Hempel Annual Report 2011

Annual Report 2011

“We have the willingness, the capabilities and the
courage to realise the Hempel Group’s true potential
for the benefit of our customers and stakeholders
all over the world.”
Pierre-Yves Jullien Group President and CEO

What we do | About Hempel | Financials
Contents
What we do
Introduction to the
Hempel Annual Report 2011 02
One Hempel – One Ambition 03
A strategy for growth
Hempel strengthens and expands
global Decorative capabilities 04
Highlights from 2011 06
New offices and factories 07
Increasing our local presence
around the globe
Decorative 08
High performance solutions for
interiors and exteriors
Protective 10
Protecting customers’ investments
Marine 12
Products and services for
the marine industry
Container 14
Advanced solutions for
the container industry
Yacht 15
A full portfolio of products
for sailing enthusiasts
R&D gets close to the business 17
About Hempel
CEO statement 18
A strong capacity for resilience
About Hempel 20
The Hempel Foundation 21
Corporate Responsibility 22
Hempel’s Management Team and
Board of Directors of Hempel A/S 24
Financials
Performance in 2011 25
Introduction to the
2011 financial results 26
Key figures 2011 27
Profit & Loss account 28
Balance sheet 29
Assets as at 31 December 2011
Balance sheet 31
Liabilities and shareholders’ equity
as at 31 December 2011
List of subsidiaries 32
Annual Report 2011

Introduction to the
Hempel Annual Report 2011
Amidst a turbulent economic climate, the strategic
focus in 2011 was on implementing the five-year
strategy One Hempel – One Ambition. Throughout the
year, we initiated many new activities and investments
that brought us closer to our customers around the world
and built momentum towards achieving our strategic
goals. A highlight was the acquisition of Crown Paints in
June, which was a significant factor in the Hempel Group
surpassing the milestone of EUR one billion in revenue
and more than 5000 employees around the world.
Despite a global coatings market that was under
significant pressure, a second half-year especially
affected by the European debt crisis, and raw material
prices that continue to rise, the Hempel Group returned
its second highest EBITDA. Our Protective and Decorative
segments in particular showed strong resilience in the
market, with revenue growth in both segments outperforming
their respective markets.
From its 10 laboratories around the world, Hempel R&D
continued developing innovative technologies across all
segments. Our waterborne solutions for containers and
biocide-free fouling release products in particular made
an impact on the market, and we intensified our focus
on intumescent technologies.
Based on a strong tradition of close dialogue with
our stakeholders, customers, suppliers and employees,
we increased the focus on our Corporate Responsibility
work. Our efforts cover all aspects of our business
and are structured according to six focus areas:
ethical behaviour, our people, community engagement,
procurement, health and safety, and the environment.
This year sees the publication of a consolidated
Corporate Responsibility Report.
We hope you enjoy reading this report about
Hempel’s recent activities.
Hempel has continued expanding its product development
and sales in local markets. In the past twelve months,
we have opened or expanded regional offices, showrooms,
manufacturing facilities and laboratories in several
locations around the world, and plans for more
facilities are underway.
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What we do | About Hempel | Financials
One Hempel – One Ambition
A strategy for growth
By focusing on the Decorative, Protective and Marine Maintenance
business segments, our strategy will propel us into the top ten leading
coatings suppliers in the world by 2015.
As the coatings industry continues to change, and with customers, suppliers and
competitors becoming larger and operating costs on the rise, Hempel needs to grow
if it is to continue delivering the most efficient coating solutions to customers.
That is the purpose of our strategy, called One Hempel – One Ambition,
which had its first full year in action in 2011.
For us, implementing our new strategy is a bit like building a house. Our previous
strategy gave us the house’s foundation – based on the right skills and capabilities
for the industry and standardised technology and operational systems. Five pillars
sit firmly on top of the foundation, which represent a sequence of focused projects
across five key organisational functions. The pillars provide solid support for the
house’s roof structure comprising our company’s three core segments:
Decorative, Protective and Marine Maintenance.
With the strategy now firmly in place, we’re seeing a galvanising effect on the
entire company, which is helping us to achieve our growth targets and get closer
to customers. We have already achieved significant milestones, including a major
acquisition, a new and larger R&D organisation, and a more coordinated approach
across the entire organisation. All of this is moving Hempel closer to a place
among the world’s ten largest coating suppliers by 2015.
3

Hempel strengthens
and expands global Decorative capabilities
A significant part of the global coatings industry,
the Decorative segment has a bright future.
With the acquisition of Crown Paints, the second largest
decorative coatings manufacturer in the UK,
Hempel took a great step towards achieving our
One Hempel – One Ambition strategic goals – and
quadrupling our sales in Decorative.
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What we do | About Hempel | Financials
Our largest ever acquisition, Crown Paints represents everything
we were looking for: a solid position in the market, a sound
financial situation, as well as innovative R&D and marketing.
“By bringing Crown Paints into the Hempel Group,” says Group
President and CEO Pierre-Yves Jullien, “we not only enhanced
our expertise in the Decorative market, but we also inherited a
valuable brand asset. It was a win-win for both companies.”
With access to a broader portfolio of recipes, products
and brands, Crown Paints has brought special competencies
to Hempel that have boosted the entire Group’s decorative
capabilities. This is particularly the case for product
development, and Hempel’s decorative R&D has been
reorganised such that the global decorative R&D organisation
is now headed from Crown Paints’ headquarters in the UK.
In addition, the procurement departments have been fully
integrated to create synergies between the two entities.
Great teamwork gets synergies off the ground
A selection of Hempel industrial products is now sold in Crown
Decorating Centres, of which there are approximately 130
throughout the UK and Ireland. Because the industrial coatings
products require specific technical and application knowledge,
Hempel staff are currently working alongside Crown Paints retail
staff to give them the skills needed to advise customers on
how to use these products.
Lars Østerby, Group Director Decorative, is delighted with
how the two teams are working together. “They came into
this project with a common objective and they have formed
a well-functioning team. They’re learning from one another,
too, which is helping to strengthen the Hempel/Crown Paints
partnership as well as the service we offer our customers.”
Visit Crown Paints on the Internet: www.crownpaints.co.uk
5

Highlights from 2011
Waterborne coating system gains interest in the market
The EcoBoxcoat full waterborne container coating system is making waves
in the container industry with the largest order to date being placed in 2011.
The order involved a total of 280,000 kilograms of the environmentally
friendly coating being applied to almost 2,000 40-foot HC dry
cargo containers.
Offering line speeds equivalent to the application of solventborne systems,
zinc-based anticorrosion protection, and low volatile organic compound levels,
EcoBoxcoat has been proven to perform on a par with, or better than,
similar-aged solventborne container productions.
Another example of our One Hempel – One Ambition strategy in action, the
order was secured through a multi-team effort involving people from different
regions and departments. We anticipate that the EcoBoxcoat system will
continue to attract significant market interest in 2012 and beyond.
Helping homeowners save energy and stay cool
Launched in 2011 in the Middle East, Contex Thermoguard is an innovative
insulation coating that saves building and homeowners money and energy,
while improving comfort.
Contex Thermoguard’s insulating hollow vacuum microspheres form a tight,
interlocking matrix that reduces radiated, conductive and convective heat
through the painted surface. The high reflectivity of the coating also deflects
nearly all of the sun’s rays, which drastically reduces the cost and energy
required for cooling a home or a building.
Applied to exterior walls, Context Thermoguard reduces passive solar heating
by lowering the indoor temperature by as much as five degrees Celsius,
which reduces electricity consumption and helps regulate the indoor climate.
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What we do | About Hempel | Financials
New offices and factories
increasing our local presence around the globe
With a major acquisition, factory
openings, new R&D centres as well as
new showrooms and office facilities,
Hempel continues to expand its
presence around the world.
More Decorative in the Middle East
In Kuwait, a new state-of-the art showroom opened in April 2011.
An important part of Hempel’s expansion drive in the region,
the showroom occupies three floors and gives customers the
opportunity to see the latest in trends and special effects in
a wide variety of colours and finishes.
Scheduled to come on line in March 2013, the designs for a new
factory in Jeddah, Saudi Arabia are being finalised, with site work
to start in May 2012. The plant will produce waterborne products
for Decorative and will have a total maximum capacity of
24 million litres per year.
High-tech in Russia
April 2011 saw the Hempel Group sign a EUR 23 million contract for
a turnkey project in Russia with the Ulyanovsk authorities. Scheduled
to start production in 2013, the plant will help meet growing demand
for Hempel coatings in the Russian market. It will feature the latest
environmentally friendly coating production equipment technology,
including a semi-automatic powder handling system, an automatic
liquid dosing system and a solvent recovery unit.
Growing Decorative in the UK
Hempel’s acquisition of Crown Paints saw the relocation of
Decorative R&D to England. And with 130 Crown Decorating Centres
throughout the UK and Ireland, the acquisition has significantly
boosted Hempel’s presence in the UK market.
Strengthening Protective in Africa
To service the growing African market for protective coatings, a
Hempel office was opened in Johannesburg, South Africa in February
2011. It will provide coatings for the mining, petrochemical and
metal processing industries as well as for wind turbines, containers
and infrastructure. With tinting facilities and a storage capacity of
150,000 litres, the office will supply countries throughout Africa.
Indian subcontinent gets more supply capabilities
With the opening of a new manufacturing unit in Nashik,
Maharashtra in June 2011, Hempel strengthened its manufacturing
capabilities and presence in the Indian subcontinent. Designed to
house raw materials and the finished product under one roof,
the one-building factory is spread across a 1500 square metre
plot and can produce up to 2.4 million litres annually.
And, to further our presence in the Indian subcontinent, we plan to
invest approximately EUR 15-20 million in a greenfield project over a
period of three years. This will help build our presence in the Indian
subcontinent and enable us to supply India, Sri Lanka, Bangladesh,
the Maldives and Nepal.
Full coverage in the Americas
Hempel opened a new office in Rio de Janeiro, Brazil in July 2011.
The office primarily concentrates on the marine and protective
coating segments, specifically in the areas of offshore Oil and Gas
and wind energy. It marks a significant strengthening of our network
in the Americas, where we can now say we offer full coverage.
Our new factory in Argentina will serve the Brazil office.
Meanwhile, in Argentina, construction began on our 24th factory –
our first in South America. Located north of Buenos Aires, the new
3000 square metre factory will manufacture paint for the Marine
and Protective coatings segments and will supply the entire South
American market. The new factory was completed and opened in
February 2012, and will help us better serve the rapidly growing
South American market.
Expanded R&D in Europe
Hempel commenced development activities in France with the
opening of an R&D centre in March 2011. The centre’s main focus
is to provide high level technical support and develop customised
solutions for the Protective segment in the region.
The extensive expansion of our R&D facilities in Barcelona, Spain was
celebrated at the official opening in September 2011. The new stateof-the-art
centre is primarily focusing on bringing intumescent coating
solutions to the global market. The new fire protection laboratory
includes an advanced testing area with furnaces, pilot manufacturing
and application in an impressive 1000 square metre space.
New global headquarters in Denmark
Planning started for our new Group headquarters in
Kgs. Lyngby, north of Copenhagen. The design was finalised,
and at a ground-breaking ceremony early in 2012, the first
soil was cut. Construction work on the three-story building
is now underway and the headquarters are scheduled
to open in 2013.
Annual Report 2011
7

Decorative:
high performance solutions
for interiors and exteriors
Performance in 2011
Our wide range of high-performance products
protects and enhances the appearance of
homes and buildings around the world,
inside and out.
Decorative was significant to Hempel Group’s growth
in 2011, with the acquisition of Crown Paints playing
a major part. Excluding the revenue from Crown Paints,
Hempel’s Decorative sales grew by 13 per cent,
which was above the expected market growth.
The trends in the overall market for decorative coatings
showed considerable variation from region to region.
The European markets where Hempel has a presence
declined slightly during the year. In the UK, which is our
most important decorative market, the total market fell
by a couple of per cent. The total decorative market
also fell in Southern Europe, but at a much lower
rate than previous years.
Driven by growth in the construction industry,
the Chinese decorative market continued its strong
performance. The market showed double-digit
percentage growth in 2011, and we expect this trend
to continue. Similarly, the total market development
in the Middle East increased. Growth in this region
is highly dependent on government investments
in construction projects. We expect Saudi Arabia,
our most important market in this region,
to continue its growth over the coming years.
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What we do | About Hempel | Financials
Urbanisation drives Decorative’s growth in China
The Chinese market for decorative coating continues to
grow as a result of the high activity level in the construction
market. This is driven by demand for residential buildings,
which continues to increase as more and more people
choose to live in urban areas.
This is a strategic focus area for Hempel and in 2011
we launched further initiatives to develop our Decorative
presence in China. With a strong foothold in the region
already, we increased our supply of decorative coating
solutions to construction projects, with a strong focus
on exterior quality coatings. Our customers include many
of China’s largest residential real estate developers who
insist on high product quality and easy access to
Hempel’s comprehensive technical service
and knowhow.
Saving the stripes at Beachy Head lighthouse
At 45 metres high and made of 3,660 tonnes of Cornish
granite, Beachy Head Lighthouse, standing off the coast near
Eastbourne in the UK, has been a famous landmark since 1834.
It was painted with distinctive red and white bands in 1980.
But the lighthouse owners, Trinity House, decided that because
mariners now rely on electronic navigational aids, maintaining
the red and white striped lighthouse was no longer critical,
or affordable.
Local enthusiasts launched a campaign to keep its
stripes in late 2011, and this was brought to the attention
of Crown Paints and Hempel by Brewers, the UK’s largest
independent decorators’ merchant and one of
Crown Paints’ biggest customers.
Crown Paints and Hempel will work together to provide
all the specialist coatings required to repaint the lighthouse.
With extensive experience providing decorative and protective
coatings, Hempel and Crown Paints are ideal suppliers
for this renowned maritime landmark.
Passion for Colour in the Middle East
To strengthen Decorative’s strong foothold in the Middle East,
we launched a new identity in 2011 called Passion for Colour.
The new identity will help differentiate Decorative from our
Marine and Protective segments and strengthen
our competitiveness as an established and innovative
decorative coatings company.
The new visual identity will be rolled out in March 2012,
with new signage and bright, modern interiors for all 120
retail showrooms in the Middle East region. The new identity
will also see new packaging for the Decorative product
ranges available in the region.
A comprehensive redesign process, Passion for Colour does
not stop at the showroom door – it includes offering customers
our expert knowledge to help them make the best colour
choices. To support this, we have offered extensive colour
training to our sales staff and external partners such as
interior designers and architects to instruct them in
the use and matching of colours.
9

Protective:
protecting customers’ investments
All over the world, our products protect man-made structures,
including road bridges, power stations and wind turbines,
from the harmful effects of corrosion.
Performance 2011
The first half of 2011 saw careful optimism in the global market for
protective coatings. In particular, Asia Pacific and other emerging growth
markets appeared to be influenced by a brighter global economy. But with an
increasing reluctance to invest, the situation changed in the second half of the
year. Growth in the established markets became limited or negative, while
the newer markets showed growth rates that were lower than expected.
Overall, however, Protective’s double-digit revenue growth out-performed the
market, according to our One Hempel – One Ambition strategic goals. This was
mainly fuelled by the segment’s performance in the Americas, China and the
Middle East, but also generally positive developments in Europe, especially
Russia. The Protective segment accounts for almost 40 per cent of
the Group’s total revenue.
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What we do | About Hempel | Financials
Oil and Gas Centre of Excellence
To meet the unique challenges of the Oil and Gas
industry, we opened a Global Centre of Excellence in
Houston, Texas, USA. The new centre brings our technical
consultants and Oil and Gas specialists closer to the
industry’s major players, most of whom have their
global headquarters in Houston.
Kunal Nadkarni, Hempel’s Group Oil and Gas Manager,
explains, “One of the pillars of Hempel’s global Oil and
Gas strategy is to be close to our customers. With this
Centre of Excellence, we are bringing our technical
expertise and market knowledge right to the doorstep
of many of the world’s biggest players. We now have
all the capabilities and agility we need to serve our
customers to the best possible level.”
Hempel delivers coating solutions to the offshore market,
as well as refineries, LNG, petrochemicals, storage tank
terminals, transmission pipelines, deepwater exploration,
unconventional gas, and oil sands.
Hempel gains Shell vendor approval
Following the completion of a demanding prequalification
programme, Hempel has become an approved vendor
of protective coatings to the Shell Group. The approval
applies to Shell’s global offshore and onshore facilities,
and encompasses more than 40 Hempel systems that
cover the vast majority of Oil and Gas applications, from
FPSO hulls, LPG spheres and bullets to storage tanks.
With operations in more than 90 countries, Shell is
behind some of the most impressive Oil and Gas projects
currently under way, including the Prelude FLNG (the first
floating liquefaction facility), the Athabasca Oil Sands
(making synthetic crude oil from oil sands) and the Pearl
GTL (the world’s largest plant to convert natural gas
into liquid fuels).
A major factor in the prequalification success
was the ongoing teamwork across borders and
departments at Hempel, which is a cornerstone of our
One Hempel – One Ambition strategy. This teamwork
will continue as we look to add to our portfolio of
approvals from other major companies within
Oil and Gas and other industries.
Strengthening our global capabilities
Cross-border cooperation is an important component
of the One Hempel – One Ambition strategy. Our
Multinational Coordination (MCO) team, who focus
on large complex multinational projects, was further
strengthened in 2011. During the year, the MCO team
provided support to our sales teams across the world
and contributed to many different projects.
But with literally hundreds of projects requiring some
degree of cross-border coordination every year, local
Hempel sales teams regularly cooperate with their
colleagues in other countries. A contract to supply 70,000
litres of coatings to the Tembusu Multi-Utilities Complex
on Singapore’s Jurong Island is just one example of
recent cross-border coordination.
A joint effort between Hempel Singapore and Hempel
China, this cross-border solution required close
cooperation. Hempel Singapore is supplying paint for the
complex’s seawater intake facility, pipe and rack utilities,
a piping reticulation system and tanks. Hempel China’s
Qingdao office is supplying primer for the tanks and over
45,000 litres for the turbine generator structure.
11

Marine:
products and service
for the marine industry
From large crude oil carriers to river-bound barges,
almost every type of marine vessel uses Hempel products.
Comprehensive technical service and training support our
extensive range of coatings, including the award-winning
HEMPASIL X3 and all-purpose HEMPADUR Quattro.
Performance 2011
The marine coatings market was once again affected by the uncertainty in the global
economy. Many newbuilding projects were delayed or cancelled, and more vessels were
taken out of service. By the end of 2011, the number of newbuilding orders globally
had fallen to 2006 levels. Our performance reflected the reduced output from yards
to a certain degree, with newbuilding revenue falling slightly.
The shipping industry in general was affected by low freight rates throughout the year.
One bright point was the total volume in the global marine transportation industry,
which grew by more than five per cent. This had a positive effect on our maintenance
revenue, which fully counter-balanced the drop in newbuilding.
Asia, the Americas, the Middle East and central Europe performed relatively
strongly in our Marine segment, and Russia showed encouraging signs.
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What we do | About Hempel | Financials
HEMPADUR EM 35740 protects against corrosion at sea
For ship owners and crews, monitoring and controlling
corrosion while at sea is an on-going process. Ballast tanks
in particular require close attention, as corrosion in the
ballast tank can lead to structural failure and expensive
drydock repair. Yet when they carry out their maintenance
work, ship crews are usually faced with limited time and
difficult conditions. So they need maintenance products
that are easy to use and readily available.
Brought to market in 2011, HEMPADUR EM 35740 is
specially developed to simplify on-board maintenance
procedures in the narrow, confined spaces of ballast tanks.
It is ideal for keeping the ballast tank coating in “GOOD”
condition, as defined by the IMO guidelines for maintenance
and repair of ballast tank coatings.
The product’s use extends beyond the confines of
a ballast tank and can be applied on any corrosion spots.
Low on volatile organic compounds, it can be safely
applied in humid conditions and on marginally prepared
or hard-to-reach surfaces, and its short drying time
means that the treated areas can be quickly
re-immersed and put back in service.
Fuel savings justify newbuild to drydock decision
When the United Arab Shipping Company (UASC) ordered
nine of the world’s largest container vessels from Samsung’s
newbuilding yard in Korea in 2011, the yard was contractually
obligated to apply a conventional antifouling. However, in
an effort to increase fuel savings, lower CO 2
emissions and
reduce maintenance costs, UASC wanted a more advanced
antifouling solution. And its choice fell on the HEMPASIL X3
system – Hempel’s fully integrated, third generation
fouling control solution.
By the beginning of 2012, two vessels had already sailed
from the Korean shipyard directly to drydock in China, where
the HEMPASIL X3 system is applied. Moving the newbuilds
immediately to drydock may seem like a drastic step, but the
return on investment and potential fuel savings completely
justifies the application of the HEMAPSIL X3 system.
Compared to similar vessels with conventional antifouling,
UASC can expect an average fuel savings per vessel of
two per cent over the 60-month drydock cycle, resulting in
savings of approximately USD 4 million and a reduction
in approximately 17,500 tonnes of CO 2
.
Mining giant looks to reduce CO 2
emissions
Hempel signed a contract in June 2011 with Brazilian mining
giant Vale, the world’s largest iron ore producer, to supply
coatings for a five-vessel conversion project. The vessels will
be converted from Very Large Crude Carriers (VLCCs) to Very
Large Ore Carriers (VLOCs) at the Yulian Shipyard in China.
The contract for the delivery of HEMPASIL X3,
HEMPASIL NEXUS X-TEND – a special tiecoat for repair
and touch-up – and advanced tin-free antifoulings is helping
Vale reduce its vessel maintenance costs, fuel consumption
and green house gas and biocide emissions.
“The shipping industry is facing increasing pressure
from governments and legislative authorities to reduce
greenhouse gas emissions,” says Torben Rasmussen, Group
Product Manager at Hempel. “In response, many shipowners
have set their own environmental targets in an effort to
reduce CO 2
emissions. But finding effective ways to meet
these targets can be a challenge, and that’s where Hempel’s
complete fouling control concept can help.”
13

Container:
advanced solutions
for the container industry
We are one of the leading suppliers of
coating solutions to the container industry,
with most of our activity concentrated in the
Asia Pacific region, particularly China.
Performance 2011
The market for container coatings followed the same trends
as the global economy in 2011. With an increase of more than
2 million TEU (twenty-foot equivalent units) in the first half of
the year, there were grounds for optimism, which resulted in an
estimate of more than 4 million TEU for the year. However, the
second half of the year slowed considerably. But despite recent
estimates indicating a total for the year of 3.7 million TEU, this
is significantly higher than the 2.9 million TEU achieved in 2010.
This contributed to overall growth in Container of 18 per cent
compared with 2010.
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What we do | About Hempel | Financials
Yacht:
a full portfolio of products
for sailing enthusiasts
Our Yacht segment covers all types of pleasure
and racing boats, from small motor boats
to large racing yachts.
Performance 2011
Yacht grew in 2011, mainly due to the performance in Europe.
In Northern Europe, our yacht maintenance business is showing
signs of stabilisation. The Southern Europe market showed
significant uncertainty and continued its slight negative trend in
2011. The coatings market for new yachts is still weak throughout
Europe, primarily due to bankruptcies and boatyard closures.
15

What we do | About Hempel | Financials
R&D
gets close to the business
A solid R&D strategy is playing its part
in Hempel’s global growth.
Research and Development received
a significant boost in 2011. David
Deters joined Hempel as Group Vice
President – R&D in August 2011.
This lead to the introduction of a
new strategy and new organisation
which were better aligned to support
the Group’s strategic goals as set by
One Hempel – One Ambition.
We continued developing innovative
technologies across all our segments in
2011, with 16 new solutions delivered
during the year. Two areas received
special attention: waterborne solutions
for containers and fouling release
products. Our waterborne solutions
for containers reduce volatile organic
compound emissions by up to 90 per
cent compared with solvent equivalents
and deliver significant long-term savings.
And our biocide-free fouling release
product portfolio is designed to reduce
fuel consumption, lower CO 2
emissions,
and reduce the amount of solvents
released into the marine environment.
Closer to the customer
But Hempel R&D is not just about
developing products. We are a
customer-focused organisation that
listens to the needs of the market.
During 2011, our R&D staff made more
than 400 customer visits – that’s more
than one visit every day of the year –
which help us to improve continually
our understanding of customers’
requirements. With 10 R&D facilities
located around the world, the weight of
our development work is performed by
people who understand local conditions,
speak the local language and are part
of the local culture.
And, as we get closer to our customers,
we’re growing fast. In 2011, we opened
laboratories in France for the Protective
segment, expanded Protective’s R&D
work in the US, gained significantly more
technical expertise in the Decorative
segment, and expanded in Spain.
With the expansion of our advanced
R&D centre in Spain, we intensified our
focus on fire prevention technologies.
Demand for intumescent coatings is
increasing, and we are leading the
way in developing a range of highly
competitive intumescent coatings
and protective systems to give our
customers more integrated solutions.
In addition to developing solutions that
are based on our customers’ various
needs, our work also involves constantly
looking for new ways to optimise costs
and increase efficiencies. For example,
we collaborate with procurement to
optimise our use of raw materials
through tracing, testing and approval.
Annual Report 2011
17

CEO statement:
A strong capacity of resilience
“It is essential
to find the right balance
between the growth
and earnings and
critical to follow our
plan of investments
in people and
the business.”
In 2011 we started implementing our new strategy
One Hempel – One Ambition, and despite the ongoing economic
turmoil worldwide and the drastic increase in raw material
prices, we believe that our 2015 goals are still realistic, even
if ambitious. We still have the capacity to further develop and
improve the solutions and services we offer to our customers.
We need to adjust our path to account for these changes
in external factors, as we do not expect them to dramatically
improve in the coming year. Therefore, we have to become
more efficient and work faster on new solutions that will
create more value for our customers.
Hempel’s performance
We were unable to mitigate the impact of the steep increase
in raw material costs quickly enough, and this resulted in a
decline in our financial performance. Achieving an EBITDA
of 10 per cent, under these conditions, is not in line with
our initial expectations, but our performance demonstrates
Hempel’s new capacity of resilience.
However, we have chosen not to compromise our middle
term objectives, by maintaining the level of investments
planned to strengthen our organisation’s professionalism.
2011 was the year of the highest investment level for Hempel,
with more than EUR 200 million invested in strategic projects.
This is a clear indication of our continuing belief in a
strong future for Hempel.
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What we do | About Hempel | Financials
One Hempel – One Ambition
One of our most important and successful
moves in 2011 was the acquisition of
Crown Paints, one of the strongest decorative
brands in the UK. This was a key milestone in
our strategic plan as Crown Paints is a perfect
fit in all aspects. The integration between
Hempel and Crown Paints has been a great
success and it will ensure the Group improves
significantly in the Decorative segment.
I want to take this opportunity to thank all
our new colleagues from Crown Paints for
their loyalty, their trust in the new owner,
their dedication, and their hard work.
As planned, we have inaugurated our new
factory in Argentina. This will present many
new opportunities to our strong team in
South America, who have proven all these
years the value of the Hempel brand.
Thanks to the strengthening of competencies in
R&D, Production and Engineering, Supply Chain
and key positions in the Asia Pacific region,
the Hempel Group is well positioned to be a
company that in a few years will be significantly
larger than today.
The future
It is essential to find the right balance between
the growth and earnings and critical to follow
our plan of investments in people and the
business. This will be the main focus for 2012.
This involves everybody through sales pricing
policy, formulations and solutions delivering
quality service and by proving every day that
we are a reliable and trustworthy partner.
We will continue our expansion plans. Investing
in new manufacturing facilities in Russia, Saudi
Arabia (our second in the country), Argentina
and India; strengthening of our activity in Africa,
following the establishment of a South African
company, and in Brazil; and launching our
new Joint Venture in Oman are the immediate
focus areas. We are continuously open to new
opportunities – either organic or acquisition –
that support our ambitions in the Decorative,
Protective or Marine segments.
Despite a difficult 2011, I am convinced that
we have the willingness, the capabilities and
the courage, to realise the Hempel Group’s true
potential for the benefit of our customers and
stakeholders all over the world.
I would like to extend my warmest thanks to
everyone at Hempel for their efforts, and to the
members of the Board of Directors of Hempel
A/S and the Board of the Hempel Foundation
who have shown their trust and confidence in
everyone at Hempel by approving the Group’s
biggest-ever investment: Crown Paints.
Finally, I want to express my gratitude to all
our customers, business partners and other
stakeholders, who, while remaining loyal,
have challenged us and helped us to stay
the course of our 2015 journey.
Pierre-Yves Jullien
Group President and CEO
19

About Hempel
Hempel – world-leading coatings supplier for decorative,
protective, marine, container and yacht markets.
Hempel coatings help enhance and protect our customers’
valuable assets, from wind turbines, bridges and infrastructure,
to ships, power stations and homes. With a strong focus on
R&D, advanced production techniques and professional coating
advice, we work around the globe to help keep our customers’
investments safe, attractive and corrosion-free for longer.
Low in solvents and biocides, big on value and sustainability,
our high-performance waterborne coatings help customers hit
their environmental targets; and our advanced marine coatings
can help shipping companies save fuel and reduce the carbon
footprint of their ocean-going vessels.
And, with our stronger decorative capabilities, we also offer a
broader portfolio of high-performance, low-solvent decorative
coatings, so homeowners can bring colour to their homes safely.
Hempel’s more than 5,000 employees live and work in more
than 80 countries around the world. And, with 24 factories,
48 sales offices and more than 150 stock points, we make
sure our customers enjoy great service wherever they are.
20 Annual Report 2011

What we do | About Hempel | Financials
The Hempel Foundation
The main purpose of the Hempel Foundation is to own,
secure and provide a sound economic basis for the
continued existence and development of the business
carried out by the Hempel Group worldwide.
The Hempel Foundation also supports charitable projects of
a cultural, humanitarian and scientific nature around the world,
especially if they help meet the world’s environmental and poverty
challenges. To make this contribution as effective as possible,
the Foundation focuses on two key issues: the education of
children in need, and research into environmentally
sustainable solutions for the coating industry.
You can read about other Hempel Foundation projects at
www.hempelfoundation.com and in the Hempel Corporate
Responsibility Report 2011.
Viggo Kragh-Hansen’s portrait of J.C. Hempel,
currently on display in the foyer of Hempel’s head office, Denmark.
21

Corporate Responsibility
The Hempel Group is committed to conducting business
in a socially responsible manner and with respect for the
environment. Our goal is to create a safe and inspiring
workplace that also engages with the local community.
Our Corporate Responsibility work aims to foster a closer dialogue with our
stakeholders, customers, suppliers and employees. By discussing our ambitions
within Corporate Responsibility, we hope to build even stronger relationships
based on exceptional business practices and ethics.
Our efforts in Corporate Responsibility cover all aspects of our business and are
structured according to six focus areas: ethical behaviour, our people, community
engagement, procurement, health and safety and the environment.
Hempel’s consolidated Corporate Responsibility report for 2011 highlights the values behind
our business and gives employees, customers and suppliers an opportunity to learn more about
our approach to Corporate Responsibility. You can download the report at www.hempel.com
22 Annual Report 2011

What we do | About Hempel | Financials
Ethical behaviour
Conducting business in a responsible manner, with respect
for our individual employees and the communities in which
we operate, has always been a priority for Hempel.
Our Code of Conduct and other policies make certain our
ethics standards are met in all areas of our business, and
we ensure compliance with all relevant laws and regulations
in the countries where we operate through our training
programmes and internal audits.
Our people
Success in our competitive global market hinges on
providing an attractive work environment that enables our
people to grow professionally while making a difference for
our customers. We attract and retain the right people through
our talent, leadership and training programmes and our
performance reviews. These initiatives support our 5,000
employees as they realise their professional goals and
reach their full potential.
Community engagement
Through the Hempel Foundation, we support cultural
and humanitarian projects around the world, with a specific
focus on the education of children in need. These education
initiatives give disadvantaged children a chance to build
a better future for themselves, their families and
their communities.
We also encourage our employees to volunteer their time
to the causes that mean the most to them. Volunteering
not only helps out people in need, it is also a unique
learning opportunity that fosters personal development
and contributes to greater social awareness.
Procurement
Each Hempel product is made from raw materials sourced
from around the globe through multiple suppliers. As we
work with key raw material suppliers to develop and produce
high quality products, we also strive to foster solid
relationships built on outstanding business practices
and similar business ethics.
Health & safety
Hempel is committed to the health and safety of our
employees and customers. Our Group Health, Safety and
Environmental policy along with our training programmes
establish a solid framework that enables us to improve
working conditions and reduce the risk of accidents and
incidents. We also promote the use of safer materials when
developing new products and we are ahead of schedule in
our efforts to implement a new international standard
for safety labels on all products.
Environment
At Hempel, we take responsibility for protecting the
environment by complying with all relevant laws and
regulations in the countries where we operate. We are
always working to further improve our environmental
performance, which is closely monitored by our Group
Health, Safety and Environmental management system.
We also we make every effort to optimise our resources
through recycling and reduced consumption.
Through new innovations, Hempel’s R&D strives to meet
our customers’ increasing demand for energy-efficient
products that incorporate sustainable technologies.
The Hempel Foundation also supports research
into sustainable technologies.
23

Hempel’s management teams
Board of
Directors
of Hempel A/S
The company has three main management teams: the Executive Group Management Team (EGMT),
the Group Management Team (GMT) and the Functional Management Team (FMT).
Here are the members and positions of each team member.
Richard Sand Chairman
Executive Group Management Team (EGMT)
Group Management Team (GMT)
Functional Management Team (FMT)
Lars Aaen Vice Chairman
Pierre-Yves Jullien
Group President and CEO
Lars Johansen
Group Vice President, Americas
Gruska F. Musaeus
Group Compliance Management Director
Ulf Lennart Holm
Kim Junge Andersen
Group Executive Vice President and CFO
Mark Rees
Group Vice President, Middle East East
Tom Froberg
Group General Counsel
Leif Jensen
Jacob Gulmann
Group Vice President, Europe
Karsten Pedersen
Group Vice President, Middle East West
Arne Bachmann Olesen
Group Procurement Director
Anders Pettersson
Peder Holk Nielsen
Mads Juhl
Employee Representative
Louise Krüger Kofoed
Employee Representative
Peter Kirkegaard
Group Vice President, HR,
Communication and Compliance
Markus Burri
Group Vice President, Asia-Pacific
David Deters
Group Vice President,
Research & Development
Jesper Bødtkjer
Group Vice President, IT
Klaus Møller
Group Vice President,
Marketing & Business Development
Joe Devitt
CEO, Crown Paints
Plus members of the EGMT
Malte V. Eggers
Group Communication Director
Michael Steen Petersen
Group Production and Engineering Director
Lillian B. Stephensen
Group Tax Director
Alain Gunther
Group Treasury Director
Josep Palasi
Group Technology & Innovation Director
Henrik Bach Falkenberg
Employee Representative
Martin Engelmand Olsen
Group Reporting Director
Lars Østerby
Group Decorative Director
Bente Mølgaard
Group CSR Director
Umesh Chandra Singh
Regional Director, South Asia
Plus the members of the EGMT and GMT
24 Annual Report 2011

What we do | About Hempel | Financials
Performance 2011
Our One Hempel – One Ambition strategy established firm financial targets
for 2015. A priority of this strategy was to ensure a powerful platform for
our Decorative segment, and an important goal was to acquire a company
with strong local presence and the right skills within R&D and retail sales
of decorative coatings. We achieved this in early June 2011 when Hempel
acquired 100 per cent of the shares in Crown Paints Group Ltd.
Hempel’s revenue grew by 21 per cent in 2011 compared
with 2010. This growth was mainly due to the revenue
gained following the strategic acquisition of Crown Paints.
Excluding Crown Paints, Hempel’s revenue increased by
seven per cent, largely because of strong growth
in markets outside Europe.
Total revenues increased to EUR 1,077 million in 2011
from EUR 889 million in the previous year. The revenue
generated by Crown Paints more than doubled Hempel’s
revenue in the Decorative segment.
Raw material prices continued their rise throughout
2011 and put pressure on Hempel’s gross profit margins.
Therefore, the key focus for 2012 is to restore profitability
to acceptable levels through further efficiency projects
and price increases.
The Hempel Group returned an operating profit of
EUR 72 million, down from EUR 92 million in 2010.
Major investments and new activities were launched
during 2011 and this will continue through 2012
to support our strategic growth plans in
the coming years.
The number of employees in the Hempel Group now
exceeds 5,000, an increase of approximately 1400 since
the end of 2010, primarily due to the acquisition of Crown
Paints in 2011. Excluding Crown Paints, Hempel gained
73 new employees in 2011.
25

Introduction
to the 2011 financial results
The following financial data show a condensed release
of the Danish statutory consolidated financial statements
of Hempel A/S for the year ended 31 December 2011
audited by PricewaterhouseCoopers.
Hempel’s consolidated financial statements have been significantly affected
by the acquisition of Crown Paints Group Ltd. in 2011, which has been fully
consolidated into the consolidated Hempel accounts as of June 2011. During
2011, Hempel has also established subsidiaries in South Africa and Ukraine.
The Hempel consolidated statements consist of financial statements of
Hempel A/S and all the companies in which Hempel A/S directly or indirectly
has either a controlling interest (subsidiaries) or a significant influence on
the operational and financial management (associates).
26 Annual Report 2011

What we do | About Hempel | Financials
Key figures 2011
External sales (€ million)
External sales (million litres)
1100
350
900
300
250
700
200
500
2007
2008
2009
2010
2011
150
2007
2008
2009
2010
2011
Employees
Net profit after tax (€ million)
Net profit after tax (€ million)
excluding non-recurring items
6000
60
60
4500
40
40
3000
1500
20
20
0
2007
2008
2009
2010
2011
0
2007
2008
2009
2010
2011
0
2007
2008
2009
2010
2011
27

Profit and Loss account
Group
EUR ‘000 2011 2010
NET SALES 1,077,324 889,144
Cost of goods sold, incl. production costs 707,959 569,442
GROSS PROFIT 369,365 319,702
Sales and distribution expenses 212,526 163,400
Administration expenses 85,338 64,691
OPERATING PROFIT 71,501 91,611
Part of net profit in associated companies 2,534 2,359
PROFIT BEFORE FINANCIAL ITEMS 74,035 93,970
Financial items, net 12,951 7,184
PROFIT BEFORE TAXES 61,084 86,786
Income taxes 18,251 25,756
NET PROFIT FOR THE YEAR 42,833 61,030
External shareholders 7,987 8,154
HEMPEL NET PROFIT FOR THE YEAR 34,846 52,876
28
Annual Report 2011

What we do | About Hempel | Financials
Balance sheet as at 31.12.11 – Assets
Group
EUR ‘000 2011 2010
FIXED ASSETS
Goodwill 68,232 24,624
Software 5,002 2,332
Software under development 5,762 6,007
Customer relationships 49,834 21,737
Other intangible assets 47,683 7,202
Intangible fixed assets 176,513 61,902
Land and buildings 127,833 95,218
Technical plant and machinery 40,493 29,451
Other tangible assets 15,585 9,082
Tangible fixed assets 183,911 133,751
Deferred tax assets 10,108 6,185
Other financial fixed assets 19,104 12,947
Financial fixed assets 29,212 19,132
TOTAL FIXED ASSETS 389,636 214,785
29

Balance sheet as at 31.12.11 – Assets (continued)
Group
EUR ‘000 2011 2010
Current ASSETS
Raw materials and consumables 63,664 59,982
Work in progress 2,464 1,198
Finished goods and commercial goods 118,260 92,749
Inventories 184,388 153,929
Trade receivables 341,799 283,706
Tax receivable 3,715 3,548
Other receivables 27,565 29,886
Prepayments 10,103 4,782
Receivables 383,182 321,922
Bonds 0 31
Cash at bank and on hand 106,288 72,764
TOTAL CURRENT ASSETS 673,858 548,646
TOTAL ASSETS 1,063,494 763,431
30 Annual Report 2011

What we do | About Hempel | Financials
Balance sheet as at 31.12.11 – Liabilities and shareholder’s equity
Group
EUR ‘000 2011 2010
SHAREHOLDER’S EQUITY
Share capital 15,468 15,426
Retained earnings 311,385 300,842
TOTAL SHAREHOLDER’S EQUITY 326,853 316,268
EXTERNAL SHAREHOLDERS 37,005 32,561
PROVISIONS
Deferred taxes 28,602 6,964
Pension obligations 10,066 10,008
Other provisions 34,592 28,454
TOTAL PROVISIONS 73,260 45,426
LONG-TERM LIABILITIES
Bank loans 223,781 67,725
Other long-term liabilities 7,990 1,122
TOTAL LONG-TERM LIABILITIES 231,771 68,847
CURRENT LIABILITIES
Bank loans 100,629 70,082
Short-term part of mortgage and other loans 34,798 22,370
Short-term derivative instruments 1,107 0
Trade payables 142,806 115,448
Tax payable 10,316 10,560
Other current liabilities 104,949 81,869
TOTAL CURRENT LIABILITIES 394,605 300,329
TOTAL LIABILITIES 626,376 369,176
TOTAL SHAREHOLDER’S EQUITY AND LIABILITIES 1,063,494 763,431
31

List of subsidiaries
Country Name Sales Production Others Holding
Argentina Hempel Argentina S.R.L. x x 2 100%
Australia Hempel (Australia) Pty. Ltd. x 100%
Bahrain Hempel Paints (Bahrain) W.L.L. x x 51%
Bahrain Dahna Paint Middle East Holding B.S.C. (Closed) x 51%
Belgium Hempel (Belgium) N.V. x 100%
Brazil Hempel Tintas do Brasil Ltda. x 1 100%
Canada Hempel (Canada) Inc. x 100%
Chile Hempel A/S (Chile) Ltda. x 100%
China Hempel (Kunshan) Coatings Co. Ltd. x x 100%
China Hempel (Yantai) Coatings Co. Ltd. x x 100%
China Hempel (Guangzhou) Coatings Co. Ltd. x x 100%
China Hempel-Hai Hong Coatings (Shenzhen) Co. Ltd. x 3 x 100%
China Hempel (Seagull) Coatings Co. Ltd. x 100%
China, Hong Kong Hempel (China) Limited x 100%
Croatia Hempel Coatings (Croatia) Ltd. x x 98%
Cyprus Hempel (Cyprus) Ltd. x 100%
Cyprus Hempel Coatings (Cyprus) Limited x 1 100%
Czech Republic Hempel (Czech Republic) s.r.o. x 100%
Denmark Hempel A/S x x 100%
Denmark Hempel Decorative Paints A/S x 1 100%
Denmark Hempel Properties A/S x 1 100%
Denmark HSA (Danmark) A/S x 100%
Ecuador Hempel (Ecuador) S.A. x 100%
Egypt Hempel Egypt L.L.C. x 100%
Finland OY Hempel (Finland) AB x 100%
France Hempel (France) S.A. x x 100%
Germany Hempel (Germany) GmbH x 100%
Greece Hempel Coatings (Hellas) S.A. x 100%
India Hempel Paints (India) Pvt. Ltd. x x 100%
Indonesia P.T. Hempel Indonesia x x 100%
Ireland Crown Paints Ireland Ltd. x 5 100%
Ireland Hempel (Ireland) Ltd. x 100%
Italy Hempel (Italy) s.r.l. x 100%
Korea Hempel Korea Co. Ltd. x 100%
Kuwait Hempel Paints (Kuwait) K. S. C. C x x 51%
Malaysia Hempel (Malaysia) Sdn. Bhd. x 100%
Malaysia Hempel Manufacturing (Malaysia) Sdn. Bhd. x 100%
Malta Hempel (Malta) Ltd. x x 65%
Malta Hempel (Malta) Marketing Ltd. x 65%
Country Name Sales Production Others Holding
Mexico Hempel (Mexico) S.A. de C.V. x 100%
Mexico Pinturas Hempel de Mexico S.A. de C.V. x 100%
Morocco Hempel (Morocco) SARL x 99%
Norway Hempel (Norway) AS x 100%
Poland Hempel (Poland) Sp. z o.o. x 100%
Poland Hempel Manufacturing (Poland) Sp. z o.o. x 100%
Portugal Hempel (Portugal) Lda. x x 100%
Qatar Hempel Paints (Qatar) W.L.L. x x 29%
Republic of South Africa Hempel Paints (South Africa) Pty Ltd x 1 100%
Romania Hempel (Romania) S.R.L. x 100%
Russia ZAO Hempel x 100%
Saudi Arabia Hempel Paints (Saudi Arabia) W.L.L. x x 51%
Saudi Arabia Saudi Arabian Packaging Industry W.L.L. x 4 18%
Singapore Hempel (Singapore) Pte. Ltd. x x 100%
Spain Pinturas Hempel S.A. (Spain) x x 100%
Sweden Hempel (Sweden) AB x 100%
Syria Hempel Paints (Syria) L.L.C. x x 49%
Taiwan Hempel (Taiwan) Co. Ltd. x 100%
Thailand Hempel (Thailand) Ltd. x 100%
The Netherlands Hempel (The Netherlands) B.V. x 100%
Turkey Hempel Coatings San. Ve Tic Ltd. Sti. x 100%
Ukraine Hempel Ukraina LLC x 1 100%
United Arab Emirates Hempel Paints (Abu Dhabi) L.L.C. x 23%
United Arab Emirates Hempel Paints (Emirates) L.L.C. x x 29%
United Arab Emirates Sapin United Arab Emirates L.L.C. x 4 18%
United Kingdom Crown Brands Ltd. x 5 100%
United Kingdom Crown Darwen Ltd. x 5 100%
United Kingdom Crown Decorative Production Ltd. x 5 100%
United Kingdom Crown Paints Ltd. x 5 x 5 100%
United Kingdom Grown Paints Group Ltd. x 5 100%
United Kingdom Crown Paints Holding Ltd. x 5 100%
United Kingdom Donald Macpherson And Company Ltd. x 5 100%
United Kingdom Hempel Decorative Paints UK Ltd x 1 100%
United Kingdom Hempel UK Ltd. x 100%
United Kingdom Reebor Ltd. x 5 50%
Uruguay Hempel (Uruguay) S.A. x 100%
USA Hempel (USA) Inc. x x 100%
Vietnam Hempel Vietnam Company Limited x x 100%
1
Started operations in year 2011.
2
Under construction and plan to commence operations in year 2012.
3
Ceased operations in year 2011.
4
Associated company. 5 Acquired in 2011.
32 Annual Report 2011

HEMPEL A/S
Lundtoftevej 150
DK - 2800 Kgs. Lyngby
Denmark
Tel: +45 4593 3800
Fax: +45 4588 5518
E-mail: hempel@hempel.com
www.hempel.com