Akzo Nobel to Exit China Fatty Acid Business at Boxing Site

Akzo Nobel NV (AKZA) said it will exit the merchant fatty acid business at its Boxing, China site as the company shutters less profitable businesses.

The closing of two out of three plants at the location, part of the Boxing Oleochemicals acquisition in January 2012, will affect about 200 employees, the company said in a statement today.

“The fatty acid market in Asia is oversupplied and much less profitable than other businesses, so this is about refocusing,” company spokesman Paul Thomas said by phone.

Akzo, which makes products from decorative paints to chemicals that are used in personal care products to asphalt road paving, is also upgrading the Boxing site, to bring it in line with ’’Akzo standards’’ and boost local production capacity for amines, an organic compound, said Thomas.

Growth economies like China and India have become more important for Akzo as European decorative paint and specialty chemicals markets are stagnating. In 2012, 26 percent of revenue came from the Asia Pacific region, and 38 percent from “mature” European markets. The company said it plans to invest a further 65 million euros ($84 million) in China, both in Boxing and Ningbo.

Akzo currently employs more than 7,000 people in China, with 2012 revenue totaling 1.7 billion euros, the majority of which is generated from local demand, the company said.

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net