Akzo Nobel Chemicals CEO Craves Independence and Capital

Akzo Nobel's specialised chemicals division would expand quickly and profitably if it gets an injection of capital after being sold or listed, its chief executive Thierry Vanlancker told Reuters.

As part of its successful defence against a takeover by U.S. rival PPG Industries, Akzo said it would create value for shareholders by splitting off its speciality chemicals business by April next year.

The Dutch company, best known for its paint brands such as Dulux, also forecast increases in earnings and sales for chemicals that left some analysts scratching their heads as to how a standalone company would achieve them.

"If we came across as pretty self confident it's because we are," Vanlancker said in his office in Amsterdam, arguing that major improvements could come about through independence.

The division produces an array of chemicals used in plastic packaging, tissue paper, cleaning materials, pharmaceuticals, food products, salts and adhesives, among others, and reported earnings before interest, tax, depreciation and amortisation (EBITDA) of 953 million euros ($1.1 billion) last year.

Vanlancker said the parent company was constrained in how much capital it could allocate to chemicals, which accounts for about a third of Akzo's sales and profits, but an injection of funds would produce significant returns.

"As a paints and coatings company, as Akzo Nobel is seen, there's a certain limit to how much you can shift to one third of the company, because you also need capital allocation for the paints and coatings business," Vanlancker said.

The chemicals division reckons it can boost EBITDA by 200 million euros a year by 2020 by spending 100 million annually from 2018-2022 to boost capacity at existing plants running at near full tilt. That's in addition to a target to boost EBITDA by 250 million euros through a mix of growth and cost cutting.

Major competitors include the likes of Solvay, Clariant, Huntsman, BASF, Croda, Evonik, Kemira and others, depending on the product category.