September-October is the time window for the intensive release of third-quarter financial reports of foreign-invested paint companies. The global coatings giants AkzoNobel, PPG, Valspar, Dow Chemical, BASF, Sherwin-Williams, Nippon Paint, etc. have released their 2013 third quarter financial reports. According to the financial report, despite the impact of the European debt crisis and the market downturn, the coatings business of all the giants still achieved adversary growth, and some even experienced high growth.
In sharp contrast, domestic paint companies have experienced a decline in sales and shrinking profits due to constant price wars, homogeneous competition, high brand maintenance costs, and the impact of domestic economic adjustment and transformation and environmental pressures. fell below the profit warning line. It can be said that they are also under the pressure of various unfavorable factors, and they are also facing unprecedented fierce market competition. Since 2013, coating companies in China, Europe, America and Japan have had completely different experiences. One has touched heaven, and the other has on the brink of hell.
Q3 financial report, foreign giants profit growth
The world-renowned paint and coatings manufacturer AkzoNobel in the Netherlands released a financial report on October 21, saying that its third-quarter sales were 3.778 billion euros, down 5% year-on-year due to factors such as exchange rates and business splits; however, benefiting from the After the reorganization, the cost reduction and the increase in sales volume resulted in an operating profit of 303 million euros, an increase of 22%; a net profit of 155 million euros, an increase of 41%. AkzoNobel Chief Financial Officer Keith Nichols said the restructuring work will continue in the fourth quarter and is expected to cost 160 million euros. Taking into account this year's higher restructuring charges and continued market weakness, AkzoNobel's full-year operating income will not exceed 908 million euros.
PPG Industries recently announced at its headquarters in Pittsburgh, USA: net sales in the third quarter were US$4 billion, a year-on-year increase of 17%; adjusted net profit from continuing operations was US$353 million, a year-on-year increase of 22.57%. At the end of the third quarter, the company had $2.2 billion in cash and short-term investments.
According to the quarterly report, sales of high-performance coatings business increased by US$409 million compared with the same period last year, a year-on-year increase of 34%; sales of aerospace, industrial and automotive OEM coatings business increased by about 10% year-on-year. The proportion of architectural coatings in the company's overall operating income has increased, and the newly acquired AkzoNobel North American architectural coatings business continues to increase. In addition, the company's optical products and specialty materials business performed well, up 11% year-on-year.
In addition, the US paint giant Sherwin-Williams Group released its financial report on October 25, saying that net profit in the third quarter increased by 12%, thanks to the improvement of revenue in various major divisions, including paint shop division, consumer division and global finished product division. The company's Paint Stores Group revenue rose 13.5%, Consumer Group revenue rose 5.4%, and Global Finished Products Group revenue rose 3.2%. Latin American Coatings Group revenue was flat year-over-year.
Valspar, the world's largest paint and coatings maker, reported earnings on Tuesday that third-quarter net profit rose 9%, but still missed market expectations and cut its full-year profit target as a result of Demand in overseas markets and general industrial markets was weak. Revenue rose 1% to $1.09 billion from $1.08 billion a year earlier, missing analysts' average estimate of $1.13 billion. Among them, the paint business revenue increased by 3%, and the coatings business revenue increased by 1%.
Dow Chemical's third-quarter net profit was $679 million, an increase of 17% from $582 million in the same period last year, and earnings per share were 49 cents, up from 42 cents in the same period last year; operating income was $13.73 billion, an increase over the same period last year 0.7%; sales of high-performance plastics increased 3.3% year-on-year. This was mainly due to the strong performance of the company's plastics division, which boosted revenue and product prices.
The world paint giant BASF recently announced the financial report for the third quarter of 2013: the company's third quarter net profit achieved rapid growth. BASF's profit growth was mainly due to the good performance of the functional materials and high-performance products divisions, and at the same time, it was also related to the effective cost reduction of other divisions. BASF's business sales in chemicals and plastics also performed well. BASF's third-quarter net profit rose by about 19%, which was higher than analysts' previous estimates of its benefits.
Nippon Paint Co. Ltd. (NIPPON PAINT Co.Ltd., the investor of Nippon Paint Japan, referred to as "Nippon Paint") on November 6 announced the 2014 mid-term (April 1, 2013 - September 30) performance report . The report shows that the continuous sales of Nippon Paint in the middle of fiscal year 2014 was 126.897 billion yen, a year-on-year increase of 6.3%; the continuous operating profit was 16.547 billion yen, a year-on-year increase of 22.1%. "Link" refers to the performance of domestic and foreign companies that Nippon Paint has invested in or invested in.
The report pointed out that Nippon Paint's good performance in the field of general-purpose coatings in Japan and the increase in sales of automotive coatings in overseas markets are the main factors driving the increase in Nippon Paint's continuous sales. In the report, Nippon Tu made special mention of its business performance in China. The report pointed out that, based on the sales performance of subsidiaries applicable to the shareholding method (referring to the joint-stock subsidiaries that Nippon Paint holds a certain proportion of the capital, here mainly refers to Nippon Paint), Nippon Paint’s sales in China, the core market, are centered on architectural interior coatings. Well developed and effective in cutting costs, resulting in a substantial improvement in yields. However, Nippon Paint did not disclose specific data on the Chinese market.
According to industry insiders, the financial reports released by foreign coating chemical giants show that the coating market situation in Europe and the United States is very severe, while the Chinese market environment is relatively optimistic. Stimulated by China's rigid demand, although growth is difficult and profits are reduced, there is still a certain space in my country's paint market, so foreign paint companies can still benefit from the Chinese market to achieve better performance.
The overall profit of domestic coating companies has declined
While foreign paint companies are making a fortune in China, the profits of Chinese paint companies are in an overall downward trend. However, judging from the comprehensive understanding of the coating business network reporters, the domestic large-scale and more distinctive coating companies have performed better in terms of product sales and sales profits, but other small and medium-sized coating companies are either declining in sales or profit. decline, and some are in a state of decline at the same time, or even in a state of loss.
A few days ago, my country's listed paint companies Jinlitai and Yusanxia A successively released their 2013 third-quarter reports, and Oriental Yuhong released its third-quarter net profit forecast.
Judging from the comprehensive financial report data, Jinlitai, Oriental Yuhong, and Yusanxia A all achieved steady and co-directional growth in revenue during the third quarter. Oriental Yuhong's total operating income in a single quarter is expected to exceed 1 billion, ranking first in the revenue list of listed coatings companies, due to product sales, year-on-year growth in gross profit margin and steady increase in market share.
The main business of Jinlitai is divided into two categories: automotive original coatings and other industrial coatings. The automotive original coatings business is mainly directly related to the overall growth situation of the Chinese automobile market and the increase in the number of supporting production lines. Its automotive original coatings business benefits from my country's commercial vehicle production and sales have grown. In addition, due to business expansion, the development of industrial cathodic electrophoretic coatings, construction machinery topcoats, mining machinery coatings, ceramic coatings, motorcycle coatings, and auto parts coatings has been promoted.
Yu Sanxia A's net profit growth in the third quarter was even more eye-catching, with a surge of 443.61%. However, the change in its performance growth was mainly due to the loss of 27.55 million yuan by its subsidiary Sanxia Yingli in the same period last year, which had been disposed of in December 2012. Its paint business was operating normally, and there was no major fluctuation compared with the same period last year.
In addition, according to the comprehensive understanding of the coating business network reporters, such as Carpoly, Xiangjiang Paint, Bardex, Meitus, Sankeshu, Baotashan, Changjiang Paint, Shuanghu Paint, Hongchang Chemical, Lighthouse Paint , Chenguang Coatings and other relatively large-scale or distinctive coating companies performed well in terms of sales volume and sales profit.
According to Liu Fang, executive director of Hongchang Chemical's Decorative Paint Division, up to now, the company's sales have increased by nearly 30%, and profits have also achieved synchronous growth. "Hongchang Chemical Co., Ltd. is a paint company characterized by its technical expertise, so it has a huge advantage in technical strength. In addition, the company emphasizes quality to win the market, so despite the fierce market competition and serious product homogeneity, our Profits are still well guaranteed." Liu Fang said.
However, recently, reporters have also received feedback from different companies. They all claim that their sales have increased, and companies with a smaller base have even doubled their growth. It seems that the form is very good, but is this true?
"But I'm sure that the growth of many companies is still watery and imaginary." Industry insiders told reporters that we should look at it in several points: First of all, on the surface, although some companies have achieved sales Growth, but in fact, many companies put pressure on dealers to order indicators. The limited digestion capacity will inevitably result in batches of unopened inventory, and the products have not been sold in the final transaction. How can it be called growth, at best, it is false growth? Secondly, Some companies may indeed achieve growth, but they must be viewed objectively and rationally, because sales growth does not mean an increase in sales profits. If a company does not increase profits or benefits, the capital chain will be broken, and the company’s reproduction will be hindered. , and may even lead to corporate bankruptcy. "Therefore, although some companies have achieved simultaneous growth in sales and profits, on the whole, the overall profits of my country's paint companies are still in decline."
In contrast, the operating performance of domestic and foreign paint companies is in a dilemma, and most of the high-end markets are occupied by foreign countries, resulting in multinational paint companies gaining a lot of profits. "In addition to the influence of external ignorance factors, disguised price wars, homogeneous competition, high brand promotion costs, and serious lack of innovation may be the main factors causing the above-mentioned huge contrast." The industry insider said.
Under the unfavorable market environment, although coating companies are also looking for breakthroughs, due to the lack of corresponding technical support, the production process between companies is similar. In the case of fierce market competition, it is relatively simple for companies to expand their market share. The way is to "small profits but quick turnover", and gain profits through scale.
Under this concept, some companies ignore the pressure of rising costs and take the initiative to sell at lower prices, or sell at lower prices in disguised form by giving small gifts. This marketing strategy further squeezes the profit space of the company.
Of course, the competitive strategy among paint companies is not limited to this. Due to the low threshold and relatively simple process, the trend of imitating each other among peers is also very popular. Once a company's new product category prevails, other companies may immediately follow up and compete with the "original" for market share. In order to get rid of the homogenized image among enterprises, they can only hope to increase their advertising investment, and increase their popularity and reputation by inviting celebrity endorsements.
In addition, some industry analysts pointed out that as long as paint companies sell their products to dealers, the risks will be successfully transferred, and companies have not formed a risk-sharing or co-advance mechanism with dealers. "In order to increase market share, paint companies often require dealers to overstock, and dealers are overwhelmed to move forward. In order not to let companies know their real sales and inventory, dealers selectively make system data errors, thus forming self-interest. The evidence shows that the game of manufacturers is staged. When the enterprise cannot judge the data, in order to complete the established growth data, in order to lure them, take the purchase rebate assessment, and give the dealer a reason to persuade themselves to grow. The total market demand does not increase because of this, and the price is changed. Quantity has become a helpless choice, and the market has further deteriorated.”
"The paint industry should innovate in the field of business models, but unfortunately, more paint brands have never escaped the vicious circle of price wars, and new products have been sold as soon as they are launched. Therefore, paint companies must get out of the profit dilemma. , and ultimately need to rely on product innovation and differentiated competition, but this is a relatively long process." The analyst said.
Industrial integration is imperative
It is understood that foreign giants such as PPG, AkzoNobel and Jotun have almost monopolized most of the market in their respective countries, especially the high-end market, and the high concentration of the industry obviously gives these coating giants sufficient scale advantages. In comparison, despite several mergers and integrations, there are still more than 10,000 paint companies in my country, and although the output ranks first in the world, the paint industry structure is not reasonable, and the structural contradictions of products are more prominent. The proportion of middle and low-end products accounts for more than half of all paint products, and a high value-added paint industry chain has not yet been formed.
The development of a considerable number of coating enterprises in China mainly relies on the expansion of quantity, one-sided pursuit of high growth in scale and output value, blindly spreads out stalls, and "isomorphic" development, while the improvement of talents, technology, brand, marketing, service and management level lags behind. The industrial technology structure and product structure are unbalanced, and the situation of high investment, high consumption, high emission and low efficiency has not been fundamentally improved; many enterprises have a low degree of informatization, weak innovation ability, lack of stamina for development, and insufficient sustainable development ability. The scale of the enterprise is relatively small, the degree of concentration and professional operation level is relatively low, and it lacks core competitiveness.
In the doubling of coating production capacity, the proportion of key products with high technical content, high added value and high market share has not been greatly improved. Order competition, resulting in a waste of limited resources. In the rapid expansion of coating production capacity, the investment in product and technology research and development is low, the isomorphism of products is serious, and high-end raw materials and high-end products are still in the hands of foreign coating giants. With the successive commissioning of projects under construction, the contradiction between raw material resource constraints caused by overcapacity and increased business risks will become more prominent.
Under such a state of industrial development, the reporter, through the understanding and situation analysis of a number of coating companies, should pay attention to and think about the following factors.
The first is to intensify the process of mergers and acquisitions. As we all know, the competition and future of coatings lies in innovation, but the small-scale enterprises cannot share and bear the high technology research and development costs. Therefore, the coatings industry should speed up the adjustment of the coatings industry structure, and encourage the superior coatings companies to join forces. Through joint ventures, mergers, Restructuring and other means to set up large-scale coatings companies to compete with foreign multinational coatings companies.
Second, attach great importance to and standardize the production and development of coatings. In recent years, due to the rapid pull of domestic infrastructure construction, the large demand for coatings and good economic benefits in the coatings market have resulted in the continuous expansion of coatings projects and intensified the degree of market competition. It can be said that the current paint industry lacks government guidance, lacks market integrity, lacks social supervision, lacks technological innovation, lacks industrial cooperation, blindly develops in production, and the chaotic state of disorderly competition in the market has greatly affected the development of my country's paint industry. Therefore, the government must carry out effective supervision and regulation, and should provide substantial support in terms of funds, taxation and other aspects, and at the same time, it should regulate the behavior of the industry from a policy perspective.
The third is to promote the brand and increase the research and development of new products. Associations, governments and enterprises should strengthen communication and increase the recommendation and publicity of domestic paint brands; paint enterprises should attach great importance to product quality control and the development of new products, rather than blindly expanding traditional products, and need to strengthen new products according to market demand.
