market update: state of the global coatings industry · packaging finishes-metal container &...

Prepared for:

2016 Annual MeetingInternational Paint and Printing Ink Council

&19th Asian Paint Industry Council Meeting

Tokyo, Japan

Presented by:

Andy DoyleInternational Paint and Printing Ink Council

Washington DC

March 3, 2016

Market Update: State of the Global Coatings Industry

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March 1 – 4, 2016

2016 IPPIC Annual MeetingAPIC 19th Council Meeting

Tokyo, Japan

Thank you to our Host

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IPPIC

Our organization continues to grow in both size and international recognition!

Market Update: IPPIC’s Global Market Analysis Report

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Global Coatings Market Analysis1st Edition: (2007 – 2012)2nd Edition: (2009 – 2014)3rd Edition: (2011 – 2016)

Today’s presentation is an update of the 4th edition of the IPPIC Global Market Analysis report published in December 2014.

4th Edition: (2013 – 2018)

R$

Note: Market Estimates in this PresentationAre Shown in U.S. Dollars (USD)

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€

₨

¥

£₱C$

CNY

1. Decorative Coatings- Painting Contractors- Do-It-Yourself (DIY)

2. Auto OEM Coatings- Passenger Cars- Light Trucks- SUVs

3. Transportation Coatings- Heavy Duty Truck, Bus & RV- Aerospace- Other Land Transportation

4. Wood Finishes- Wood Furniture, Cabinets, etc.- Flat Stock

5. Powder Coatings- Thermosets- Thermoplastics

6. Coil Coatings- Coil - Sheet and Strip- Extrusion

7. Packaging Finishes- Metal Container & Closures- Paper, Paperboard, Film & Foil

8. General Industrial Finishes- Non-Wood Furniture & Fixtures- Heavy Machinery & Equipment- Home Appliances- Other Industrial Products

9. Automotive Refinish- Passenger Vehicles- Light trucks

10. Industrial Maintenance & Protective Coatings- Oil & Gas- Infrastructure

11. Marine Coatings- Commercial, Military, etc.

Three Coatings Classifications11 Coatings Segments Investigated

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Five Geographic Regions Studied

North America

Latin America

Middle East& Africa(MEA)

Europe

Asia Pacific

Flags represent the locations of IPPIC Members

Presentation Agenda

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1. Overview - Global Coatings Industry

2. Economic Trends & Driving Forces

3. Global Coatings Industry Forecast

4. Final Thoughts

Global Coatings Industry – 2015Volume vs. Value (Decorative vs. Industrial)

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41 Billion Liters $144 Billion (USD)

55% 57%

45% 43%

41 B.Liters

$144 Billion

Source: Orr & Boss, Inc

Global Coatings Industry -- 2015End Use Segments: Volume vs. Value

2015 Volume by End Use Segment41 Billion Liters

2015 Value by End Use Segment$144 Billion USD

Source: Orr & Boss, Inc

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Segment ASPAutomotive Refinish $10.71 / liter

Decorative $2.78 / liter

ASP = Average Selling Price

IM &Protective

5%

Packaging3%

2015 Global Coatings IndustryVolume by Region

41 Billion Liters

Global Coatings Industry Geographic Segment: Volume vs. Value

2015 Global Coatings IndustryValue by Region$144 Billion USD

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Source: Orr & Boss, Inc

Region ASPNorth America $4.57 / literEurope $4.34 / literLatin America $3.24 / literAsia Pacific $3.10 / literMEA $3.01 / liter

ASP = Average Selling Price

20.8 Billion Liters $64.4 Billion (USD)

ASP

Sale Price Product Mix

Global Coatings -- Volume GrowthFrom 2008 to 2015

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200829 Billion Liters

201541 Billion Liters4.9% CAGR

Source: Orr & Boss, Inc

76% Growth

1% Growth

Coatings Industry Growth – 2008 to 2015

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Growth – differences by geographic region.

Asia – Very strong growth.

Latin America – Fairly good growth.

Middle East – Moderate growth.

North America – Little growth.

Europe – Flat growth.

Geographic Shifts - VolumeFrom 2008 to 2015

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Changes in Market Share by Geographic Region

200829 Billion Liters

201541 Billion Liters

4.9% CAGR

Source: Orr & Boss, Inc

Presentation Agenda

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1. Overview - Global Coatings Industry

2. Economic Trends & Driving Forces

3. Global Coatings Industry Forecast

4. Final Thoughts

Examples: Coatings Market Drivers

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A-C-E Equipment

GDP Growth

CivilConstruction

ResidentialConstruction

Oil / GasProduction

Beverage Packaging

GlobalShipping

VehicleProduction

VehicleAccidents

Distribution of Auto OEM Paint ConsumedDistribution of Vehicle Production86 Million Units

Example 1: Vehicles Built vs. Auto OEM Paint Produced (2014)

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Source: OICA Automotive Statistics Source: Orr & Boss, Inc

Example 2: Regional Distribution of Marine Coatings

Source: Orr & Boss, Inc.

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2014

Example 3: Marine Coatings (2014)New Builds of Ships vs. Repairs

CoatingsNew Builds vs. Maintenance & Repair

(Volume)New Builds: Countries within Asia

(Vessels Produced)

Source: Orr & Boss, Inc. Sources: IHS World Fleet Statistics; Int’l Council of Marine Industry

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Per Capita Coatings Consumption

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North America clearly has the highest per capital coatings demand.

However … good opportunities exist for coatings growth in developing regions as the middle class continues to expand.

Presentation Agenda

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1. Overview - Global Coatings Industry

2. Economic Trends & Driving Forces

3. Global Coatings Industry Forecast

4. Final Thoughts

Global Coatings Industry (2008 to 2018)Volume Growth by Region

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201337 Billion Liters

2018f46 Billion Liters

Coatings Volume CAGR 2013 to 2018f

Region Decorative Industrial TotalAsia Pacific 5.2% 6.7% 6.0%Latin America 4.5% 4.0% 4.4%MEA 3.4% 4.1% 3.6%North America 2.5% 1.1% 1.9%Europe 1.6% 2.3% 1.9%World 3.8% 5.1% 4.4%

200829 Billion Liters

LatinAmerica

9%

Source: Orr & Boss

Coatings Volume CAGR 2008 to 2013

Region Decorative Industrial TotalAsia Pacific 10.8% 9.1% 9.8%Latin America 3.6% 3.6% 3.6%MEA 2.9% 2.0% 2.6%North America 0.9% 0.4% 0.7%Europe -0.2% -0.7% -0.4%World 4.6% 5.1% 4.8%

Global Coatings Industry (2008 to 2018)Volume and Value Growth

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2013 2018f2008

Source: Orr & Boss

$100 Billion (USD)

29 Billion Liters

$130 Billion (USD)

37 Billion Liters

$167 Billion (USD)

46 Billion Liters

Presentation Agenda

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1. Overview - Global Coatings Industry

2. Economic Trends & Driving Forces

3. Global Coatings Industry Forecast

4. Final Thoughts

Forecasts for the Global EconomyHow the Economy Can Impact Future Coatings Growth

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Global Economy IMF’s Forecast Revision: Last year’s global growth forecast -- revised downward for 2016 & 2017. Global Economy: Forecasted to have 3.4 % growth in 2016 & 3.6% growth n 2017. High Income Countries: Continued slow recovery. Modest and uneven growth Developing Countries: Mixed picture -- but economic challenges continue for many countries.

Asia Pacific China: Slowing growth – forecasted to have 6.3% growth in 2016 and 6.0% growth in 2017. China: Rebalancing of economic activity -- weaker investment and slower manufacturing activity. Japan: 1% or less GDP growth forecasted for the next two years. India: Forecasted to have the highest GDP growth in the region – could reach 8% GDP annual growth. Southeast Asia: Low oil prices, structural reforms, infrastructure investment – a positive for most.

Europe Most of Western Europe: The 1.5% GDP growth in 2015 is likely to continue over next few years. Positives: Weakening euro exchange rate & low oil prices – proving to be positives for most countries. Challenges / Risks Remain: Russia recession; economies of Greece & Iberian peninsula; refugees. Emerging Europe: Projected to continue growing at a broadly steady pace.

Forecasts for the Global EconomyHow the Economy Can Impact Future Coatings Growth

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North America USA: Energy boom, low energy costs & strong U.S. dollar – seem to be driving economic growth. USA: But … exports are moderating due to strong dollar and sagging foreign demand. Canada: Forecasted 2% growth may be cut back due to lower prices for oil and exported commodities.

Latin America & Caribbean Latin America: Continued struggles. Aggregate GDP growth deceleration will likely continue. Brazil: Good long-term potential – but struggling with low oil prices, inflation & economic recession. Mexico: GDP forecasted to have 2.7% to 3.2 % annual growth over next few years. Mexico: But struggling with weak external demand, low oil prices & government spending cuts.

Middle East & Africa Middle East: Developments in the region dominated by falling oil prices & rising geopolitical tensions. Middle East: 2016 GDP growth forecast cut back again to 2.8% -- due to these challenges. Africa: Longer term -- may turn out to be the next China in term of growth & market size potential.

IPPIC’s Global Market Analysis

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Contact: Steve Sides, American Coatings Association

Washington DC(202) 462-6272

ssides@paint.org

[2015 – 2020]Global Market AnalysisFOR THE PAINT & COATINGS INDUSTRY

INTERNATIONAL PAINT & PRINTING INK COUNCIL

Preparing for the 5th edition of the Global Market Analysis

to be published December, 2016.

Prepared for:

2016 Annual MeetingInternational Paint and Printing Ink Council

&19th Asian Paint Industry Council Meeting

Tokyo, Japan

Presented by:

Andy DoyleInternational Paint and Printing Ink Council

Washington DC

March 3, 2016

Market Update: State of the Global Coatings Industry