Akzo Nobel to axe 3500 jobs

London - Akzo Nobel, the new owner of ICI, has launched a major restructuring initiative with the aim of achieving Euro100 milion in annual savings, in part through axing 3,500 jobs, by 2011. The Dutch group, according to its CEO Hans Wijers, is taking aggressive action to accelerate the synergies of the new combination and to further improve operational effectiveness.

"The world economy has now clearly entered a phase of lower growth, particularly in the mature markets. In these challenging markets, only lean companies succeed. We have therefore started a rigorous drive to further reduce our cost base,"  Wijers said at a 29 Sept meeting with financial analysts  in London.

Akzo Nobel is now targeting an EBITDA margin target of at least 14% by the end of 2011, via organic growth, selective acquisitions and delivering the ICI synergies faster than previously forecast. These moves, combined with improved margins across the company and rigorous cost management will lead to at least an additional €100 million in net cost savings, the CEO predicted

"We operate from strong positions in diverse, highly attractive sectors with good growth potential, continued Wijers. "This is particularly evident in emerging markets, which now represent 35% of total revenue and 40% of total EBIT. Our positions of strength are underpinned by our widespread market-leadership and the fact that up to 75% of the new AkzoNobel operates in markets with low to very low cyclicality."

Emerging markets accounted for 25% of 2007 sales at the group's Decorative Paints business, which includes the Dulux, Sikkens and Glidden Dulux brands. By 2012, that number will have increased to 35%. The company has also adopted a new brand strategy – driving towards fewer, stronger brands in the medium term – with a stronger focus on a global approach to innovation.

Performance Coatings, said Wijers, offers high growth potential, paricularly in emerging markets – with further opportunities being targeted through organic growth and active participation in industry consolidation. Close to 50% of the business is conducted in emerging markets, which provides a strong platform for organic growth.

The group's Specialty Chemicals business, meanwhile, is to invest in emerging markets such as Brazil and China. Current projects account for more than Euro300 million and moving forward, the main focus will be on margin management through procurement, value pricing and energy efficiency, said the Akzo Nobel boss.