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FY2018SECOND QUARTERFINANCIAL RESULTSBRIEFINGNov. 19, 2018
Page.02
1. Status of the Kansai Paint Group
2. Financial Results & Forecast
3. Regional Overview
4. The 15th Mid-Term Business Plan Progress
◎ Reference Material for the FY2018 second
quarter Financial Results
FY2018SECOND QUARTER
FINANCIALRESULTSBREIFING
NOVEMBER 19, 2018
Status of the Kansai Paint Group
35%
21%
18%
9%
15%
2%
Japan
India
Asia
Africa
Europe
Other
By region
28%
6%
27%
26%
6%7%
Automotive
Auto Refinish
Industrial
Decorative
Marine &
Protectie
Other Paints
By business
1
Founded :May 1918
Capital :25.6 billion yen（as of September 30, 2018 ）
（Number of Shares Issued:272 million）
Number of Employees :16,367（ as of September 30, 2018 ）
Sales :401.9 billion yen(FY2017)
Page.03
Financial Results & Forecasts
191.8 215.5
0.0
100.0
200.0
300.0
400.0
500.0
FY2017 2Q FY2018 2Q
Sales
Sales2Q Cumulative Full Year
2
（billion yen）
YoY
+12.3%435.0401.9 426.0
0.0
100.0
200.0
300.0
400.0
500.0
（billon yen）
YoY
+6.0%
■Sales
FY2018 Forecast(Initial) （Revised）
FY2017
Page.04
● Sales increased year on year in all regions.
● KANSAI HELIOS (Europe) and the companies in East Africa fully contributed to the performance of the Group.
●Negatively affected by currency conversions.
●Negative effect from translating results to JPY due to depreciation of local currency associated with the revision of assumed currency rates. Sales are expected to increase on a local currency basis compared to the forecast at the beginning of the period.
● Sales are expected to increase year on year in all regions except Asia.
33.2
46.5
35.7
8.3
10.7
8.4
2.0
4.0
6.0
8.0
10.0
12.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0Ordinary Profit Ordinary Profit Margin
FY2018 Forecast(Initial) （Revised）
FY2017
Financial Results & Forecasts
22.6 19.1
11.8
8.9
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
FY2017 2Q FY2018 2Q
Ordinary Profit Ordinary Profit Margin
Ordinary Profit
2
（billion yen） （%）
YoY
▲15.2%
YoY
+7.4%
● Profit decreased year on year in Japan and India.
● Profit increased year on year in Asia, Europe and Africa.
● Negatively affected in all regions by the increase in costs such as raw material prices and the time lag in passing them on in prices.
Ordinary Profit MarginOrdinary Profit
2Q Cumulative Full Year
Page.05
Ordinary Profit MarginOrdinary Profit
（billion yen） （%）
● Raw material prices are expected to remain at high levels.
● Cost reduction efforts will continue.● Profit is expected to increase year on year in Asia
and Africa.● Profit is expected to decrease year on year in
Japan, India, Europe, and other regions.● Profit from equity method affiliates is expected to
increase year on year.
56.469.2
60.1
14.0
15.9
14.1
2.0
6.0
10.0
14.0
18.0
0.0
20.0
40.0
60.0
80.0EBITDA EBITDA Margin
FY2018 Forecast(Initial) （Revised）
FY2017
Financial Results & Forecasts
31.4 30.9
16.4
14.0
8.0
10.0
12.0
14.0
16.0
18.0
0.0
10.0
20.0
30.0
40.0
50.0
FY2017 2Q FY2018 2Q
EBITDA EBITDA Margin
EBITDA
2
（billion yen） （%） （billion yen） （%）
YoY
▲1.4%
YoY
+6.6%
EBITDA MarginEBITDA EBITDA MarginEBITDA
2Q Cumulative Full Year
Page.06
● Pre-tax income decreased year on year.● Amortization of goodwill and depreciation
increased due to consolidation of KANSAI HELIOS, East Africa, etc.
● Operating CF also decreased year on year.
● Although pre-tax income is revised downward, pre-tax income is expected to increase year on year.
● Operating CF is also expected to increase year on year.
155.6 158.0
19.1 18.8
23.6
25.2
0.0
15.0
30.0
0.0
50.0
100.0
150.0
200.0Sales Ordinary Profit EBITDA
YoY
+1.4%
YoY
▲1.3%
Sales（billion yen）
Ordinary ProfitEBITDA
（billion yen）
Regional Overview
Japan
3
2Q Cumulative Full Year
Page.07
158.0
21.7
25.8
77.3 77.8
12.0
8.6
14.0
11.5
0.0
15.0
30.0
0.0
50.0
100.0
150.0
200.0
FY2017 2Q FY2018 2Q
Sales Oridnary Profit EBITDA
YoY
+0.7%
YoY
▲27.5%
Sales（billion yen）
Ordinary ProfitEBITDA
（billon yen）
● Sales grew in the new car area of the automotive coatings sector despite a 1% decrease in auto production .
● The industrial coatings sector saw robust performance mostly in demand for construction machinery.
● Demand shrank in the decorative coatings, automotive coatings (for refinishing) and marine sectors.
● Negatively affected by the increase in costs as the domestic naphtha price rose more than expected (JPY 48,000/KL).
FY2018 Forecast(Initial) （Revised）
FY2017
YoY
▲17.6%
YoY
+6.6%
● Domestic naphtha price forecast is JPY 54,000/kl for the second half.
● Demand forecast in the decorative and marine sectors is revised downward.
● The promotion of and progress in passing on price rises are factored into the forecast.
83.4 88.0
13.4
11.6
15.0
13.6
0.0
5.0
10.0
15.0
20.0
0.0
20.0
40.0
60.0
80.0
100.0Sales Ordinary Profit EBITDA
FY2018 Forecast(Initial) （Revised）
YoY
+5.5%
YoY
▲13.2%
Sales（billion yen）
Ordinary ProfitEBITDA
（billion yen）
Regional Overview
India
3
2Q Cumulative Full Year
Page.08
86.5
14.0
16.1
43.9 45.0
7.3
6.4
8.0
7.3
0.0
2.0
4.0
6.0
8.0
10.0
0.0
20.0
40.0
60.0
80.0
100.0
FY2017 2Q FY2018 2Q
Sales Ordinary Profit EBITDA
YoY
+2.7%
YoY
▲11.7%
Sales（billon yen）
Ordinary ProfitEBITDA
（billion yen）
● Auto output increased while strong demand continued in the decorative field.
● Net sales for the 1st quarter decreased year on year due to changes in the accounting standards following the introduction of GST accounting, but net sales in real terms increased.
● Negatively affected by the increase in costs of materials etc. and the conversion of weaker currency.
YoY
▲9.4%
YoY
▲9.3%
FY2017
● Net sales is expected to increase year on year due to continuous demand expansion in both the automobile and decorative sectors.
● Negative effect from time lag in passing on price rises associated with the rise in raw material prices.
● Negative effect from translating results to JPY.
Regional Overview
Asia
3
2Q Cumulative Full Year
Page.09
63.3 63.0
0.4
6.4
7.6
10.5
0.0
3.0
6.0
9.0
12.0
15.0
0.0
20.0
40.0
60.0
80.0
100.0
FY2017 FY2018 Forecast
Sales Ordinary Profit EBITDA
YoY
▲0.5%
YoY
+1,485%
Sales（billion yen）
Ordinary ProfitEBITDA
（billion yen）
68.0
8.6
12.7
30.7 31.5
2.7
3.3
4.95.2
0.0
2.0
4.0
6.0
8.0
0.0
20.0
40.0
60.0
80.0
100.0
FY2017 2Q FY2018 2Q
Sales Ordinary Profit EBITDA
Yoy
+2.8%
YoY
+27.3%
Sales（billon yen）
Ordinary ProfitEBITDA
（billion yen）
● Auto production recovery continued in Thailand.
● In China, sales in the industrial coatings sector saw growth of paints for construction machinery.
● Profits from equity method affiliates recovered despite the increase in costs of materials etc. (Automotive business in China and review of operations in the Middle East).
YoY
+7.4%
YoY
+36.5%
(Initial) （Revised）
● The forecast is revised downward reflecting negative effect from the revision of currency conversion rate of each country, sales volume performance, and rises in costs such as raw material costs
● Profit from equity method affiliates in China and the Middle-East is revised downward, but expected to increase year on year.
35.1
40.5
-5.0
-3.5
-0.9
1.4
-5.0
-3.0
-1.0
1.0
3.0
5.0
0.0
10.0
20.0
30.0
40.0
50.0
FY2017 FY2018 Forecast
Sales Ordinary Profit EBITDA
14.419.5
-2.3-2.1
-0.7
0.5
-4.0
-3.0
-2.0
-1.0
0.0
1.0
0.0
10.0
20.0
30.0
40.0
50.0
FY2017 2Q FY2018 2Q
Sales Ordinary Profit EBITDA
Regional Overview
Africa
3
（billion yen） （billion yen）（billion yen） （billion yen）
YoY
+15.3%
Ordinary ProfitSales Ordinary ProfitSales
2Q Cumulative Full Year
Page.10
YoY
+35.8%
45.0
-2.9
2.7
● The recovery of demand is slow due to the economic stagnation in South Africa.
● Companies in East Africa fully contributed to the performance of the Group.
● Negatively affected by the increase in costs including raw material prices arising from weak South African rand, and intensified price competition.
(Initial) （Revised）
● The forecast is revised downward because of negative effect from the revision of currency conversion rate due to depreciation of currency and rises in raw material prices.
● EBITDA is expected to return to the black.
Regional Overview
Europe
3
2Q Cumulative Full Year
Page.11
59.171.0
4.4
1.6
9.1
7.7
0.0
2.0
4.0
6.0
8.0
10.0
0.0
20.0
40.0
60.0
80.0
100.0
FY2017 FY2018 Forecast
Sales Ordinary Profit EBITDA
YoY
+20.1%
YoY
▲63.6%
Sales（billion yen）
Ordinary ProfitEBITDA
（billion yen）
72.0
4.1
9.9
22.838.4
2.4 2.4
4.0
5.4
0.0
2.0
4.0
6.0
8.0
0.0
20.0
40.0
60.0
80.0
100.0
FY2017 2Q FY2018 2Q
Sales Ordinary Profit EBITDA
YoY
+68.9%
YoY
+4.4%
Sales（billon yen）
Ordinary ProfitEBITDA
（billon yen）
● KANSAI HELIOS fully contributed to the performance of the
Group. Despite continuous sales growth in the industrial
coatings sector, a rise in raw material prices had a negative
impact on profit.
● In Turkey, despite a decrease in auto production numbers, sales and profit increased significantly in the local currency due to sales promotion and robust demand in the industrial coatings sector.
● There was downward impact from currency conversions in
Turkey.
YoY
+35.2%
YoY
▲15.6%
(Initial) （Revised）
● Negative effect from time lag in passing on price rises associated with the rise in raw material prices.
● Negative effect from translating results to JPY associated with a sharp decline in Turkish lira.
● The deterioration of results of equity method affiliates in Turkey due to depreciation of the currency is factored into the forecast.
Regional Overview
Other
3
2Q Cumulative Full Year
Page.12
5.5 5.5
1.0
0.8
1.7
1.5
0.0
0.4
0.8
1.2
1.6
2.0
0.0
2.0
4.0
6.0
8.0
10.0
FY2017 FY2018 Forecast
Sales Ordinary Profit EBITDA
+0.7%
YoY
▲16.9%
Sales（billion yen）
Ordinary ProfitEBITDA
（billion yen）
2.82.9
0.6
0.3
1.0
0.7
0.0
0.4
0.8
1.2
1.6
2.0
0.0
2.0
4.0
6.0
8.0
10.0
2017 2Q 2018 2Q
Sales Ordinary Profit EBITDA
YoY
+7.6%
YoY
▲34.3%
Sales（billion yen）
Ordinary ProfitEBITDA
（billion yen）
5.5
1.0
1.7
● Sales of U.S. Paint (a U.S. paint subsidiary for automotive components) grew in the industrial coatings sector.
● Profits from equity method affiliates decreased due to sluggish auto production and intensified competition in the U.S.
(Initial) （Revised）
YoY
▲24.7%
YoY
▲10.6%
● Although the U.S. Paint is expected to post profit, the forecast for profits from equity method affiliates is revised downward due to negative effect from a downturn in auto production (by Japanese manufacturers) in the U.S.
The 15th Mid-Term Business Plan Progress
Business Plan
4
Ordinary Profit, EBITDA(billion yen)
Sales(billion yen)
Page.13
445.0
328.1 330.2
401.9426.0
39.7 40.033.2 35.7
59.653.1 56.4
60.1
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
0
100
200
300
400
500Sales Ordinary Profit EBITDA
54.0
2015（Actual）
2016（Actual）
2017(Plan)* （Actual）
2018(Plan)*（Forecast）
*Disclosed at November 2017
8.4
9.5
6.77.5
9.0
10.19.5 9.3
4.0
6.0
8.0
10.0
12.0
2015 2016 2017 2018
ROE Adjusted ROEROE（%）
● In the FY2018 plan, although we initially expected results in South Africa and the Middle-East to recover, we revised the forecast of sales and ordinary profit to JPY 426 billion and JPY 35.7 billion, respectively, since raw material prices have increased more than expected and there is a negative effect from translating results to JPY due to depreciation of local currencies.
● We aim to achieve ROE of more than 10% with the increase of EBITDA.
Each initiative was conducted based on the three themes set as priority measures, etc.
The 15th Mid-Term Business Plan Progress
Priority Measures and Progress
4
Priority measures Main content Progress up until now etc.
Accelerating
Globalization
1. Expanding and strengthening our
businesses in existing markets
2. Entering into new markets and regions
• Acquired shares of the Helios Group in Europe
• Acquired shares of the Sadolin Group in East Africa
• Acquired shares of Polisan Turkey, capital increase from third parties
• Acquired shares of U.S. Paint in the U.S.
• Acquired shares of Saudi Industrial Paint in Saudi Arabia
• Acquired shares of Sancora Paint Industries in Malaysia
• Established a joint venture in Nigeria
• Acquired pipeline-internal-painting technology from Mirodur in Italy
• Mitsui & Co., Ltd. acquired a stake in Kansai Helios
• Development of Components of Lithium-ion Battery
• Acquired shares of Marpol in India and RAK Paints in Bangladesh
• Collaboration with Jutan in Protective Coating Business
Increasing
Profitability
1. Increasing earning power by expanding
market share
2. Reducing costs through efficiency and
optimization
• Promote measures to develop businesses for non-Japanese clients and expansion
of market share
• Promote new business development with European and U.S. automakers.
• Expand sales of functional products such as plaster paint and insect repellent paint
• Kansai Anti-Mosquito Paint obtained approval of U.S. EPA
Strengthening
the Group’s
Management
Foundations
1. Sharing and promoting the resource
utilization within the group
2. Establishing the headquarters’ function
and building the organization
3. Integrating current regions into eight
global regions and establishing a
supervisory control function
• Issue of convertible bonds
• Establishment of headquarters’ functions to start in FY 2017
• Established the Group’s corporate philosophy
• Introduced new corporate brand and logo design.
Page.14
Formation of conductive path
by conductive carbon
is required
Progress of the 15th medium-term management plan topics4
Development of Components of Lithium-ion Battery
Page.15
Kansai paint studies toward the practical use of its pigment dispersion technologies
which can be applied to materials for lithium-ion batteries, which will grow in the future.
Kansai’s Target Composition of lithium ion battery
Optimizing Dispersing Condit ions of Conductive Carbon Future Prospect
Dispersing of functional powders
Cathode/Anode layer
Electric insulation, Thermal storage, Radiation, Impact resistance, etc.
Battery package
Conductivecarbon
Graphite
Discharging
Electrolyte
Lithium metal oxide
Power control unit
Market expansion
Application study
Application study
Basic Study
Expanding period
Growingperiod
EntryPeriod
2020 2025 2030
Sedimentation Seeds
Formation ofconductive path
Disconnection of conductive pass
Optimal dispersion
Other materials
Suitable dispersant
Conductive carbonDispersingCondition Conductivity
Binders
Separator
Charging
We leverage superior technology to contribute to our Customers and Society in a sustainable
manner, with innovative Products and Services, through a competent workforce, built on a
culture of Customer Focus, Integrity and Respect to our Stakeholders.
Page.16
Mission Statement of the Kansai Paint Group
“Designed to last”, a timeless reflection of the Kansai Paint Group.
Providing beauty through color and ceaselessly finding solutions to embrace your living style.
Being sincere, open and positive, continually creating lasting values that please.
Through this practice, we will become an essential element that supports the development of people and society.
Launch of New Kansai Paint Global Corporate BrandBy introducing a new corporate brand to be widely used and promoted, we aim to bring it to life,
and at the same time increase our business competitiveness and expansion.
In Conclusion:
The Kansai Paint Group Global Corporate Brand
Page.17
FY2018SECOND QUARTER
Reference Material forFinancial Results
Reference Material
Sale by Segment2016 2017 2018
1H Full year 1H Full year 1HFull year
(Forecast)
Automotive (domestic) 21.8 47.3 23.7 50.2 24.5 50.5
Automotive (overseas) 28.7 56.1 30.6 61.0 32.1 61.5
Auto Refinish (domestic) 5.4 10.6 5.4 10.5 5.3 10.8
Auto Refinish (overseas) 4.6 8.8 5.5 12.7 7.3 13.7
Automotive total 60.5 122.8 65.3 134.5 69.5 136.6
Industrial (domestic) 19.0 38.3 19.8 39.7 20.5 41.4
Industrial (overseas) 22.2 45.1 32.1 72.2 40.8 76.1
Industrial total 41.2 83.4 51.9 111.9 61.3 117.6
Decorative (domestic) 11.7 22.2 11.5 21.5 11.1 22.3
Decorative (overseas) 31.0 64.4 39.4 82.1 45.8 93.7
Decorative total 42.7 86.7 50.9 103.6 57.0 116.1
Marine & Protective (domestic) 9.6 19.7 10.3 19.8 9.1 18.8
Marine & Protective (overseas) 0.5 1.1 1.1 2.8 1.5 3.4
Marine & Protective total 10.0 20.8 11.4 22.6 10.6 22.3
Other Paints 7.8 16.5 12.4 29.4 16.8 33.1
Total 162.2 330.2 191.8 401.9 215.5 426.0
（billion yen）
Page.18
Reference Material
Sales by Region2016 2017 2018
1H Full year 1H Full year 1HFull year
(Forecast）
Japan 73.8 151.4 77.3 155.6 77.8 158.0
India 37.3 74.7 43.9 83.4 45.0 88.0
Asia 28.3 56.6 30.7 63.3 31.5 63.0
Africa 13.4 28.0 14.4 35.1 19.5 40.5
Europe 8.8 16.8 22.8 59.1 38.4 71.0
Other 0.6 2.6 2.8 5.5 2.9 5.5
Total 162.2 330.2 191.8 401.9 215.5 426.0
（billion yen）
Ordinary Profit by Region2016 2017 2018
1H Full year 1H Full year 1HFull year
(Forecast）
Japan 10.0 23.5 12.0 19.1 8.6 18.8
India 5.9 11.6 7.3 13.4 6.4 11.6
Asia 3.6 6.6 2.7 0.4 3.3 6.4
Africa -1.8 -3.7 -2.3 -5.0 -2.1 -3.5
Europe 0.6 1.0 2.4 4.4 2.4 1.6
Other 0.6 1.0 0.6 1.0 0.3 0.8
Total18.8 40.0 22.6 33.2 19.1 35.7
（billion yen）
Page.19
Cash Flows
Reference Material
（billion yen）
（billion yen）
2016 2017 2018
1H Full year 1H Full year 1HFull year
(Forecast）
Operating CF 10.2 29.1 13.6 33.5 13.3 36.0
Investing CF -62.6 -97.0 -24.7 -33.8 -5.1 -17.0
Financing CF 78.8 60.2 11.2 8.1 -16.9 -22.0
Depreciation, Capital Expenditures, R&D Expenses
2016 2017 2018
1H Full year 1H Full year 1HFull year
(Forecast）
Depreciation 4.8 10.2 5.9 13.2 6.9 15.0
Capital expenditures 6.2 13.6 7.6 16.8 9.7 23.0
R&D expenses 2.5 5.3 3.1 6.6 3.4 7.0
Page.20
Reference material
Key Performance Indicators2016 2017 2018
1H Full year 1H Full year 1H
Net assets （billion yen） 262.9 296.1 310.4 322.4 314.3
Total assets （billion yen） 497.1 540.4 585.8 601.3 583.3
Net assets per share (yen) 885.63 984.5 1,038.61 1,074.09 1,052.27
Earnings per share (yen) 43.80 93.16 49.38 68.80 45.22
Shareholders’ equity ratio (%) 45.8 46.9 45.6 46.0 46.4
Return on equity (%) - 9.5 - 6.7 -
Price-earnings ratio (multiple) - 25.4 - 36.0 -
No. of employees (persons) 12,435 14,828 15,754 15,731 16,367
Domestic Car Production
2016 2017 2018
1H Full year 1H Full year 1HFull year (Our Predictions）
No. of cars produced 4.41 9.36 4.67 9.67 4.62 9.75
Source: Japan Automobile Manufactures’ Association
（million）
Page.21
Reference Material
Currency Translation Rates2017 2018
Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep2H (our
prediction)
U.S. Dollar 114.10 111.43 111.35 113.03 108.74 108.79 111.82 111.82
Euro 120.99 123.23 130.61 133.61 132.88 129.58 130.21 130.21
Indian Rupee 1.74 1.74 1.74 1.76 1.71 1.64 1.61 1.61
Chinese Yuan 16.57 16.33 16.66 17.10 17.11 17.00 16.45 16.45
Thai Baht 3.25 3.26 3.33 3.43 3.44 3.40 3.40 3.40
Malaysian Ringgit 25.67 25.69 26.12 27.25 27.73 27.56 27.36 27.36
Indonesian Rupiah 0.0086 0.0084 0.0084 0.0084 0.0081 0.0078 0.0077 0.0077
Turkish Lira 31.15 31.33 31.75 30.09 28.49 25.51 20.67 18.86
South African Rand 8.48 8.44 8.44 8.42 9.09 8.60 8.02 8.02
yen/local currency
Domestic Naphtha Price(our estimate)2017 2018
1H 2H 1H (Forecast) 2H (our prediction)
Domestic naphtha price 37,600 46,300 51,200 54,000
(JPY／kl）
Page.22
Forecasts of financial results stated in this document are forecasts based on
currently available information that includes potential risks and uncertain elements.
Therefore, actual financial results may differ from the forecast figures.
KPAL INVESTOR PRESENTATION
19 NOVEMBER 2018
1
Africa is a volatile business environment in the short term with huge future
potential
CPI SA Mal. Bots. Zim. Nam. Zam. Swl. Nig. Ken. Ugan. Tanz. Italy
2018 Exit 4.7% 9.0% 3.7% 5.9% 5.8% 8.1% 5.4% 11.2% 4.8% 3.8% 3.3% 1.6%
2019 5.7% 11.0% 3.0% 5.9% 4.0% 7.3% 5.8% 14.0% 5.0% 6.2% 2.4% 1.8%
2020 5.4% 12.0% 5.0% 6.7% 6.0% 5.8% 6.0% 12.0% 5.0% 6.0% 6.6% 2.3%
2021 5.1% 12.0% 5.0% 6.7% 6.0% 5.8% 6.0% 12.0% 5.0% 6.0% 6.6% 2.3%
2018 2030Land Area : 29.6 M sq. Km
Population : 1.28 B - 1.70 B 33%
% World : 16.64% - 20.80% 4%
Urban : 40.60% - 45.20% 5%
Med. Age : 19.4 - 21.2 1.8
Source: Worldometers
KPAL’s footprint makes it the market leader in Sub Sharan
Africa2017 Survey
SAP implementation in 2015
Mid –Tier product demand
Difficult to implement full price increases
High Expenses
High Inventory levels
East Africa competitor activity
However, KPAL’s journey has not been easy from 2015, experiencing many challenges, but we are on the road to
recovery
We lost market share due to poor service levels during the SAP
implementation Adopt a least risk approach
- Implemented across the entire business (end to end)
- Went live with Deco and Industrial – biggest business
- A modular approach would have been better
Timing is critical
- Peak season implementation Q 4
- Allowed competitors to take shelf space
- Poor customer satisfaction
- We seemed to have rushed implementation
People
- Should have focused on change management
- More training
Problem is not SAP – but implementation Used Consultants to assist in rectifying 2015/6 Staff engagement sessions & roadshows Explained customers & suppliers All stakeholders understand the situation Staff now understand how to use SAP and its benefits Market knows that we have bounced back We have the capability and confidence to move forward
Result
- Paid Penalties due to non supply
- Inaccurate forecasts resulting in high inventory
- Increase in warehousing and logistics costs
- Lost share in Deco and Industrial
- Lost customer confidence resulting in poor market perception
- Low employee morale and hostile culture
6
The S.A. landscape changed and KPAL was not agile enough to adapt resulting in share loss, but we are clawing
back
Defend Premium – new colours & advertising campaign Expand Mid Tier – exterior segment & in store focus Launch new Corporate Identity Focus on Digital communications Corporate Social Investment – Classrooms Track Salesforce Efficiency Implement Joint Business Planning with Key Customers Focus on Protective Coatings Introduce Mobihel (Helios) Leverage Nerolac experience in Mid -Tier
Our customers also make it difficult for us to implement price increases
immediately
We will be proactive in forecasting input costs – built into SAP Build in escalation clauses on tenders Leverage purchasing synergies (with East Africa) Implement a Value Engineering Program (leverage Nerolac expertise) Reward the salesforce on Gross Profit and not Revenue Reduced marketing spend to focus on instore activity, linked to sales plans rather than TV Brand advertising (increased effectiveness)
We also embarked on many cost reduction programs with the aim of changing employees
mindsetsMANPOWER COST
Engaged with Korn Ferry (Global Consultants)- Benchmarked structures against 52 companies- Recommendations by Functional Department
Aligned structures to future organization - Focus on leveraging SAP benefits- Central led procurement- Salesforce plans and support- New Manufacturing Model
Implemented a restructure program (Sept – Nov)- Removed 101 employees - A future benefit of R 64 m from 2019- Once off cost of R 42 m
Exit JV partnership in Nigeria and implement a new model in West Africa Rationalise Products ( SKUs ) Reduce the number of Raw materials we use Reduce number of vendors Improve Operational Efficiencies (Leverage KPJ support team) Evaluate the option of an on-site warehouse on the LVR – after 2020
Cost Reduction Program vs Budget ( R ' m ) May - Oct
Cancelation of non essential contracts, manpower savings, project
realignment37,637
New Supplier for customer Incentive review of target assumptions
and in house communication strategy13,900
Pallet Reduction 2,500
Cleaning, Security, Canteen, Laundry 514
Reduction in IT contract workers 4,113
Vacancies, travel and general cost control 2,487
61,151
9
We have also ended up with very high inventory levels due to inaccurate system forecasts but are making good progress in
rectifying
Continue with PWC to assist (based on Risk) Focus on getting the forecast improved at depot level Embed the Sales & Operations process – one plan Reduce Inventory by a further R 120 M in 2019 Implement new Manufacturing Process (similar to Nerolac)
After entrenching Plascon in East Africa, we will focus on increasing market
share E. Africa M&A ended successfully despite brand
changes and the brand owner’s fierce re-entry.
Well-prepared brand migration - Experienced marketing resources from SA- Training of local sales & front office staff in country and in SA
-Well-established and strong relationship with dealers
Countered Competitor re-entry - Did not take a Price Increase in H1- Successfully defended share with sales & marketing activities. - Most of competitors have slowed down activities
Maximised on Production capabilities - Focused on improved service to customers Anti Mosquito Paint launch in Uganda – end Jan ‘19
Launching Water proofing products from SA Annual promotional activity Paint & Win campaign Implement Group purchasing for all 3 countries Introduction Japanese Retan Auto Refinish range Protective Coatings expansion - via co-operation
agreement Jotun Proactive Margin management like SA +
In Summary the 15th Middle term has been very challenging, but we understand the issues and have
adequate plans to promise a bright future
THANK YOU
12
Forecasts of financial results stated in this document are forecasts based on
currently available information that includes potential risks and uncertain elements.
Therefore, actual financial results may differ from the forecast figures.
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