Paint and adhesives supplier DuluxGroup says it will continue to defend its market leading position in Australia, while a hit to its joint venture in China will not derail its broader Asian interests.
DuluxGroup expects to achieve profit growth in its current fiscal year, and managing director Patrick Houlihan told the company’s annual general meeting that revenue in the first two months is “comfortably ahead” of the same period a year ago.
The only area of the company’s operations that took a hit to profit in 2016/17 was its 51 per cent owned DGL Camel coatings and adhesives business in China and Hong Kong.
Chairman Peter Kirby told Thursday’s AGM that a strategic review of DGL Camel is still underway, after finding the mainland market “much tougher” than Hong Kong, where it remains a market leader.
“We have a smaller market share and we don’t participate across all (of China’s) geography… that particular boat has sailed, and we will be a much more niche player,” Mr Kirby said.
Mr Houlihan said DuluxGroup will continue with a Selleys-led approach in Asia, where a focus on trade and construction markets trumps the consumer renovation and repair market in Australia and New Zealand.
“In Asia our focus is on trade distribution, given this tends to be a ‘do-it-for-me’ rather than ‘do-it-yourself’ consumer market,” Mr Houlihan said.
Selleys has been a successful competitor in markets like Hong Kong and Vietnam for a few decades, and the company expects to make genuine progress in Indonesia with PT Avian Selleys, a joint venture with a leading Indonesian paint company.
“This joint venture is capital light and will ultimately give Selleys access to approximately 40,000 retail hardware outlets,” Mr Houlihan said.
The Indonesian joint venture is on track to begin operating in the second half of 2018.
Mr Houlihan said the company was confident that its core renovation and repair markets in Australia and New Zealand, where 80 per cent if its earnings are generated, were on track to provide ongoing, resilient growth.
DuluxGroup shares were down 7.5 cents at $7.785 at 1325 AEDT.