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Creating Enduring Shareholder Value
Through Asset Assembler Excellence
The success of our Asset Assembler model is built on a unique combination of attributes
At the Nippon Paint Group, our unwavering mission is MSV. To achieve this, we are driving forward the Asset Assembler strategy with determination and focus. The success of this approach depends on speed, swift decision-making, strong execution, seamless collaboration and financial discipline. I am fortunate to work alongside Co-President Wakatsuki in close partnership with our Board of Directors, ensuring alignment and agility at every level. Above all, our team believes that earning the trust and confidence of our stakeholders for this strategy is key to unlocking long-term value for our shareholders.
I am deeply committed to this challenging journey and find immense purpose in leading my management teams toward success, which we define as the sustainable and safe compounding of EPS. To me, the Nippon Paint Group is dynamic, evolving and courageous, ready to embrace challenges and drive forward innovative, high-impact initiatives. I firmly believe that delivering results with speed is essential to our success. In today’s intensely competitive and uncertain environment, speed is a decisive advantage. While thoughtful decision-making remains important, we must stay agile, because standing still means falling behind. Our notion of speed can be viewed simply as uncluttering complexity. This principle pervades our organizational design, management empowerment and focus on core talents.
Breathing life into the Asset Assembler strategy
To bring a decentralized organizational structure to life - where value-creating strengths and capabilities reside within our independent and autonomous partner companies - our management approach is grounded in trust and collaboration. While we take full accountability for outcomes, Co-President Wakatsuki and I approach our responsibilities with deep mutual respect for each other’s capabilities and experience, thereby facilitating focus based on our respective areas of expertise. This strong foundation of trust and mutual understanding permeates through the levels of our organization, fostering seamless and responsive collaboration among management teams across regions and business segments.
Our Medium-Term Strategy, unveiled in April 2024, marks a decisive step in activating the Asset Assembler strategy. The acquisition of AOC in this first year stands as a milestone, demonstrating the full-scale implementation and strategic intent behind our Asset Assembler approach.
Over the past decade, our Group has enhanced its capabilities by acquiring key partner companies, Dunn-Edwards in the U.S., DuluxGroup in Australia, Betek Boya in Türkiye and PT Nipsea in Indonesia, primarily focused on integrating core paint and coatings businesses. In stark contrast, the acquisition of AOC represents a deliberate step beyond our traditional boundaries, stretching into business domains that could be further afield. While underscoring the inherent versatility of the Asset Assembler strategy and vividly bringing its adaptive potential to life through the smart use of our balance sheet strength, it is also an indication of what we mean by safe EPS compounding.
The acquisition of AOC was made possible by leveraging the Group’s solid financial foundation. Among many acquisition opportunities, AOC stood out for its exceptional management team, robust financial health, strong cash generation, and impressive performance metrics. The company’s ability to operate independently while preserving its autonomy is particularly noteworthy. With its continued business growth, AOC will contribute positively to our EPS. It embodies the key qualities we value in our partner companies, and I am genuinely pleased to welcome AOC to our Group.
While the acquisition of AOC represents a pivotal milestone in our Group’s evolution and exemplifies the true value of the Asset Assembler strategy, it signals our commitment to accelerating growth by integrating high-quality assets like AOC into our Group.
In 2024, we showcased another dimension of the strategy’s adaptability and scalability. Betek Boya, which joined us in 2019 and was previously part of the Malaysia Group under the NIPSEA umbrella, has now assumed a new enhanced role. Following the acquisition of Alina in Kazakhstan in 2024, Betek Boya has transitioned to operate independently as the Türkiye Group, reflecting the strategic agility and scalability of the bolt-on feature of the Asset Assembler approach. Alina has become a key gateway for our expansion into Central Asia, while the newly established Türkiye Group is sharpening its focus on growth opportunities in both North Africa and Central Asia. As a strategic hub for regional development, the Türkiye Group is laying the groundwork to expand its role within our Group and drive sustainable, long-term growth.
Empowering decentralized talented management through mutual trust
To effectively execute the Asset Assembler strategy in pursuit of MSV, our Group has embraced an autonomous and decentralized management approach. Tailored to our unique business structure and market environment, this model reflects our deep commitment to valuing human capital and serves as a cornerstone of our sustainable growth.
Unlike centralized management, where key decisions are concentrated at the head office, often at the expense of speed and agility at the regional level, our decentralized model empowers local management teams to make prompt, flexible decisions aligned with the specific needs of their markets. This approach not only enhances responsiveness but also enables us to fully leverage the capabilities of talented individuals across the Group, rather than concentrating expertise solely at the corporate center. In contrast, our autonomous and decentralized management model enables the strategic deployment of skilled personnel across regions and business segments, empowering them to lead with autonomy grounded in mutual trust. This approach unlocks the full potential of local leadership and strengthens our competitive edge in each market. The success of our decentralized model lies in a carefully built framework of trust and delegated authority, allowing our teams to act decisively and responsibly. This foundation has thus far enabled our Group to deliver sustainable results consistently.
Active balancing between trust and authority is essential to the effectiveness of our autonomous and decentralized management model. Disrupting this balance, by reverting to centralized decision-making, would undermine the independence of our partner companies and hinder agile execution. As such, we are often reminding ourselves that excessive impositions from the head office risk eroding the trust that underpins our partnerships. Recognizing these risks, our Group is deeply committed to continually demonstrating trust through our actions.
Trust is, without question, the most critical element of our management philosophy. It is a two-way relationship, delivering value only when we place confidence in the leadership of our partner companies, which, in turn, reciprocates the trust. In new acquisition transactions where trust has yet to be established, we prioritize understanding the character and values of the target company’s leadership through a thorough due-diligence process. This involves personal engagement and ongoing dialogue, forming the initial foundation of trust. We spare no effort to ensure the new leaders fully understand our intentions and approach. True trust is not instantaneous, it is cultivated over time through mutual understanding, genuine respect, and deliberate effort.
The success of our approach lies not in granting unchecked autonomy, but in maintaining a disciplined framework of controlled autonomy. While we entrust our partner company management teams with significant authority rooted in mutual trust, we have also established robust governance mechanisms to ensure appropriate oversight and accountability. For example, our Group employs the “Audit on Audit” framework for internal audits across the organization, complemented by Control Self-Assessment (CSA) practices that promote proactive self-evaluation. These mechanisms support effective risk management while deliberately avoiding the pitfalls of overregulation. We are sometimes asked by investors, “Isn’t autonomous management difficult to control?” or “How do you prevent partner companies from operating independently of the Group’s objectives?” In practice, our autonomous and decentralized management functions as a form of “controlled chaos,” driven by a constant self-inquiry: “How can we prevent over-control or misalignment?” This constant inquiry lies at the heart of our approach and defines the true essence of dynamic autonomy and decentralization.
Continuous demonstrations of the success in maintaining a fine balance of autonomy while benefitting from being part of a larger group attracts outstanding talents. This constant inflow of talents unleashing their full potential creates the fountain of sustainability of our success. Continued effort to buttress this solid foundation for securing and retaining top talents is central to driving our sustainable and stable EPS growth.
Validating the Asset Assembler model through deliberate execution by partner companies
Through the disciplined execution of the preceding Paint ++ approach, which later morphed into the Asset Assembler model, our Group has achieved sustainable organic growth. The partner companies, NIPSEA Group, DuluxGroup, Japan Group, Dunn-Edwards, and most recently, AOC, clearly recognize their responsibilities for delivering sustainable EPS compounding, which is a core performance metric of the Asset Assembler approach. These companies fully utilize the strengths of our Group’s shared platform while maintaining their autonomy and independent operations. Even amid a challenging business environment, marked by the COVID-19 pandemic, post-pandemic supply-chain disruptions, and rising inflation, our Group has steadily delivered sustainable EPS growth. This consistent performance underpins our confidence that the basic tenets of the Asset Assembler model are effective in execution and deliver resilience in outcome.
For example, DuluxGroup has continued to drive EPS growth through the strong performance of its Pacific businesses, helping to offset slower recovery in its Europe operations. In France, Cromology is progressing with the integration of its flagship brands, Tollens and Zolpan, while enhancing distribution efficiency and streamlining supply chains. DuluxGroup is sharing its insights in trade-use and DIY paint markets, supporting Cromology in developing new strategies to excite the market place and gain market shares, while at the same time leveraging group purchasing power to optimize costs and enhance competitiveness. These initiatives are poised to drive EPS growth when the market rebounds.
Through agile strategy adjustments and targeted market initiatives, NIPSEA China continues to deliver sustainable EPS growth even as it grapples with a sluggish real-estate market and cautious consumer sentiment. As the developerdriven residential segment had dwindled, the company pivoted to strengthen its retail presence beyond the established Tier 0 and Tier 1–2 cities, with expansion into the Tier 3–6 regional markets. We are confident in our growth prospects as our brand strength and market insights allow us to offer products tailored to meet the distinct needs of local regional consumers. At the same time, we are leading the charge to promote “Colors” to spark consumer imagination and generate growth in repainting demand.
In addition, NIPSEA China has broadened our market coverage by building up a B2G pillar that serves the government and public sectors, such as schools, hospitals, factories and rejuvenation projects for aging districts. Backed by an established brand promise, providing comprehensive “total solutions” that include waterproofing agents, adhesives, putties, topcoats, primers, and other complementary products differentiate us as an attractive partner to many of our new larger customers.
Thus, each partner company remains committed to achieving sustainable EPS growth, taking in adverse market conditions in its stride. Only by consistently demonstrating that we deliver on our commitments with real, measurable outcomes, can we continue to reinforce the credibility and effectiveness of the Asset Assembler model, thereby increasing the probability of attracting future partner companies.
Diversity advances group synergy
Our Group promotes collaboration and synergy by leveraging our global platform while honoring the independence of each partner company. It requires constant active management, and the balance is easier struck when the chiefs of our partner companies not only fully realize the power of the Group but also accept that we depend on them to preserve and safeguard the inherent strengths unique to their individual partner companies. Although mentioned in previous years, Selleys continues to stand out as a prime example. The 2019 acquisition of DuluxGroup introduced the Selleys brand, revealing to us the tremendous expansion potential of the Sealants, Adhesives & Fillers (SAF) business segment for the Group. Leaders from DuluxGroup and NIPSEA Group joined forces to expand Selleys across Asia through NIPSEA’s robust distribution network, creating significant new value. This led to the 2021 acquisition of Vital Technical, a leading Malaysian SAF manufacturer, further strengthening our position in the region. NIPSEA Group also expanded the Selleys brand into Singapore’s home detergents and cleaning market, launching it in supermarkets and large hardware stores, building on the brand strength beyond the strict SAF ambit. We will continue to build on this momentum, enhancing brand value, boosting consumer awareness, and driving the growth of our SAF business. The journey goes on as we continue to adjust our approaches, while building the talent base.
Group-wide collaboration is not restricted to the realms of powerful brands, innovative products, emerging technologies or dominating scale. Active exchange of market insights and ideas continue to excite the imagination of our leaders. Japan’s decorative paints market offers up a clear example where this is gaining momentum. In this sector in Japan, traditional practices largely prevail. Infusing fresh global talents and exposing our younger Japanese leaders to other market dynamics, we seek to transform both the practices, as well as the habits of market participants, stakeholders and consumers. For one of the transformational initiatives, in order to inject new energy into the conventional distributor-led structure in Japan, we draw upon the collective expertise and knowledge from across our Group led by Betek Boya’s head of marketing. She is challenging the traditional mindsets and assumptions.
This notion of challenging the traditional mindsets and assumptions stem from the collective determination of our Japanese leadership that to win in Japan, we need to move away from the set of behavior typical of large Japanese corporations and embrace new ideas and mindsets, while anchoring on core Japanese attributes that we value. This is a work in progress, flying into the headwinds of convention, but if anyone in Japan could succeed, Nippon Paint can, as we have such varied and diverse experience from across the world to draw upon. Over the years, as we have evolved with a more international executive base in the country, we hope that the pace of change will accelerate and allow us to be attractive to other prospective partner companies in Japan as well.
Enabling sustainability through localized initiatives aligned with broad global pillars
Under the Asset Assembler model, our Group advances sustainability through a balanced approach, combining unified Group-wide guidelines with the autonomy of each partner company. This decentralized structure empowers local teams to design and implement initiatives that reflect the specific needs of their countries and regions. By aligning with local regulations and customer expectations, we drive both agility and relevance, while creating business value that supports our broader sustainability goals.
For instance, our People & Community team leads localized initiatives to tackle social challenges unique to each region. In India, they empower women by offering them training to become professional painters. In Indonesia, they support fishing communities through boat painting programs. In China, they partner with local schools to run student support initiatives. These efforts not only address regional needs but also contribute to creating business value. Meanwhile, our Sustainable Procurement team promotes both social responsibility and operational efficiency by utilizing audited, high-quality suppliers and sharing supplier information across the Group.
The team will deliver sustainable shareholder returns
What drives me personally is the opportunity to motivate and work with our people to inspire swift action and achieve ambitious goals. Achieving a broad-based shared sense of purpose in our people is not only going to be deeply fulfilling, over the longer term, it is going to be extremely rewarding and enriching. Resonating success across all levels will inevitably enhance job satisfaction and organizational pride, ensuring better lives for our employees and their families and satisfaction to our customers, thereby maximizing value for our shareholders.
Under the Asset Assembler model, outstanding management teams with proven success are driving sustainable progress through distinct, value-creating strategies to realize the tremendous potential of the Group. With the continued trust and support from our investors, I am confident we can take on new challenges and deliver our mission.
