175.87% over the same period, with a compound annual growth rate of 15.46%. According to the "2024 Top 10 Global Coatings Manufacturers Rankings" published by "Coating Industry," Sherwin-Williams has once again retained its position as the global leader, marking its fifth consecutive year at the top.