Chemicals: Virtual Coatings Conference: Operational execution & supply security drive growth

Research evidence excerpt

Chemicals: Virtual Coatings Conference: Operational execution & supply security drive growth

Company specific takeaways

Axalta

We hosted a call with Carl Anderson, Axalta’s Chief Financial Officer, who discussed the

AkzoNobel merger (See: Akzo Nobel: No (G)regrets), end markets outlook, and raw

material inflation. He continued to express confidence in achieving the planned $600

million of synergies from the proposed AkzoNobel combination, citing the extensive

work already completed by the clean teams, while noting that he does not believe the

market is fully recognizing the value of the synergy opportunity. On raw materials, Axalta

continues to expect MSD inflation, though recent trends suggest costs may ultimately

land toward the lower end of that range as certain inputs begin to ease. The company

also noted that more than half of its mobility coatings business is protected by raw

material index mechanisms, while additional pricing actions have been implemented

across industrial coatings to offset inflationary pressures. From a demand perspective,

management described sequential improvement in refinish markets and signs that the

North American channel destocking cycle is nearing its end. Insurance claims activity, a

key driver of refinish demand, has begun to stabilize, which could support distributor

restocking and improve demand in the second half of the year. Industrial coatings

demand remains mixed, though the business has done a strong job protecting margins

through disciplined execution. Looking ahead, Axalta sees opportunities to benefit from

continued consolidation among body shops, where customers are increasingly focused

on productivity-enhancing technologies and digital solutions.

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