German paint industry under heavy pressure on margins

The German paint industry is achieving better results than expected in the crisis. but is coming under severe pressure in terms of margins - this was announced by the German Paint and Printing Ink Association (VdL) at its yearly business press conference 2023.

In 2022, 1.53 million tons of coatings, paints and printing inks were sold in Germany - a decrease of 4.5 percent compared to the previous year. A further decline of 2-3 percent to 1.5 million tons is expected in the current year, reports President Peter Jansen at the annual business conference of the German Coatings and Printing Inks Industry Association (VdL). Sales of coatings, inks and printing inks sold in Germany rose by 8% year-on-year to 6.1 billion euros in 2022 due to inflation. In the current year, VdL also expects a further slight increase of a good 2% to 6.2 billion euros. Several developments are depressing the earnings of paint manufacturers: raw material prices remain at a high level, and no relief is expected, not least due to inflation. The energy crisis will lead to higher costs for gas and electricity in the long term. Rising bureaucracy costs are having a particularly severe impact on small and medium-sized enterprises.

In architectural coatings, there was a 7% decline in volume in 2022. Both the DIY segment and the professional sector performed poorly due to the weak development of the construction industry. For 2023, VdL forecasts a further decline of 4% in volume to 770,000 tons. Sales will stagnate at 1.8 billion euros.

In industrial coatings, there was a slight increase in consumption of 1% in volume terms, while value increased by 11% due to price factors. While automotive OEM coatings, automotive refinish coatings, other vehicle construction and the electrical industry performed quite well, consumption of coatings in the wood and furniture industries and for metal products declined. In 2023, there will be a decline of around 1% in industrial coatings, as a significant temporary drop in demand is expected, particularly in the wood and furniture industries but also in mechanical engineering. Overall sales will rise again in the current year by 4% to 3.4 billion euros due to price factors.

Exports increased by just under 5.8% to €4 billion in 2022 due to inflation. Imports amounted to 1.4 billion euros (+11.7%). In 2023, foreign trade will continue to develop positively in value terms and is expected to increase by around 5%.

The risk of inflation and the acute global political situation make it extremely difficult to forecast economic development. Without significant further disruptions, the VdL expects a decline in production by German paint manufacturers of around 2%. Domestic demand will decline in a similar way. In value terms, a slight increase in domestic demand of 2% is still expected. "The industry cannot be satisfied with these figures, but we are struggling with the adversities of our times," comments President Peter Jansen. "Our appeal is to legislators not to place additional burdens on businesses in this difficult economic environment."

The 2022 paint industry has reported a success on the issue of titanium dioxide. Following the ruling of the European Court, the white pigment can continue to be used safely and without restriction in coatings and paints. This was made possible in particular by VdL members who, with the support of the association, had sued against the classification as "probably carcinogenic by inhalation". Although the decision is not yet legally binding, the Luxembourg judges certified that the EU Commission had committed decisive legal violations, which led to the ruling that the labeling requirement for the substance and for powdery, solid and liquid mixtures was unlawful.

The association's political work continues to be shaped by the European Green Deal, explains Managing Director Dr. Martin Kanert. Although Brussels has given the industry a little breathing space with regard to the REACH revision, the VdL continues to call for a sense of proportion and a holistic view of sustainability in the implementation of the Green Deal. This is because the upcoming projects on ecodesign and packaging and packaging waste, in particular, are challenges that member companies must overcome and thus contribute to the green transformation. "In addition, the Green Deal's 'farm to fork' strategy provides the basis that printed food contact materials urgently need timely European regulation." (OM-1/23)