“Prepare for take off”
Arnhem, the Netherlands, January 10, 2002 – “We have experienced one of the most turbulent years in the history of our Company, mostly caused by external events. We can be proud to have kept Akzo Nobel in good health. However, we must become even more alert and even faster in reacting to changes. When the market goes down, we must adjust instantaneously and not shy away from preventive measures. The flip side of that coin is, of course, that we will then also be stronger and the first to reap the benefits of the turnaround in the economy. We will prepare now for take off later this year,” said Cees J.A. van Lede, CEO of Akzo Nobel in his New Year’s Address to the more than 67,000 employees worldwide.
Looking back to 2001, Mr. Van Lede called it “a sobering experience”. “The world had to re-adjust the hard way to the reality of falling share prices, something many had forgotten could happen. On top of this cold shower, the industrialized world was confronted with growth rates tumbling down. September 11 duly aggravated this situation. Investments are substantially down everywhere and consumer confidence, which upheld economy for most of last year, is at its lowest point in 25 years,” Mr. Van Lede said.
“There is a lesson to be learned on how companies respond to such an abrupt change in perceived economic security. In contrast to the U.S.A., continental Europe has shown its usual secondary reaction. Unemployment apparently has to go up again before governments take steps. Companies in Europe often only seem to propose the real remedies when they approach the danger zone. Akzo Nobel is a different company. Already in the summer we started to implement a far reaching program of restructuring, primarily affecting Coatings and Chemicals, where more than 2,000 jobs will be cut over a couple of years. We have now accelerated and extended these programs a great deal, recognizing the fact that we are competing in global markets with fast reacting American and Asian companies.”
Mr. Van Lede explained that the shareholders’ appreciation of Akzo Nobel as a hybrid company has also changed with the sobering environment. “We are now praised as a defensive stock enjoying the favor of many disappointed dot.com and other investors. It is increasingly recognized that around 50 percent of our profits come from Pharma, which is our main value driver. We kept the ship on course and invested in line with our priorities i.e. most in Pharma.”
Looking forward to this year Mr. Van Lede said: “2002 will certainly be one of the years marked by an unusually high degree of uncertainty, insecurity and lack of economic growth. The days of automatic economic growth are over. Now is the time to tell the men from the boys; managing the downturn is infinitely more difficult than in the easy nineties. In this vulnerable economic climate, the message for Akzo Nobel is clear. We want to get ourselves in the best possible shape to benefit immediately from the upturn. Akzo Nobel will prepare for take off and use the coming months to get the company into optimal condition.”
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