Published on 21 - October - 2010
Decorative paints category up for Akzo in Q3Despite weak housing and construction market, Dulux parent company reports revenue increase but remains 'cautiously optimistic'.
Group sales were up 13% to €3.9bn for the period ended September 30, with EBITDA up 9% to €574m.
In Akzo Nobel's decorative paints category, which includes the Dulux, Sadolin and Sikkens and Glidden brands, revenue increased 8% in Q3, with strong growth in emerging markets, such as Asia (30%) and Latin America (25%). This was offset by lower sales volumes in Europe, affected by the hard-hit housing construction markets, which, said the company, "show no sign of improvement."
In Europe, revenue was up 1% compared with last year, while sales volumes dropped 3%. Akzo strengthened its position in the UK trade market, while most of the other countries in Europe, apart from Turkey, reported weak demand, due to ongoing uncertainty in the economic climate.
Sales in the US were up 9%, with improvements seen in retail revenue. Trade sales, however, dipped slightly, due to reduced building and construction activities. The third quarter showed solid growth in Akzo's Glidden brand, which the firm has continued to invest in, expanding its retail market share.
The Dutch-based coatings firm also secured a landmark deal last month as primary paint supplier for home improvement chain Walmart's 3,500-plus US stores. The move will see Akzo develop and manufacture a portfolio of interior and exterior paints for Walmart stores across the United States, further boosting the paint firm's market share and strengthening its Glidden brand.
Akzo increased its total spend on advertising across the decorative paints category by €13m in Q3, to 6% of revenue.
While the group is aware that the construction and housing markets in some of its mature markets remain soft, Akzo's outlook remains unchanged. It believes its leading position and strong balance sheet "give reason for cautious optimism".
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