Materis Paints Chief Sees 18% Drop in 2013 Spanish Deco Market

Spain and Portugal will again lead a drop in volumes of decorative paint sales in southern Europe next year as construction and renovation work continues to slump, Wendel’s (MF) Materis Paints predicted.

Volumes may decline 18 percent in the two countries in 2013, following a 50 percent drop from 2008 to 2012, Europe’s third-largest maker of decorative paint said in a presentation today. Volumes in France and Italy, the two largest markets for Materis, will probably drop 8 percent and 12 percent, respectively, the company predicted.

“Next year will be rather bad for our industry,” Bertrand Dumazy, the head of the paint division, said at an investor day in Paris. “We expect a rebound in 2014-2015.”

Materis Paints will reduce its headcount by 5 percent next year after reducing staff by 7 percent this year as profitability was hurt by falling demand and rising raw material prices. Akzo Nobel NV (AKZA), the world’s largest paintmaker, wrote down the value of its decorative paint business in October by 2.5 billion euros ($3.24 billion) after a prolonged attempt to turn around the unit failed to counter falling demand in Europe.

Revenue at Materis Paints may fall by about 4 percent in 2012 after sales of 816 million euros in 2011, Dumazy said. Earnings before interest, taxes, depreciation, amortization and management fees dropped to 8.3 percent of sales in 2011 from 10.1 percent in 2010. The business is a unit of Materis SA, which is 76 percent owned by French investment firm Wendel.

The price of titanium dioxide, a paint ingredient, peaked at about 3,000 euros per ton six months ago, and is now 2,300 euros to 2,400 euros because of the global slowdown, Dumazy said. The price may rebound in the second half of 2013 but is unlikely to reach 3,000 euros, he said.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net.

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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