- Sales improve in 2011 thanks in part to favorable market conditions for the global automotive industry as well as increased demand in South America
- Special charges arise from write-downs related to the planned sale of our business with Relius brand decorative paints; earnings therefore below previous year’s level
- Outlook 2012: sales to grow thanks in part to growing demand from the global automotive industry; significant earnings improvement after high special charges in 2011
Coatings – Sales by region (Location of customer)
In 2011, we increased our sales to third parties year-on-year by €223 million to €2,800 million (volumes 6%, prices 4%, currencies –1%). Demand for our products grew in all business areas. The favorable market environment in the global automotive industry, higher demand in South America and our strong business with coatings solutions in Russia made a significant contribution to sales growth.
Our business with automotive coatings was very successful thanks to growing demand from our customers in Europe and Asia, especially in China. Sales in the automotive refinish coatings business also grew thanks to new customers and price increases, but the business environment remained competitive. We were able to achieve a significant increase in sales volumes of coatings for transportation and agricultural machinery. In Europe, we benefited from strong demand for coil coatings from the Russian steel industry. Thanks to new customers, especially in emerging markets, sales volumes of coatings for wind turbines also grew. In the decorative paints business area, sales were higher than in the previous year, particularly in South America. In this region, we not only experienced greater consumer demand, we were also able to gain additional market share with product innovations and targeted advertising measures.
Income from operations was below the level of 2010 owing to special charges which resulted from impairments in connection with the planned sale of our business with Relius® brand decorative paints. Production sites in Memmingen, Germany, and Deurne, Netherlands, are primarily affected by this divestiture. Adjusted for these special charges, earnings exceeded the very good level of the previous year.
Although we expanded our operations, we managed to limit the increase in fixed costs thanks to restructuring projects. The sharp increase in raw material costs could not be fully passed on to the market.
In 2012, we expect demand for decorative paints in South America to stabilize at a high level and demand from the global automotive industry to grow. The emerging markets in particular will be a driving force in this regard. We therefore expect sales to increase in comparison with the 2011 level. After the high special charges in the previous year, earnings are expected to significantly increase in 2012. We will strengthen our presence in the growth markets of Asia and Eastern Europe – particularly in China, India and Russia – and together with our customers, we will continue to grow in these markets.