Wendel’s Materis Focused on Margin Amid Heightened M&A Interest

Materis Paint, the French paintmaker owned by buyout firm Wendel SA, is starting to see the benefit from a savings program and is regaining market share as it battles with competitors including PPG Industries Inc. and Akzo Nobel NV.

Profitability at the maker of Zolpan and Tollens paint brands will widen to 8.9 percent this year from 8.2 percent in 2013, helped by cost cuts and rebounding demand in southern Europe, Chief Executive Officer Bertrand Dumazy said in a presentation in Paris today.

Materis, now in its eighth year of Wendel ownership, is looking to improve earnings after a jump in the cost of titanium dioxide pigments coincided with a 40 percent drop in demand in southern European markets. The market remains “highly competitive,” and while paintmakers are in acquisition mode, Materis isn’t currently for sale, Dumazy said.

“If we want to thrive in our industry, we need to be the best purchasers of the world,” as raw material and packaging represent 32 percent of sales, said the CEO.

The paint business is the last part of Materis retained by Wendel, which divested other units to bring debt down to four times earnings.

Bolstered by a stronger U.S. recovery and improved construction markets, PPG and Valspar Corp. have entered European markets, challenging incumbent paintmaker Akzo Nobel in its traditionally strongest markets. In the U.K., Valspar has signed a deal with home-improvement chain B&Q to establish paint-mixing stations.

Materis has a presence in markets equaling 40 percent of Europe’s 10-billion euro decorative paint markets, mostly in France and Italy, with smaller presences in Switzerland, Spain and Portugal. It was the fourth-largest player in decorative paints in Europe last year, behind Akzo Nobel, PPG and Daw.

Dumazy said he plans to broaden Materis’ distribution network in France to grab more of the market. Sales this year are expected to total 748 million euros ($930 million), compared with 754 million euros in 2013, he added.

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