AkzoNobel’s chemicals business, with annual sales of $5 billion, has entered a period of strong financial performance that will continue until well after it is carved out of AkzoNobel in about 12 months, according to its CEO, Thierry Vanlancker.
The Belgian national, who has held senior roles with DuPont and Chemours, rejects comments by some analysts that the business’s commodity chemicals units need to be more profitable and that restructuring will be required.
“The business units have been steadily improving,” he says. Furthermore, the chemicals business’s combination of commodities and specialties means that overall demand for its products will be steady through economic cycles, he argues.
“The outside perception is that the surface chemistry and polymer chemistry businesses are the most technologically advanced and that industrial chemicals including salt, chlorine, and caustic are less exciting,” Vanlancker says of several of the firm’s businesses. “Honestly, all the businesses are equally performing, with a pretax profit margin of 18–22%.”
PPG Industries’ recently rejected bid to acquire AkzoNobel has “nothing to do with” the planned carve-out of the chemicals business, Vanlancker says, acknowledging that the bid did move announcement of the plan forward by a few months.
Analysts expect the chemicals business to fetch up to $12 billion. AkzoNobel plans to either float its shares on the stock market or sell it as a whole to another company.
The chemicals firm spends about $110 million annually on R&D and has about 1,100 R&D employees. “I definitely don’t want to reduce R&D,” Vanlancker says.