Expert interview: precarious situation
Leading heads of European paints and coatings producers share their review of 2023 and their outlook for 2024. Damir Gagro shows you a little insight.
The annual survey provides a snapshot of the coatings industry in EMEA. Top managers report on their assessment of the past year’s business activity and their expectations for the coming year. In most cases, the picture is mixed, both in terms of assessment and forecast. This year is different, as the following pages show.
ECJ’s editorial team traditionally conducts its annual survey of paint and coatings manufacturers at the beginning of the year. The purpose of the survey is to provide a brief overview of how managers assess performance in 2023 and to give an outlook for the year ahead. A cross-section of different company sizes, different segments/markets and countries usually results in a mixed picture. This year, 26 top managers participated in the survey and this mix is reflected in the responses on business activity. There are weaker performances, but also results that have exceeded expectations. The past year has brought significant challenges and continued uncertainty to the industry. Inflation, geopolitical tensions and a slowdown in demand in certain segments have left their mark on business performance. The majority of respondents say they could be satisfied with their results in 2023.
However, when it comes to predicting how 2024 will affect business activities, the picture is more uniform. When asked about their expectations for when the economic situation will stabilise, more than 70 % do not expect an improvement before 2025. Less than 30 % predict that the second half of 2024 will bring the necessary change. Only one expert thinks that the situation will stabilise in the first half of 2024.
How did business go for you in 2023?
Markus Fritzsche (Chairman of the Board, Mipa, Germany): Overall, we are very satisfied with 2023. After a somewhat lacklustre start, demand for automotive refinish coatings increased towards the middle of the year. Regrettably, the industrial coatings division experienced the reverse, with numerous industrial clients feeling the pinch of the weakening economy in the latter half of the year. The decorative paints and wood coatings divisions, however, experienced relatively stable demand throughout the year, notwithstanding the overall bleak environment. Despite numerous other cost increases, the decline in raw material costs contributed to a relatively gratifying annual result.
Rachel O’Connor (Managing Director, General Paints, Ireland): In 2023, the Irish decorative coatings market declined slightly in volume terms, reaching its lowest volume level in five years. In value terms, there was a slight increase, continuing the widening volume-value gap we have seen in recent years. The volume/value trend is largely due to inflation, but we also believe there is a move towards higher quality products – with consumers increasingly concerned about the provenance and impact of the brands and products they buy.
Where do you see the greatest opportunities and challenges for your activities in 2024?
Andrea Berghofer (CEO, Adler-Werk Lackfabrik, Austria): We remain optimistic about our potential across all markets, and will keep notching up successes through exceptional product innovations. The inauguration of new sales centres in Austria and Germany in 2024 will bolster our sales logistics and foster closer ties with our customers. Undeterred by the prevailing circumstances, we are proceeding with significant investments as part of the “Factory of the Future” initiative. Mounting price pressure and the potential for above-average wage settlements necessitate prudent cost management.
Julien Molina (Managing Director, Mäder Group, France): Our specific positioning has always included our contribution to a sustainable future and our participation in the environmental transition. It is in our DNA. In 2023, we have accelerated this shift towards sustainable chemistry. In 2024, we will reaffirm this positioning by bringing innovative and decarbonisation-driven solutions to our strategic markets. We will also start to measure our impact in detail with automatic calculation of product carbon footprints in a cradle-to-gate approach to set clear targets for improvement in line with the IPCC reports and SBTi to which we are committed. It will also help our customers with their decarbonisation strategy. It seems clear that the economic environment will remain uncertain. The decline in commodity prices remains relative, given the increase in prices since 2021, and market volatility needs to be taken into account. We will have to keep a close eye on how we manage our business. Nevertheless, we are confident that the direction we have taken and our specific positioning will enable us to support our customers in their own transformations and to continue to increase our market share.
