Akzo Nobel boosts ICI synergies

The Netherlands-based global chemicals giant said it had upgraded the estimated annual synergies target resulting from the ICI acquisition to EUR 340 million, a 20% increase on the previously announced EUR 280 million. CEO Hans Wijers explained that the integration was making good progress and Akzo was benefiting from the complimentary cultures of both businesses. "The ICI integration process is well underway," he said. "After reviewing the available synergies from the transaction and former cost reduction programmes of both companies, we now expect to realise estimated annual pre-tax cost synergies of EUR 340 million per annum. This breaks down as EUR 180 million from Decorative Paints, EUR 85 million from corporate savings and EUR 75 million from procurement costs." Akzo Nobel expects to realize 85% of the synergies in the first three years. Also on track and reconfirmed were the transaction's other - non-cost savings related - synergies. The company had already identified a reduction in working capital of EUR 100 million, consolidation of manufacturing sites of EUR 100 million and opportunity costs of building a position in Asia of EUR 100 million. "Our transformation into a focused coatings and chemicals company is progressing well," said Wijers. "Although trading conditions are challenging at the moment, with a strong currency impact, there is an ongoing trend of underlying growth in most of our businesses - in local currencies - especially in the emerging markets. Wijers also updated shareholders on the outcome of a recent global brand assessment, which has been used to review Akzo Nobel's corporate name and visual identity. The company had decided to continue using the Akzo Nobel name for the newly enlarged company, he revealed. Product brand names such as Dulux and would also remain, but ICI will be discontinued as a corporate name.