The Changing State of the Global Marine Coatings Industry

Global Marine Coatings ForumGoodwood Park Hotel

Singapore

November 8, 2012

Prepared by:

Scott DetiveauxOrr & Boss, Inc.

Corporate Headquarters33900 Harper Avenue, Suite 103

Clinton Township, Michigan 48035U.S.A.

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Presentation Agenda

· Global Coatings Market

· Geographic Shifts

· Market Forecasts

· Final Thoughts

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An international management consulting firm. Focused on the specialty chemicals, coatings,

adhesives & sealants, and related industries.

Headquartered in Detroit, Michigan USA. Offices & Staff -- Americas, Europe and Asia.

Consulting services focused on the following three areas for our clients:

Growing revenues and market share.

Reducing cost & complexity of the business.

Improving profits and cash flow.

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Representative List of Clients

Paint & Coatings Ace Hardware Corporation Ameron International AkzoNobel BASF Corporation Beckers Industrial Behr Process Corporation Benjamin Moore & Company CIN Consorcio Comex S.A. DAW / Caparol DuPont Performance Coatings Dyrup Ferro Corporation Helios Hempel ICI Paints Inversiones Mundial (Pintuco) Materis Paints Nippon Paint Pinturas Condor PPG Industries, Inc. Professional Paint, Inc. RPM – Carboline Company RPM, Inc. - StonCor Group RPM -- Rust-Oleum Corporation Samuel Cabot Incorporated Sherwin-Williams Company Sigma-Kalon Tambour Paints True Value Corporation Valspar Corporation Van Wijhe

Chemicals / Raw Materials

Eastman Chemical Company Huntsman Kemira Lapinus Fibres Millennium / Cristal Reichhold, Inc. Rohm and Haas Company Sartomer

Diversified Industries Alberto Culver Eli Lilly Estee Lauder Ford Motor Company GenCorp Polymer Products General Motors Corporation Hershey Foods Corporation ITW Ransburg Lafarge Mortars McKechnie Plastic Components Nabisco Brands Stanley Furniture US Gypsum Corporation

Private Equity & Investment Actis Private Investment Credit Suisse Dubai Capital EBRD Investment KKR Financial Holdings Permira Advisors, LLC Riverside Investment

Adhesives, Sealants & Films Ashland Adhesives ADCO Products Avery Dennison Casco/Akzo Nobel Dow Corning Franklin International ITW Fibre Glass-Evercoat Lord Corporation Reichhold Roman Adhesives 3M Company Tremco, Inc. TruSeal Technologies Watson Standard

Inks Ashland Specialty Chemicals BASF BF Goodrich / Noveon Toyo Inks

Chemicals / Raw Materials Arkema Emulsions Ashland Chemical BASF Corporation Bayer MaterialScience BF Goodrich Celanese Cytec Evonik Degussa Dow Coating Materials DuPont Titanium Technologies

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Global Coatings Market Analysis1st Edition: (2007 – 2012)2nd Edition: (2009 – 2014)3rd Edition: (2011 – 2016)

We Wrote the Book on Paint

IPPIC’s Global Paint & Coatings Industry Market Analysis Report has become the industry benchmark for reliable market data.

Next edition due to be published in December 2012.

Thank you to IPPIC and ACA for allowing us to share some of these

findings today.

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Presentation Agenda

· Global Coatings Market

· Geographic Shifts

· Market Forecasts

· Final Thoughts

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Five Geographic Segments

NorthAmerica

Latin America

Rest of World

Europe

Asia Pacific

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1. Decorative Coatings - Professional Painters - Do-It-Yourself (DIY)

2. Auto OEM Coatings - Passenger Cars - Lights Trucks - SUVs

3. Other Transportation - Automotive, Light Truck, Vans - Heavy Duty Truck & Bus - Aerospace - Other Land Transportation

4. Wood Finishes - Wood Furniture, Cabinets, etc. - Flat Stock

5. Powder Coatings

6. Coil Coatings- Coil - Sheet and Strip- Extrusion

7. Packaging Finishes - Metal Container & Closures - Paper, Paperboard, Film & Foil

8. General Industrial Finishes - Non-Wood Furniture & Fixtures - Heavy Machinery & Equipment - Home Appliances - Other Industrial Products

9. Automotive Refinish

10. IM & Protective Coatings

11. Marine Coatings- Coatings for vessels and

structures in marine and fresh water operations for protection and appearance.

- Antifouling coatings for ships.- Ballast tank lining- Tank linings for cargo

containers.

11 Major Markets Segments

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Geographic Segmentation2011 Global Coatings IndustryVolume by Region33 Billion Liters

2011 Global Coatings IndustryValue by Region$106 Billion USD

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Global Market Segments

For comparison purposes, powder coatings have been converted to liquid equivalents at the rate of 1.5 liters of liquid paint per kilogram of powder coatings.

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Marine Market Segments

Coatings for vessels make up the majority of the market

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Marine Coatings

The vast majority of Marine coatings are now applied in

Asia-Pacific.

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Presentation Agenda

· Global Coatings Market

· Geographic Shifts

· Market Forecasts

· Final Thoughts

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Geographic Shifts2006 vs. 2011

3.5% CAGR

Volume ValueNorth America -2.9% -0.8%Europe -0.5% 0.3%Asia - Pacific 7.1% 7.5%Latin America 4.7% 12.6%ROW 4.1% 6.1%Total 2.9% 3.5%

CAGR 2006 TO 2011

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Application Types – Commercial / Military

Marine Coatings volume is fairly evenly split – New

Construction vs. Maintenance

However, Application type varies widely by region.

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New Construction - Commercial

Over 93% of all new vessel construction, in terms of gross

tonnage, occurred in South Korea, China and Japan in 2011.

Source: IHS "World Fleet Statistics"

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Military Fleets

Source: Strategypage.com

The U.S. Military far outpaces all others in terms of ship weight.

The U.S. fleet size is larger than the next ten fleets combined.

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Pleasure Craft

Note that the vast majority of all pleasure craft

owners are in North America and

Western Europe.

Source: ShowBoats International

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Offshore Oil & Gas by Region

ROW is the most important region in terms of offshore

oil & gas activity.

Source: IFPEN

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Geographic Shifts2006 vs. 2011

2.7% CAGR

Growth in the Marine coatings market in the past five years has largely occurred in Asia-Pacific.

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Presentation Agenda

· Global Coatings Market

· Geographic Shifts

· Market Forecasts

· Final Thoughts

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Marine New Build Forecasts

Source: IHS 2011 World Shipbuilding Statistics

New Ship Construction grew

steadily and significantly from

2006 to 2011.

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Marine New Build Forecasts

Source: IHS 2011 World Shipbuilding Statistics

This activity has drown down the

global order book for new ship construction.

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Marine New Build Forecasts

Source: Clarkson’s

The outlook for new construction based on the current order book is pretty bleak

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Global GDP Growth (2000 – 2016f)

Source: IMF World Economic Outlook, Oct. 2012

6.5% CAGR

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Global GDP Growth (2000 – 2016f)

Source: IMF World Economic Outlook, Oct. 2012

6.5% CAGR

4.0% CAGR

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Global GDP Growth (2000 – 2016f)

Source: IMF World Economic Outlook, Oct. 2012

6.5% CAGR

4.0% CAGR

5.7% CAGR

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Regional GDP Growth (2006 – 2016f)

Source: IMF World Economic Outlook, Oct. 2012Asia Pacific will

continue to lead the pack, but at a somewhat

slower pace.

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Trade Patterns

Source: UNCTAD, Orr & Boss Estimates

Seaborne trade is projected to grow at a slow rate for the next five years.

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Pleasure Craft Forecast

· Global pleasure craft market is forecast to grow to 2016.– Growth is forecast in

US as well as in developing markets such as China

· Much of the U.S. growth is recovery from the steep decline in 2008 / 2009.

8% CAGR

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Oil & Gas Production

Source: US Department of Energy International Energy Outlook, Orr & Boss, Inc. estimates

Latin America and ROW will see the biggest increases in production.

Forecast Growth in Total Liquid Fuel Production by Region (2011-2016f)

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Global Coatings Forecast

Global coatings volume growth is forecast to be consistent with forecast GDP growth.

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Marine Coatings Forecast

1.1% CAGR

Marine coatings volume growth is forecast to lag GPD and the overall coatings market.

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Presentation Agenda

· Global Coatings Market

· Geographic Shifts

· Market Forecasts

· Final Thoughts

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Final Thoughts

· The marine coatings is a small, but important part of the global coatings market.– Significant regional differences in the nature of the market.

· Marine coatings consumption has become increasingly concentrated in Asia-Pacific.– This is likely to continue.

· Market volume has been relatively evenly split between new construction and maintenance.– However, new builds are forecast to decline significantly over the next several

years.

· Seaborne trade is forecast to grow a modest about over the next five years.– This should lead to growth in marine maintenance coatings demand.

· Growth is forecast for the Pleasure Craft and Offshore components.

· Overall, very modest growth is forecast in the marine coatings market to 2016.

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Questions and Comments?

The Changing State of the Global Marine Coatings Industry

Global Marine Coatings ForumGoodwood Park Hotel

Singapore

November 8, 2012

Prepared by:

Scott DetiveauxOrr & Boss, Inc.

Corporate Headquarters33900 Harper Avenue, Suite 103

Clinton Township, Michigan 48035U.S.A.