Interview: "We believe in long

Kansai Helios has announced the acquisition of two major European household names in powder and railway coatings. We spoke to Dietmar Jost, Executive Director and Member of the Board, Kansai Helios, about the move.

You have expanded your activities in railway coatings. What was the reason for this step?

Dietmar Jost: The railway sector is a segment where we are successfully active for many decades with high quality and innovative surface solutions. In many aspects we see the railway sector as innovation incubator for modern industrial coatings with highest demands where we can leverage our full system competence (E-Coat, liquid coatings, powder coatings, composites and other specialities). Being part of Kansai Paint group it enables us to follow and support our global railway customers throughout the world and provide homogeneous quality and service levels. We believe in a long lasting and stable growth of the railway segment in the next decades and see and excellent fit with our ESG strategy.

For Kansai Helios, the railway coatings sector has always been of great importance and we have developed a strong market position in recent years, being the largest producer of railway coatings in Europe with important brands such as Wefa, Rembrandtin and Helios. Our production and operations have been tailored to excellently serve this segment. Beckers business provides highly innovative coating technologies for railways that meet the most demanding technical requirements, while contributing to sustainability. It will strengthen our leading position. Beckers is taking advantage of this leading position and is confidently placing its business in our hands to continue providing superb customer experience in the future.

Why are customers in India and China explicitly excluded from this transaction?

Jost: It was agreed from the beginning that Beckers would continue its railway business in India and China. In parallel, Kansai Paint group can use the Beckers product IPs and own railway IP already now to develop these important markets further. Kansai Paint group traditionally has already a strong market presence in the industrial coating segment in China and India. Therefore, China and India are clearly dedicated growth and focus markets for Kansai Paint group to grow in the railway business.

This also marks the establishment of the first subsidiary in France. Why is France an important location for this segment?

Jost: The French market is one of the leading railway markets globally, with continuing investment in its highspeed network and a growing list of cities and towns with urban rail systems. We certainly believe that markets shall be served locally with the highest level of customer proximity possible and are therefore happy to have a strong and experienced French railway team which will also drive our global expansion out of France and which will be fully involved into our global railway competence team. Kansai Helios France will be our organisation to ensure the long-term benefit of our French railway customers as well as other industrial customers.

Why is this railway coatings segment of interest? How do you rate the market in this segment?

Jost: We do see a stable and growing segment with a bright future in the light of ESG and the European Green Deal fostering the railway sector and sustainable and smart mobility in Europe. We are proud to be a trusted supplier for many decades in this high performing coating segment. In general, we also believe that European coating technology for railways is at the leading edge and will be increasingly utilised globally.

To what extent are further steps planned to expand activities in the railway coatings segment? (e.g., further acquisitions, investments, cooperations)

Jost: It is most important for us to integrate all our railway know-how basis and platforms in the best way to create one strong team which focuses together on the needs of our customers and partners. Therefore, we are very happy to see that the culture and spirit of the people from different entities is matching very well and that we could achieve a joint team spirit and way to work faster than expected.

Additionally, we are working on our system supplier strategy for E-coat to be able to utilise all relevant coating/surface technologies out of one hand (E-Coat, liquid, powder, composites, other specialities). As the railway business is one of our dedicated strategic long-term growth areas, we are certainly further interested in organic and inorganic growth to achieve our targets.

You have also strengthened your powder coatings and binders business with the acquisition of CWS Powder Coatings and the associated Atcoat. What is the motivation behind this move?

Jost: With the acquisition of CWS Group, we are becoming one of the leading suppliers for powder coatings in Europe and also enter the US market with powder coatings. Due to the market presence and product technologies of CWS and Kansai Helios in powder coatings field we see this as a perfect fit. Kansai Paint group (globally) as well as Kansai Helios (in Europe) have defined powder coatings as strategic growth area, again taking our ESG strategy under consideration. During the last years Kansai Helios has a good track record to utilise the power of such strong family-owned companies as CWS also after the acquisition, by embedding portfolio companies into a strong global group without diluting the spirit and strengths of the acquired company.

There are a lot of synergies between Kansai Helios and CWS, which we want to use at our both advantages. We want to join forces in the field of R&D to work on future innovations, we want to share distribution networks, we want to benefit from joint raw material purchase, we want to benefit from having two production sites and bigger capacities and storage options and there are many more. With this acquisition Kansai Helios will significantly expand its strategic position in this perspective-rich segment of powder coatings. So, this consolidation represents a long-term opportunity for the integrated Kansai Helios Group to grow and develop. Consolidation alone creates many opportunities for greater efficiency – we want to take advantage of these opportunities.

Helios Resins has established itself as a mid-sized provider of specialty resins with strong proximity to local customers and high flexibility. Atcoat is perfectly rounding up the portfolio and is following the same strategy as Helios Resins. Together both companies will provide a stronger service offering to our customers in the field of acrylic- polyester- and alkyd resins.

What are your further plans for your powder coatings activities and how do you intend to develop this business segment?

Jost: Many industrial customers have selected powder coatings as state-of-the-art technology in the recent years. Quality aspects, easy handling, and processing as well as ESG considerations will further accelerate this trend in the next years. In combination with other paint systems which we offer (e.g. E-Coat) we can supply the full paint system to our customers and adapt our systems perfectly to the individual needs. One of our main strategic goals is to further reduce the environmental footprint of powder coatings, thus reducing the curing temperatures. Together with the solid resin technology of Atcoat, our R&D and trusted raw material suppliers, we are expecting further promising results in the near future. Also, in the powder coating industry strong market consolidations will create the demand for flexible, professional and reliable industry partners. This is where we see the strengths of our group.

To what extent will you continue to maintain all the plants and all the employees of the acquired business units/companies?

Jost: We have agreed on a growth strategy in Europe. Our track record shows that it is in our highest interest to keep the spirit and way of work of all portfolio companies, while supporting on group level with the global reach and stability of Kansai Paint group, the possibility to offer full-fledged systems for our industrial customers and to keep the proximity to our customers. One of the main reasons for our acquisitions were to onboard new talents and professionals to our group, which we tend to keep and attract in our group the utmost.

The plants of CWS are in good shape and will help us to foster new technologies and production methods. We plan to continue with all of the plants and people from CWS. The plant in USA is our entry key to the north American market. We will try to use this plant as hub to increase our footprint in that region. Same for Düren and Hamburg plant. Both fit perfectly and offer us enough space and options to increase capacities and to open other segments in Germany in the future.