Assets: DuluxGroup (Pacific・Europe)

Features of the asset

With a market presence in 22 countries across the Pacific^*1 and Europe, commanding the No.1 market share in decorative paints in four countries, including Australia, and ranking in the top 3 in six other countries
Anchoring its growth on three strategic pillars, being (1) extending its market leading position in the Pacific, (2) leveraging capability for growth into the mature European paint and coatings market, and (3) leveraging capability for growth into global SAF^*2 segments
Pursuing sustainable growth through organic growth and strategic M&As

Australia, New Zealand, Papua New Guinea
Sealants, Adhesives & Fillers

An excellent management team instrumental in achieving continuous growth each year

Patrick Houlihan Chairman & CEO DuluxGroup

Patrick Jones COO Dulux Paints & Coatings Australia and New Zealand
Richard Stuckes COO DGL Europe Paints & Coatings (including Cromology and JUB)
Martin Ward COO DGL Sealants, Adhesives & Fillers (including Selleys and NPT)

Financial outcomes

2023 results

Revenue from the decorative paints business increased from the previous year in both the Pacific and European markets, despite market volumes generally flat or declining from economic and geopolitical pressures, underpinned by ongoing focus on brand investment, innovation and customer service. Revenue from the adjacencies business increased, mainly due to the benefit of the new consolidation of NPT. This was partly offset by lower sales of External Thermal Insulation Composite System (ETICS) in Europe, due to reduced government incentives. Overall, our consolidated revenue rose by 14.4% YoY to JPY360.4 billion.
Operating profit increased by 16.7% YoY to JPY34.6 billion, driven by the effects of new consolidation and revenue growth, coupled with the normalised gross profit margin (post COVID).

Growth since the acquisition (2019)

Under the guidance of its excellent management team, DuluxGroup has consistently achieved strong earnings growth through focus on organic and inorganic strategic growth initiatives across its three strategic pillars. As a result, since the acquisition, revenue increased by 167.2%, with operating profit up 117.7%. DuluxGroup’s focus on strategic M&A has played an important role in complementing its organic growth initiatives, with over 30 acquisitions (including a mixture of strategic and small bolt-on businesses) executed since it joined Nippon Paint Group in 2019.

Trends in revenue, operating profit, and operating profit margin

Segment basis (after elimination of inter-segment transactions and after PPA)

Pro forma figures. Including one-off items such as M&A cost
2023 results

Revenue from the decorative paints business increased from the previous year despite flat volumes, with higher volumes in the trade-use market offset by lower retail market volumes (normalizing post-COVID). Revenue in the adjacencies business increased, mainly from the benefit of bolt-on acquisitions. Consequently, revenue rose 9.3% YoY to JPY222.5 billion.
Operating profit increased by 9.3% YoY to JPY28.5 billion, as the effects of higher sales and normalized gross profit margin (post COVID) offset inflation-driven increases in SG&A expenses.
In terms of both volume and value, Dulux has successfully maintained its leading market share in the Australian decorative paints sector.

Growth since the acquisition (2019)

By relentlessly focusing on continuous investment in premium brand products, consumer insights, innovations, marketing, customer services catering to retail and trade-use customers, DuluxGroup has continued to outpace the market growth. Furthermore, the company has complemented its consistent organic growth with multiple strategic and bolt-on acquisitions.
As a result, since the acquisition, revenue has grown by 65.0% and operating profit by 79.4%.

Trends in revenue, operating profit, and operating profit margin

Market share^*4 (Australia Decorative): 50% (+0pt YoY / +2pt post-acquisition)

2019

2020

2021

2022

2023

2019

48%

2020

50%

2021

50%

2022

50%

2023

50%

Segment basis (after elimination of inter-segment transactions and after PPA)

Pro forma figures. Including one-off items such as M&A cost

Due to a change in reporting segments within DuluxGroup, figures for 2022 and 2023 do not include Craig & Rose and Maison Deco

NPHD’s estimates of decorative paint market volume

2023 results

Revenue from the decorative paints business increased from the previous year despite market volume in most countries declining, most notably in France, due to economic and geopolitical factors. Revenue from the adjacencies business was higher, mainly from the new consolidation of NPT. Consequently, the overall revenue rose 23.9% YoY to JPY137.9 billion.
As for operating profit, the increased revenue, benefit of new consolidation, and normalised gross profit margin (post COVID) offset the inflation-driven rise in SG&A expenses. As a result, operating profit increased 70.4% YoY to JPY6.1 billion (the operating profit for 2022 includes one-off factors, such as step-up from PPA).
Both Cromology and JUB have successfully maintained their leading positions in the key European decorative paints market in which they operate.

Growth since the acquisition (2022)

DuluxGroup is leveraging its core growth capabilities that have contributed to its long term, consistent growth in the Pacific market to accelerate expansion, primarily through Cromology, the fourth largest player in the European decorative paints market, and JUB, a leader in central European decorative paint markets. Additionally, DuluxGroup is broadening its base in the adjacent SAF business though the acquisition of its interest in NPT, a specialist in adhesives and adhesives based in Italy.
As a result, since the acquisition, revenue has risen by 26.4% with the acquisition of NPT offsetting market volume decline in France. Operating profit, fell by 37.2% primarily due to market contraction in France and NPT M&A related costs.

Revenue(*1): ¥137.9 bn (+23.9% YoY, +26.4% post-acquisition)

Operating profit(*1): ¥6.1 bn (+70.4%(*2) YoY, -37.2%(*2) post-acquisition)

Trends in revenue, operating profit, and operating profit margin

Market share^*3

Cromology	No.1 in Italy and No.2 in France (Trade only) and Portugal in decorative paints market
JUB	No.1 in Slovenia, Croatia, Bosnia and Herzegovina, and Kosovo in interior paints market

The annotation has been revised to clarify that the 2021 figures represent the simple sum of Cromology and JUB figures. JUB’s earnings for FY2022 are pro forma figures for 12 months and converted to JPY at the following exchange rate: EUR/JPY=138.5 yen. Due to a change in reporting segments within DuluxGroup, figures for 2022 and 2023 include Cromology, JUB, NPT, Craig & Rose, and Maison Deco
Including one-off items such as M&A cost
NPHD’s estimates

Non-financial outcomes (2023 results)

DuluxGroup (Consolidated)	Human resources/organizations	Ratio of female employees: 33.4% Ratio of women in managerial positions: 30.5%
DuluxGroup (Consolidated)	Nature/environment	Controlled water usage through proper management following voluntary standards Water consumed: -10% YoY
DGL (Pacific)	Human resources/organizations	Implemented measures to increase the ratio of female employees in all job levels Ratio of female employees: 36.8% Ratio of women in managerial positions: 30.7% More than doubled female representation at the Top 200 senior leaders conference over 10 years, increasing to 35% in 2023 from 15% in 2013 Investments in improving employee engagement Employee engagement (ANZ FY2021): 80% (+8pp vs. FY2017)
	Brands	Improving the brand awareness Several DuluxGroup brands have been voted by consumers as Australia’s most trusted brand in their respective product category, while Dulux is consistently voted one of Australia’s most trusted brands overall and has industry-high brand recognition.
	Nature/environment	Initiatives aimed at reducing energy consumption – Commenced solar install program at operating sites to achieve target of 50% renewable electricity consumption by 2030. Renewable energy consumption (% of total): 2.4% (+1.0pp YoY) Renewable electricity (% of total electricity consumption): 4.5% (+2.5pp YoY)
DGL (Europe)	Human resources/organizations	Ratio of female employees: 29.4% Ratio of women in managerial positions: 29.8%
DGL (Europe)	Nature/environment	Promoted the use of renewable energy - Continued solar use in JUB and renewable power purchase in Cromology, though at reduced rate versus 2022 due to market pricing changes. Renewable energy consumption (% of total): 11% (-20pp YoY) Renewable electricity consumption (% of total): 21% (-45pp YoY)

Related data

SWOT Analysis

For the SWOT analysis of each asset, please refer to the “Overview of Partner Companies” section in the Investor Book.

Medium-Term Strategy

For the medium-term growth strategy of each asset, please refer to pages 19 and 20, as well as the Appendix, in the Medium-Term Strategy Briefing presentation.