AkzoNobel to paint a bright future for the UK as the Dulux owner invests £112m in two new plants

Ton Büchner has been up since 5.30am, yet despite being grilled by investors and journalists about his company’s financial results for 2016 the day before we meet, the boss of AkzoNobel is remarkably sprightly.

But it’s not the performance of the paints and chemical behemoth he first wants to talk about. It’s the queue. At London City airport.

Having spent the majority of a three-decade career living abroad, in China, Indonesia, Malaysia, Singapore, the US and Switzerland, the Dutchman has clocked up thousands of thousands of air miles under his belt.

That morning, the 65-minute flight from Amsterdam’s Schiphol to City has got the better of him. Delays on the runway and electronic gate failures mean that the airport was far more hectic than normal. “The queue was all the way out on to the tarmac,” he shrugs.

The anecdote is a rare moment of informality from a man who has a reputation for having a laser-like focus on managing the sprawling business he is in charge of. In the year before he got the top job at the Anglo-Dutch giant – best known in the UK for being behind such major brands as Dulux, Cuprinol and Polyfilla, and for having bought Courtaulds in 1998 and ICI in 2007 – Akzo made an adjusted profit of around €1bn (£855m) on sales of €15.7bn.

Last year, according to figures published on Wednesday, the business made an adjusted profit – earnings before interest and tax - of €1.5bn on sales of €14.2bn. He puts the jump in profitability in that time, albeit on reduced revenues, down to focus and innovation. He was attracted to Akzo because of its “amazing set of brands” and “positions that are market leading”. “So when I started looking at the financial performance of the company relative to its peers, I thought, 'Hey that’s odd, that’s something we can actually change.’

“When you have strong brands and market positions, you should be able to be a strong performer.”

As a result of this focus, Akzo’s shares are up approximately 46pc on the last five years, giving it stock market value of €15.8bn. “Catapulting our performance has been an exciting ride,” he smiles.

But figures are not the only thing that excite the smooth-talking industrialist. Akzo is spending £112m in the north east of England at two different sites designed to propel two parts of the business yet further. The lion’s share of the cash, some £100m, will be spent at Ashington in Northumberland, where Akzo is creating a new manufacturing plant for its paint brands.

The factory, consolidating work previously done at sites in Slough and Prudhoe in the Tyne Valley, will create 120 jobs directly, and an estimated further 600 in the supply chain. Testing has already begun and production is expected “pretty soon”.

“It’s a big chunk of change,” Büchner says of the investment. “But it’s a commitment to the UK, which is an important market for us. Having a dedicated facility here in the UK will be a big contributor to our efficiency.”

The UK arm generated €1bn of turnover in 2015, 7pc of group sales.

Some £12m is being spent upgrading its research hub in Felling, just outside Gateshead, in keeping with Büchner’s desire to see the company constantly innovating.

“What we’re trying to create in Felling is a research and development hub for the world,” he explains, “delivering incredibly technologically demanding products for these coatings.” Coatings is Akzo’s bread and butter, with the business covering everything from ships to oil rigs to the inside of drains and even the roof of centre court at the All England Lawn Tennis Club in Wimbledon.

The Felling site already has a fire lab where the materials can be tested up to heats of 1,500 degrees. The latest investment will see Akzo develop a cryogenics lab to test and adapt how coatings react in extreme cold, as well as investigating new applications for linings inside pipelines and tunnels.

Although Akzo was a proponent of the Remain campaign in the run-up to last June’s European Union referendum, Büchner says Brexit is no reason for the company to change tack. “It’s a reflection of the feelings in a part of the population which I think we as companies should absolutely respect,” he says, conscious that a fair proportion of his 3,500 employees in the UK will have voted to Leave.

“Now we’re in a position where we’re saying the faster we can get clarity, the better. Business wants predictability, we don’t mind change and will adapt to it when we need to. But the faster we can make it happen together, the better it will be.”

The fall in sterling since the referendum has not overly effected the business. “The good thing in the UK is that most of the goods we sell in the UK, we actually manufacture in the UK. So from that perspective, we’re naturally hedged.

“On the other side, the stuff we do export presently benefits a little from the exchange rate. But we consolidate our annual accounts in euros, so the UK revenues suddenly look a lot less. But that’s a translation effect.”

He says it’s too early to tell what, if any, long-term impact Brexit will have on the business.

“The biggest change has been the exchange rate. There’s been some apprehension around construction activity in the country, people don’t necessarily know what the trends are, but we’ve seen a bit of hesitation.

“What we’ve done as a company – including a record result in 2016 – is we’ve learnt the ability to respond. So when economic effects and geopolitical changes do require us to adapt quickly, we can do that,” he says, citing that as key given the 80 territories it operates in.

And so what of the US, where it employs about 10pc of its global workforce, and the new president creating geopolitical changes on an almost hourly basis, most of them via his Twitter account?

“It’s at least new,” he smiles, slightly awkwardly. “For now, I think our attitude is, let’s stay calm. We have a good business, good technology and a lot of families there rely on us.”

That said, he’s aware of Trump’s business-centric rhetoric: “We are there very much listening. We don’t exactly know what is going to happen yet. We have 4,500 employees in the US, by and large Americans. We are manufacturing in America for America. The raw materials we buy are mostly locally bought.

“We’ll have to see what the developments are. At the moment, it’s mostly noisy politics.”

China, where he lived for a number of years when he worked for equipment giant Sulzer before taking the top job at Akzo in 2012 at the relatively young age of 45, is one economic superpower he is more relaxed talking about.

If it’s not lauding the values of Dulux’s specialist “Forest Breath” paint, an anti-bacterial product designed to help freshen the air, it’s highlighting the need to employ a small army of painters in the country as China’s burgeoning middle classes don’t like to live at home when their homes are being decorated.

He also appreciates Akzo’s role as a unique window on to the fate of the Chinese economy. “We have a good view as we serve so many segments. Whereas five or six years ago, everything was growth, what has happened in China now is there a bit of differentiation, which we see in all other markets all the time.

“Last year, property was doing well, steel was a bit weaker, electronics was doing strong. For us, that’s normal everywhere else in the world. In this normalisation, it’s good to be the company that sees these things, and we’ve seen a move from an industrial to a more consumer-led economy.”

That understanding is vital to him, given it’s the country with the largest number of employees – 8,000 at the last count – and generates some €1.8bn of sales in no small part to the work his ICI predecessors did on promoting Dulux as a premium brand in China.

Five years into the role – his predecessor did nine – he’s already starting to think that if his first act was about financial performance, what his second act will be.

Accelerate organic growth, add acquisitions, and accelerate innovations, he says, pointing out he’s already started to do all three.

Innovations, just like those at Felling, are clearly high on his agenda.

He points to a colleague’s iPhone that is showing a smartphone application which allows a customer to take a picture of a wall in their home and then see how it would look covered in different Dulux paints. If they like how it looks, they can order tester strips to be posted to allow them to try it out.

“People start sitting at home on their sofa saying, 'I think I want a change.’ Then they go to a B&Q or Homebase or one of our own stores, as we have a lot of those in the UK, and they stand in front of a rack of paint. Between the wish and what do I buy now, there is this gap which makes people a bit dazed.

“Initially, people said, 'Ah, this visualiser, this is just a gimmick. But we’ve had 13 million downloads globally. It’s not a trivial app.”

The beauty, he explains, is that Akzo can use those customers’ visualisations to understand trends and start making more of certain paints and less of others.

To most of us, it might just be paint on a wall or a coating on the hull of a ship that Akzo makes but, for Büchner, it’s a way of life and one that he’s determined to make as colourful – and successful – as possible.