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Top Paint Manufacturers

In Asia Pacific

18th MeetingJune 29 to July 2, 2015

Howard Johnson Plaza Hotel, Shanghai, China

Asian Paint Industry Council

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IPPIC & APIC Joint Meeting

The Global Market for

Industrial Wood Coatings

4th March 2016The Prince Sakura Tower

Tokyo, Japan

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Industrial Wood CoatingsDefinition

Factory applied coatings used during the manufacture of:

Wooden furniture (including furniture components, flatstock etc)

Building components (doors, windows, architraves etc)

Prefinished hardwood flooring (parquet)

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Industrial Wood CoatingsMarket Size

$3.20

Litres ValueASP

$3.35 $8.7bn2.6bn

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Industrial Wood CoatingsMajor Countries

EMEA Italy, Germany, Spain

Americas USA, Brazil, Canada

Asia Pacific China, India, Japan, Malaysia

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Industrial Wood CoatingsSegments

Furniture 60% Joinery 26% Parquet 11%

Other 3% Decking Toys Sporting Goods Musical Instruments

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Industrial Wood CoatingsSales Top 10

0100200300400500600700800 Top 10

Market Share33%

$m

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Industrial Wood CoatingsManufacturers

First Tier 20% AkzoNobel, Sherwin-Williams, Valspar

Second Tier 12% Renner Sayerlack, IVM, Carpoly, PPG, ICA, Himonia

Third Tier 7% Teknos, Hesse, Taiho, Looser, RPM, Tikkurila

Fourth Tier etc 61% Chugoku, Interchem, Mirotone, Fujikura etc

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Industrial Wood CoatingsStrategies – First Tier

AkzoNobel Global presence, Growth in China

Sherwin-Williams US distribution, Acquisition

Valspar Growth outside NA, Acquisition

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Industrial Wood CoatingsStrategies – Second Tier

Renner Sayerlack Distribution

IVM Price/cost leadership

Carpoly Technology, Innovation

PPG Technology

ICA Technology

Himonia Technology

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Industrial Wood CoatingsCapabilities

AkzoNobel Wood Finishes

High-solids, UV-cure, waterborne and nano technologies Paints, lacquers and stains of minimal environmental influence Global network of chemists perfecting and customising Strategically placed R&D laboratories around the world Custom products reformulated and fine-tuned locally Extensive customer support and service Colour mixing system for industrial coatings Business unit for distribution in selected markets

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Industrial Wood CoatingsCapabilities

Sherwin-Williams Product Finishes Division

Local finishing solutions globally to OEMs and tier suppliers On-site technical assistance Customised products Colour and design services Process improvement expertise Liquid and powder technologies Finishing equipment and supplies for coatings application Infrastructure spanning six continents

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Industrial Wood CoatingsCapabilities

Valspar Wood

Leader across many markets and segments Broadest technology portfolio in wood coatings industry Used on some of the world's most famous brands Distributors to service smaller manufacturers and craftsmen Unlimited number of custom colours and designs Leader in colour and design with centres across the globe Technical service representatives the most experienced in the market Application engineering services for new product transition Marketing support to help customers promote and sell their products Regulatory support in rapidly changing environment

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M&A Transactions2010 To Date

Industrial WoodSales Price

2015 RPM USA Morrells UK $33m n/a Furniture, Cabinets2013 Lechler Italy IVE Coatings IT/BR €20m n/a Furniture2013 Plantag Germany JP Coatings Jordan DE n/a n/a Furniture 2013 Teknos Finland Kemiflora EE €5m n/a Industrial Wood 2012 Teknos Finland Wedevåg SE €13m n/a Industrial Wood 2011 Looser Switzerland Otto Weibel CH CHF12m n/a Furniture, Panelling 2011 RPM USA Fuhr Industrial USA n/a n/a Furniture, Joinery 2010 Fujikura Japan Sonneborn & Rieck UK £20m £2m Industrial Wood

2010 Sherwin-Williams USA Becker Acroma SE $300m n/a Furniture, Joinery, Flooring

2010 Sherwin-Williams USA Arch Chemicals USA $147m n/a Joinery, Furniture, Cabinets

2008 Sherwin-Williams USA Inchem SG $30m n/a Furniture, Joinery, Flooring

2008 PPG USA SigmaKalon Global $1,914m $3.2bn Joinery

2007 AkzoNobel Netherlands Chemcraft USA $145m Furniture, Cabinets, Joinery

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M&A Transactions2010 To Date

Woodcare Sales Price

2014 Rust-Oleum USA Citadel Restoration USA n/a n/a Wood Deck 2014 Landora Sweden Colorex SE n/a n/a Woodcare2014 National Paint USA Sampson Coatings USA n/a n/a Hardwood Flooring 2014 Nippon Paint (China) China DGL Camel HK n/a n/a Wood 2013 National Paint USA Petri Paint USA n/a n/a Hardwood Flooring 2013 Rustins UK Briwax UK n/a n/a Waxes 2013 Sidereal Capital USA U C Coatings USA n/a n/a Logging, Lumber 2012 Dr. Schutz Germany Eukula DE n/a n/a Parquet 2012 RPM USA Synta USA $40m n/a Wood Deck 2011 PPG USA Dyrup DK €190m €135m Woodcare 2011 Flügger Denmark Steen-Hansen NO n/a n/a Woodcare

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Industrial Wood CoatingsTechnology

Dow Coating Materials View

Customers are looking for solutions that vary across a range of capabilities Less volatile organic compounds More application flexibility Do more than decorate and protect Increasing sustainability Functionality improvements

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Industrial Wood CoatingsTechnology

FurnitureNow 5 Years

Waterborne 15% 20%High solids 10% 12%Powder 1% 3%Radiation cured 20% 23%Conventional solids 54% 42%

----- -----100% 100%

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Industrial Wood CoatingsTechnology

JoineryNow 5 Years

Waterborne 35% 45%High solids 20% 22%Powder 0% 0%Radiation cured 15% 18%Conventional solids 30% 25%

----- -----100% 100%

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Industrial Wood CoatingsTechnology

ParquetNow 5 Years

Waterborne 0%* 0%High solids 0% 0%Powder 0% 0%Radiation cured 90% 100%Conventional solids 10% >1%

----- -----100% 100%

*Included in Radiation cured

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Industrial Wood CoatingsTrends & Issues LifestyleCustom finishes follow demand for unique interior furnishings RegulatoryLow/no formaldehyde systems Green certificates, indoor air quality, rising health costs EconomicIncreased efficiency and automation in mature markets Lower labour costs in emerging marketsSignificant process improvements in Asia to remain successful TechnologicalRobust coatings for veneers, lower quality solid and engineered woods ConsolidationEurope and Asia highly fragmented

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Industrial Wood CoatingsKey Messages

Asia is the battleground

Technology and innovation matter most

Distribution is important too

Process cost is paramount

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Industrial Wood CoatingsHeadlines

What happened in 2014?Volume up 3%

What is likely for 2015?Volume up 3-4%

What is the forecast for 2016?Volume up 4%

What is the CAGR from 2015 to 2020?4.4%

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Industrial Wood CoatingsMarket, Companies, Trends, Issues

I hope you have enjoyed

Information Intelligence Insight

on the latest global developments

For a copy of this talk, email louis.mcculloch@btconnect.com