Europe’s largest paint maker Akzo Nobel warns on price rises

Europe’s largest paint maker Akzo Nobel put customers on notice for further price rises on Wednesday because of strong demand and supply chain disruptions that have pushed up the cost of raw materials.

The Dutch group, which owns the Dulux brand of paints, raised prices in the first quarter as it was caught up in a series of global supply chain issues, ranging from the deep freeze in Texas to cuts by Chinese suppliers.

Chief executive Thierry Vanlancker warned the company intends to pass the extra costs on to its customers as much as it can by increasing prices for both paints and coatings.

“You see already in our published data a 4 per cent increase across the globe for our decorative paints. And that’s just the first wave. There’s more to come,” he said. 

Vanlancker said that in the months ahead, demand for paint to decorate homes would remain strong because of the return in business for professional handymen, a recovery in markets such as Africa and the Middle East, the newfound interest in home improvement for a younger generation and permanent working from home arrangements.

He also warned retailers that the boom in DIY and demand for paint for decorating, prompted by the pandemic, could be hit by shortages in supplies of raw materials.

“Our retail partners are extremely bullish and actually to our eyes almost over-enthusiastic for the outlook for 2021,” he said.

He added that some customers had “exuberant” forecasts on the stock that they would be able to secure from paint suppliers.

“If you’re in a strong market and you see strong demand, you go back and think how it was difficult to get shelves stocked in moments of last year. Then you hear all the noise around raw materials,” he said.

“We would love everybody to have extra inventory, but there’s not enough raw materials to go around.”

The group said operating profit jumped 62 per cent to €303m in the first quarter compared with a year ago on the back of a 10 per cent rise in revenues to €2.26bn, supported by strong demand for paints for decorating as people continued working from home.

Higher demand, supply disruptions and price increases have been signalled by other paint producers.

PPG, a US rival that attempted a hostile takeover of Akzo in 2017 and outbid the Amsterdam-based group this year for Finland’s Tikkurila, reported last week record first-quarter earnings per share after sales rose 15 per cent to $3.9bn.