All things come to an end eventually and that’s certainly true of economic booms as it seems growth in the second largest economy in the world is set to slow considerably
According to AkzoNobel boss, Ton Büchner, the Chinese economy will begin to cool in the coming months. Büchner was speaking in a recent interview about his companies plans in the future and where they plan to invest. Areas such as Russia, South America and China are forecast to have slow and even negative growth in 2015/16. This is due to different factors for each region ranging from economic sanctions, low demand in natural resources and an unregulated banking sector.
AkzoNobel have reported healthy operating profits in recent quarters. Sales grew by 2.8% to 12.3% in the last 12 months. This is largely due to the weakening of the Euro but nevertheless, its good news for the Dutch based company. Business in the Euro-zone continues to be challenging so strong economic growth in overseas markets is always welcomed.
Being the global giant that it is, AkzoNobel is affected by all areas of the global economy. In Latin America you have oil and gas companies cutting back on coatings for the production and research platforms. In China the manufacturing industry isn’t consuming the same levels of industrial paint. All these variables give you a global economy that is constantly in flux and very difficult to forecast.
Says Ton Büchner, AkzoNobel CEO :
We continue to deliver on our aim to improve the performance of our company. This will position us well to make the most of future opportunities and growth. The second quarter continued to show the positive impact of our focus on profitability and leadership in sustainability. The global economy remains challenging and shows a very mixed picture with different dynamics per region and customer segments. We remain on track to deliver our 2015 targets.
Europe had proved to be a very, very tough market over the past few years, though there were pockets of strength.
The UK was the first to recover, followed by the Netherlands this year. There is weakness in France, and Spain is recovering but from a very, very low base…
The divestment of its paper chemicals business has certainly helped retain a healthy balance sheet but further cuts in costs will be required if this world giant is to fight off competition from its rivals. Akzo Nobel will long continue to be a big player in the industrial coatings sector and we will benefit from its strength and ability to innovate.
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