By Philip Wen
DULUXGROUP will look to boost its foothold in the fast-growing Asian region after doubling the size of its Chinese operations by merging with Hong Kong paint maker Camelpaint.
DuluxGroup chief executive Patrick Houlihan said while Australia and New Zealand would remain the priority, the merger would mean about 10 per cent of total revenue would come from China.
He said DuluxGroup - which reports its full-year profit results in two weeks - would continue to look for suitable acquisitions as it lifts its exposure to the region over the ''medium to long term''.
''Just the sheer size of the Chinese market, which is growing at significant rates faster than Australia, really does give us a material contributor to our position when we think out to that medium to long term.''
But Mr Houlihan said it was important to grow in a ''low-risk and measured way'' in a highly fragmented Chinese market, in which AkzoNobel and Nippon Paint were the main players.
''What we're really looking to do in China is what I might call a more niche position in a large and high-growth market,'' he said.
Nomura analyst Daniel Porter said DuluxGroup generated good cash flow and enjoyed strong market share at home, but it was logical for it to expand its Asian presence given growth opportunities were more limited in the mature Australian market: ''You can see the appeal [in Asia] given the growth prospects in Australia are more sedate.''
Dulux's market share is about 40 per cent in Australia and, together with Wattyl and Taubmans, it dominates 90 per cent of the market.
DuluxGroup's brands include the Dulux, British Paints and Cabot's paint range, as well as the fast-growing Selleys range of home-improvement products. The Dulux brand is distributed in China through AkzoNobel.
DuluxGroup will own 51 per cent of the newly formed DGL Camel International group.
DuluxGroup shares were steady at $2.57 yesterday.