Good morning, and welcome to our investors' update. Thank you for taking the time to hear more about our strategy for the future for AkzoNobel. The video you just saw, I really like it because it truly shows that so many essential things in life are actually containing or covered by our products and really make their lives more livable and inspiring. I'm excited to stand here today to present to you the next phase of our strategy and the next steps in the AkzoNobel's journey to deliver long-term value creation. We do that with a number of announcements we've seen this morning.
One is, of course, a very strong first quarter results with clear growth momentum, but also the announcement where we are creating two focused businesses going forward to do this within a period of 12 months, to increase the guidance for both of these two businesses, and to increase the cash returns to shareholders in 2017 and for 2017. On to the business of the day. I'll soon be outlining the step change and the long-term value creation for AkzoNobel. Thierry Vanlancker, who joined AkzoNobel in October from Chemours and previously DuPont, now leads the Specialty Chemicals business and will present our plans to unleash an industry-leading business to achieve its full potential. I will then share our strategy to deliver sustained profitable growth as a focused Paints and Coatings company.
Maëlys will provide an update on various financial topics and provide more details about the increased shareholder returns we will deliver. I will then conclude with a short summary of the sustainable and superior value creation that our plan will deliver. There will afterwards, of course, be time for some questions. Going into the step change in growth and long-term value creation, we have put the things that summarize today's presentation on one single slide. Therefore, this slide shows you what we want to deliver. Over the last years, we've built a strong financial and operational foundation, and it's in place now to take the next logical step. During the next 12 months, we will create two focused businesses, Paints and Coatings, and Specialty Chemicals. We do this by adopting a dual-track process to maximize value.
Project teams are already in place and running, and preparations are in clear advanced stages. Our focused strategy for Paints and Coatings will accelerate growth and profitability with a clearer customer focus and a fit-for-purpose organization and processes. We have significantly increased our financial guidance for each of these businesses. For the Paints and Coatings businesses, we're clearly looking at 15% return on sales by 2020 and more than 25% return on investment by 2020. Starting with a guidance of EUR 100 million additional EBIT in 2017, as Maëlys has indicated this morning as part of the Q1 result presentations. That includes annual savings of EUR 150 million from continuous improvement programs, compensating — actually in excess of compensating for inflation. This underpins our confidence in the current momentum we have to accelerate growth and profitability across our company.
This will allow us to deliver significant value for our shareholders. As a result, we're delighted to announce today a 50% step-up in the regular dividend to EUR 2.5 per share. This will be paid as an interim and final dividend in line with normal practice. The dividend for the Paints and Coatings company alone in the future from 2018 onwards will be EUR 1.65 per share, and this is in line with the previous level of dividend for AkzoNobel as a whole. What that means is that we're saying that the Paints and Coatings company will pay the same dividend and then have a stable or rising philosophy afterwards as AkzoNobel today does in total, still having Specialty Chemicals as part of the group.
We're also announcing that we are so convinced of the separation route for Specialty Chemicals that we are in advance distributing parts of the proceeds via a special cash dividend of EUR 1 billion. We are committing to returning to shareholders the vast majority of net proceeds received from the separation of Specialty Chemicals. Many of these items come back during the course of the presentation. This is the core summary of what we've announced this morning and that we would like to present today. We will deliver a step change in value creation. We can summarize that in six key messages. Accelerating our growth momentum and enhanced profitability means now is the right time to increase our financial guidance in line with our vision of leading market positions, delivering leading performance.
We will create two focused companies as a logical next step and complete a clear separation within 12 months. We're committed to increasing returns to shareholders, evidenced by the measures we've announced today, while continuing to create long-term value for all stakeholders by investing in innovation, sustainability, and the society that we operate in. We at AkzoNobel are convinced that we are best placed to unlock the value of the company. Let me step in each individual ones of these six in the next couple of slides. We worked very hard on putting in place the foundation for growth during 2015 and 2016. Yes, with several markets and several geographies turning down, it was a concern for me as well when I didn't see that growth as strongly as I would have liked it in 2016.
That is also why it is great to see that Decorative Paints has grown five quarters in a row, despite the downturn in Latin America. That Specialty Chemicals has accelerated its volume growth despite the raw material and energy price developments. That Performance Coatings was able to compensate for the downturn in the oil and gas and the marine sectors, with growth in other segments, as well as complete an acquisition that is adding to their growth. Our growth momentum is clearly accelerating. We're seeing positive developments in many of our markets. The most recent quarter clearly confirms this trend. Coming to the company, I saw great people, amazing brands, and fantastic market positions. We also had a set of challenges to address. We first, in 2012, defined our 2015 targets, which for AkzoNobel at the time, for the portfolio that we had, were records.
We were able to overdeliver on those 2015 targets and quickly define the next phase in terms of our financial guidance. What we can see today, that with the guidance for 2017, we are convinced that we will be operating at the top of our guidance that we provided in October 2015. Therefore, today is also the right time to actually establish a new guidance going forward. We've steadily increased our Return on Sales, our Return on Investment, our EBIT, and our cash flow generation, a clear focus of AkzoNobel in the last years. We've done so by tackling historical issues, pruning the portfolio, and taking measures to simplify the organization and its processes.
Good results are visible, as we've always said, further potential is clearly there, this management team is truly excited to make that potential come real for all of our stakeholders, clearly also, very much so for our shareholders. The foundation, therefore, has been built for the next phase, which together with our accelerating growth momentum and enhanced profitability, gives us the confidence to announce increased financial guidance. Paints and Coatings will achieve a Return on Sales level of 15% and a Return on Investment greater than 25%. Specialty Chemicals will achieve a Return on Sales of 16% and a Return on Investment greater than 20%. We have a clear aim to grow faster than the relative market.
The above guidance is provided as we did with the previous guidance, for comparison reasons, that the previous guidance is exactly along the same definitions as the guidance for 2020. For comparison's sake only, we have translated it to an AkzoNobel guidance at the bottom, which of course in 2020 will not be in its present configuration. It clearly shows 300 basis points above our previous guidance definition for the overall company in its translation. Creating the two focus businesses is the logical next step. You've seen this chart from us before. We indeed started tackling some significant historical issues in 2012, those challenges were tackled head-on by the management team. We built solid foundations during this first phase of the strategy. We focused on customer deliveries. We optimized our factory footprints. We reduced tens of thousands of stock-keeping units out of our portfolios.
We consolidated ERPs and did many things more to create that foundation that we now have. This led to the achievement of the 2015 targets and allowed us to make the next step on the phase two that we announced in October 2015. Since then, we have delivered continuous improvement, including through the AkzoNobel Leading Performance System program, returned to growth, have acquired, are now at the upper end of our second phase financial guidance that is there. What should be mentioned is that during this entire period, we assessed the portfolio aspects on a regular basis, including the portfolio aspects around Specialty Chemicals. We've looked at the options that were possible. We designed organizational structures of both the Paints and Coatings and Specialty Chemicals companies. We assessed what would be the right time to implement the change.
Pensions, of course, were a key consideration in making that decision. Specialty Chemicals, of course, with its solid cash flow, helped us to deal with de-risking and of course, providing top-ups. From now on, we have had this crossing point, on the one hand of increasing performance, increasing cash flows, reducing pension top-ups, and de-risked pension funds that allow us, in 2017, to make that decision to separate Specialty Chemicals. We will unlock further value to accelerate growth. We will create these two focused and high-performing businesses. Both businesses have scale and capabilities to stand on their own and to deliver a strong cash generation in the future. Of this crossroad of the de-risking of pension funds and the increased cash flows that we have, 2017 was the logical year to have the decision.
You know that we've pulled it forward a bit, exactly this crossroad would have made 2017 the year where the decision would have been on the table. What does it mean, unlocking the full potential of two focused companies? First of all, we believe that with the setup that we have right now, and the strength and the leadership positions that these businesses have, as independent businesses, they can clearly grow above market rates. Their customer focus can even be tighter than it already is today, and we've significantly improved it since 2012. Both businesses have world-class global brands. Building global brands is an art, it is a skill set, and it is a key value driver for many of our businesses. They can do market-leading innovation together with their customers. They have teams with a proven track record that can truly focus on the business overall.
They can develop the market specific capabilities of their talent in the organization. What is clear is that, of course, they can make clearly differentiated capital allocation decisions. Specialty Chemicals being a more asset intense and more people light business compared to the Paints and Coatings, which is more asset light and people intense, clearly asks for a differentiated capital allocation in the way going forward. Thierry Vanlancker will explain some of these allocations that he has in mind for the business. Both businesses can do targeted acquisitions and, of course, by being more cleanly present in their own industries, the valuation from the financial markets can be more cleanly compared with the peers in the industry. That does mean, of course, that we need to adapt the structures of both organizations. We do this by continuing the cost discipline that we've had.
The support structures of AkzoNobel have continuously reduced in cost and continuously increased their efficiency through Global Business Services and other optimized processes and tools that we've implemented in the last years. We're not done. We can still do more, and that will continue for both businesses going forward. It's driven by standardized and automated processes, simplified tools, and of course, by clearly targeted talent management for the industries that these companies are in. Thierry Vanlancker will clearly explain to you the way forward for Specialty Chemicals. For the Paints and Coatings business, we have actually decided to get a more even distribution between the businesses.
Instead of having two businesses, to develop three more market-focused groups that can truly then have the corporation align a number of issues like Color development, like brands, like operational excellence, like integrated supply chain, that will truly then be driven for the company overall. When we look at these structures and we've assessed what we can do, that despite the fact that it will be two companies, we are clearly of the belief that we can take EUR 50 million of additional cost savings out of these support structures when we are two separate businesses. Let me step into the separation of Specialty Chemicals. We will focus on doing this right. That is the prime driver, what we want to do.
We're convinced we can do this right within a 12-month period, and we're convinced that the right way to do it, to maximize value, is to accommodate a dual-track process for the best outcome for shareholders and other stakeholders. The business already operates rather separately in relationship to the Paints and Coatings organization. Over the years, as I indicated earlier, while we were assessing the situation, we've made sure that we did not create special interdependencies in tools, in structures, in legal entities, and the like. We have also a new head of Specialty Chemicals with Thierry Vanlancker, who has experience in separations and that has already helped us in the project team setups and the way forward.
This dual-track process will take various options into consideration, including creating a separate listed entity or selling the business, that is done to make sure that we keep tension in the process. Project teams are already in place. Immediately, of course, after it becoming known both internally and externally, we could ramp up the teams, and they are already running and moving forward. We will take into account a number of decision criteria, including our strategy, the value of course, the speed with which we can implement, and a number of others as you see on this slide. The current estimated market value based on analyst reports, not our own, is between $8 and $12 billion. As we mentioned earlier, the vast majority of net proceeds will be returned to shareholders.
AkzoNobel will have an ongoing commitment to invest in sustainability, innovation, and the society we operate in. When we look at our products, 90% of the products we introduce are more sustainable than the products that they replace in our portfolio. 50% of our products provide sustainable benefits, and in excess of 20% of our products even provide sustainable benefits in excess of what competitors actually supply. A true driver of our innovation machine over the last number of years. To further drive our commitment to innovation, we will invest EUR 1 billion between now and 2020 for the period for the Paints and Coatings company.
We're also announcing an investment in Paints and Coatings, apologies, which on the basis of the Imagine Chemistry success, which is an open innovation platform that we've created, we're actually starting something very similar for Paints and Coatings and are looking forward to the same amount of energy that comes to us and the sharing of ideas that we've already seen at Specialty Chemicals. All of these investments are absolutely key, together with the Human Cities projects that you've seen as well, to the actual success of AkzoNobel going forward. Therefore, to summarize the same six key messages, we've seen clear accelerating growth momentum in Q1, and that growth momentum gives us the confidence and the foundation to enhance our profitability and clearly describe a higher guidance for both businesses. We'll be creating two focused businesses as a logical next step. We'll do that within a 12-month period.
We're clearly increasing our short-term return to shareholders, but we're keeping our long-term strategy and our medium-term strategy intact while doing so. We're committed to investing in sustainability, innovation, and society, and we're absolutely convinced, based on the track record of this management team, based on the knowledge that we have of the businesses, based on the drive and the energy that is presently in the organization, we are best placed to unlock the value in AkzoNobel. Thank you very much. Next, I would like to welcome Thierry to describe the Specialty Chemicals way forward. Thierry, the floor is yours.
Thank you, Ton. Good morning, ladies and gentlemen. It's always a pleasure to talk about a business that is already performing at the top of its quartiles on all its relevant key financial metrics. There is a sort of added sense of pride when I can present, on behalf of my whole management team, the next plan to take it and unleash the full potential of this business. The way we're going to do this is by working on three strategical levers. One is a continued hygiene and drive of operational excellence. This is to offset cost inflation and to release more working capital out of the business. I'll come back to that, to each of these levers, in the following charts. Secondly, we have to accelerate growth.
As you will find out from the presentation, it's less about us accelerating growth than accommodating the accelerated growth of the long-term key customers that we serve over many years. All of these two initial levers are within the historical capital investment levels for this business. The separation, and this is lever number 3, gives us an opportunity to step change the growth even further and basically adds another EUR 200 million of EBITDA on an annual basis by 2022. That is for later. The first two levers are really the basis why my management team and myself are comfortable to propose the new guidance to Maëlys and Ton for the next coming period. Before I go on how we're going to do this, maybe it's good to spend a little bit of time on what Specialty Chemicals is.
I've talked to many people from outside the company, and their opinion is very much aligned with what my opinion was before entering this business. It's probably good to put it a little bit in perspective. Specialty Chemicals is close to a EUR 5 billion revenue business, almost an 18% return on investment, and currently 60% of our business is outside of mature Europe when we look at the current run rate. Of course, a business is more than a couple of numbers. When I joined AkzoNobel and I did my homework on analyzing the business, I have to admit, I came to the same conclusion that some of you have externally about how this business is built up.
Seven months in the role, I've been able to interact with all of the team, to visit all of the sites, to look at all of the segments and the business plans, and do a deep dive in what the future opportunities are. I do have to admit, there have been a number of wow moments while doing that. There is more to this business. 9,000 highly capable and highly engaged people around the world who are really putting customer first and have an intimate, deep knowledge of the segments that they serve. Each of the business units shows a similar level of profitability. Let me repeat that. Each of our business unit shows a similar level of profitability, despite what some of you may believe before getting into this room. You see that momentum is on our side.
First quarter 2017, Specialty Chemicals delivered 7% higher revenue than the first quarter last year and 5% volume. It's really going. This growth is for all of the business units. It's not one that is a locomotive for the others. Last but not least, and I'll try to explain that in future charts, the business portfolio has been highly resistant to macroeconomic cycles because the businesses balance each other out as you go through a cycle. What is the secret behind that success? Yes, we look at this business as four reporting units or five business units as you see here, but we run these businesses very much as three interlinked platforms, and we really have the synergies to sharing world-class capabilities across the network. What are these three platforms that we look at?
Well, first of all, let me point out that through the cycles, all of these three platforms have had similar profitability levels that vary between 18%-20% EBITDA, which explains the resilience of Specialty Chemicals because it really has three stable legs to stand on. The three platforms, one is our bio-based and ethoxylation chemistries, which in fact, if you look at it, has been the most impacted in the cycle through the oil and gas downturn the past years and margin pressure in our ethylene amines. Despite that, this business has stayed within that margin of profitability. The second platform is the plastics industry. Three of our businesses are catering to the plastics industry, be it on initiator, be it as a chlorine supply, et cetera. Whereby Polymer Chemistry has the broadest portfolio of initiators, which is a product that makes the polymerization happen, of anybody out there.
Industrial Chemicals is really the key supplier of chlorine, which is essential for the polyurethane and PVC industry in Europe. Our third platform is what we call the green electrochemistry. AkzoNobel is a renowned leader in electrochemistry, specifically when it goes around chlorine-based products. We call it green because the electricity consumption hog that this business is, now is based over 50% on renewable sources, and in fact is the result of really active engagement in wind farms that we have developed in partnerships with companies like Google and Philips, and more to come. I'm not going to dwell too long on the shared capabilities, but let me just pick out one.
The whole EUR 5 billion platform is running on one ERP system, which gives us an enormous granularity on the data that is being generated, and it's not just for the historians to look at the data, but it's increasingly used to do business analytics and business remediation moving forward. What can we do to deliver more of the profitability? Well, over the past years, the profitability has been driven by these five pillars. One is the fine-tuning of the portfolio. One good example is how Specialty Chemicals exited, about a year and a half ago, the paper segment for our bleaching chemicals. Paper chemicals, it has a quite a low growth and has been doubling down on the cardboard and the tissue market, which shows a high growth.
80% of our past year's growth budget went into emerging markets, which gives us now a solid and significant base to build on in the future in places like Brazil, China, and India. A strong contributor has also been the integration of our assets with key long-term partners. When I mean integration, I mean really inside interlinked units we have with our customers, specifically as an example, for our pulp customers with our so-called chlorate Chemical Islands. Then, as Ton indicated, also in Specialty Chemicals, there has been impressive work done on continuous improvement and productivity programs, which has been one of the reasons to drive the profitability through cycles on a continuous basis. Besides the financials, which have been improving, where does that leave us today for the business?
Well, the hard work has resulted in both strong business portfolio and positions, and on the other hand, core competencies that let us build on the future. Some of the proof points to illustrate that. 80% of our positions in segments are either in a number one or a number two position. We have relevance where we are operating. Secondly, we are top quartile in ROI. Not only do we have the relevance, but we have the stamina to basically sustain and create the markets along with our customers. Core competencies, and I will come back to that, has been the ability to retain winning customers. Pretty impressive is the 98% retention rate in our top 250 customers, and that the vast majority of that list we have relationships with that are longer than 10 years. This is very strong customer intimacy that entails.
As I said, through the investments, 30% of our asset base is now in emerging markets, so we're well positioned there. We have more than 5,000 active and profit-delivering patents, which really sustain our product pipeline, and sustain in every sense of the word, the business word, but also the sustainability part of it. Last but not least, around our people, very proud to say that AkzoNobel Specialty Chemicals is now in the top quartile in the 2016 peer ranking of the American Chemistry Council, which is a great achievement for the team. Also, not to be forgotten, that Specialty Chemicals scores extremely high on the Gallup engagement surveys for its own employees. Let me go back on this long-term customer relationships and how important that is.
Let me explain you what it really drives the bottom line and why that gives confidence that in our plans we have about 4% compounded average growth rate for our business. If you have long-term relationships with winning customers in winning segments, well, then basically you're in the front seat for growth. What this chart shows you is about 93% of our business portfolio and where our products end up with, in which end user markets they end up with. It's based on an analysis to our key customers and their markets on what is driving the pull-through for what we produce. Now, obviously, I could speak for hours about this chart, and I'm known to be doing this, but let me take three examples to explain why we are very confident about the growth here.
In the first category, you see for the cleaning, personal care, and pharma, you see the replacement of phosphate. Well, our chelates business is well-positioned with its biodegradable chelates range to be the replacement for phosphates in dishwasher detergents. Phosphate, which are banned in Europe going forward. We're really in the front seat to capture that growth. For cardboard packaging and tissues, while our bleaching chemicals are predominantly focusing on cardboard. Unlike the paper industry, every single time one of us sits at a laptop and order something via internet sales, it invariably ends up at your doorstep in a cardboard box. Every single time you click it, there's a little thank you from our bleaching business because that's exactly a stronghold for our bleaching product on the cardboard and there are lots of internet-based shipping around the world.
Last but not least, let me go back to the Polymer Chemistry and the plastics. We are a big supplier into, for example, the polyurethane industry, which is really growing fast right now based on lightweighting of cars and the ever-increasing demand for insulation for energy conservation. Also, that is, as you see, a big part of our portfolio. When I talk about growth going forward, it is really much more around accommodating the growth of our customers than any bonanza around market share growth independent of that. Let me now get a little bit more in detail on the three levers for growth. The plan is built, as I said, on the three levers. One is the operational excellence hygiene, and I'll come back to that. We deliver by 2020 about EUR 150 million of cost reduction to outpace inflation.
We will decrease our working capital by about EUR 100 million-EUR 150 million over that cycle. Secondly, we will accelerate growth or accommodate the growth, as I indicated, which will deliver EUR 250 million of EBITDA by 2020 in our bottom line. Then, as I said, these two levers are all within the historical capital spend of our business. If we take it to the separation, well, that gives us an opportunity to increase over and above that guidance, the annual, if we do more on our growth investment spend to create an additional EUR 200 million of EBITDA by 2022, over and above the guidance that we just gave. Let me just do a little short deep dive in each of these three levers. The first one, continued operational excellence. For a big chemical global business, keeping hygiene and discipline around operational excellence is a must.
By 2020, we will have taken out about EUR 150 million of fixed cost to offset that inflation. You see five of the key drivers to do that. One is operational productivity. We do see opportunities to rationalize some of the workflows in our own plants, which would now create the capacity to insource work from third parties and therefore reduce our spend out there. Very excited about the opportunity for maintenance reliability. We've done some work to get from reactive maintenance, which is expensive and disruptive in our supply, to proactive reliability by using digital means of analyzing big data. Very encouraged by that, and we believe that would be another big driver. The third one in the proverbial low-hanging fruits category is the indirect procurement.
We have not been very good so far at leveraging our global spend for the non-product related category. We have seen already this year quite some step improvements and believe we can step that up even more to deliver more bottom-line value. Also want to spend some time on the working capital. We believe that we can release EUR 100 million-EUR 150 million of working capital through integrated business planning. By that I mean really a methodology uniform across all our businesses of connecting a much crisper demand signal with our capabilities internal of producing and therefore have less laying around in a warehouse. We believe we can do that by keeping or improving the service levels to our customers. This is an important chart here because that is about the delivery of the EUR 250 million of EBITDA by 2020.
As I said, we call this accelerating growth. In fact it is accommodating the growth of our customers. It is great to have key customers that are growing and winning in growing segments, but it's only great to the point that you can actually supply them and fulfill their needs. In many of our supply chains today, because of the success we've had in the past years, we are at a very high utilization rate. For those supply chains, basically the motto is valid, all we can make we can sell, and frankly, all we could make more would deliver more to the bottom line. Increasing our output is a prime driver for enabling the growth of our customers. How are we going to do this?
One is debottlenecking, and that is in the sense of the normal physical debottlenecking, a more drier, bigger reactor, et cetera, to get more product out of your unit. It goes further. It also goes around product wheel rationalization, so we have less yield losses, less stoppages, et cetera. Frankly, getting percentage by percentage more product out of our existing asset park. The asset-light approach is an important one. We have great technology positions, IP, or deep knowhow, or in-depth customer relations, which allows us not always to fork over the money ourselves to build a unit, but really play the whole spectrum of make versus buy to get to our customers. A good example I would mention here is our partnership with ICL in Spain. In Europe, there is a pretty tight situation around high purity industrial salt.
The normal reflex would be to invest, we had a partner here who had a byproduct from potash who really wanted to work with us together. It avoided for us a EUR 60 million CapEx investment we had to be doing otherwise ourselves, at the same time, it really put in our lap about one and a half million tons of high purity industrial salt that we now basically can put in our existing network. Of course, when I talk about right-size supply demand out there, it also gives quite some opportunities over the cycle for margin management, which the team is already on that as we speak to drive the bottom line. Last but not least, I would talk about commercializing new products.
On purpose, I did not take one of the more sexy ideas out there, but really take an example of how you can make a real game changer in a very traditional industry like PVC. Our Continuous Initiator Dosing offering, a patented technology which we call CID, allows a traditional PVC producer to get up to 30% higher output out of their units without capital investment. It actually improves the safety, and it improves the overall product quality out there. Not a surprise that in this area, all of a sudden we have an enormous high adoption of this technology across the globe for any of the PVC manufacturers. In a commodity market like PVC, any kilogram you can more out of output out of your units is like printing money. Let me summarize what I've explained you so far. Specialty Chemicals is a world-class business.
It's highly profitable, mainly by having an interlinked and a very resilient business portfolio. We have a really robust collection of leading positions, we have all reasons to be very optimistic about growth because we see it coming to our customers. Three, we have a strong plan in place to deliver. As a result, we feel confident to deliver the increased value numbers, both on return on sales and return on investment. Again, what I all mentioned so far is within historical capital investment levels. Where can we take it post-separation? Over this increased guidance, as I've mentioned before, we have a very clear path and a very clear vision on delivering by 2022, EUR 200 million more of EBITDA to the bottom line.
We have identified growth investments for an additional EUR 100 million on an annual basis that would have, in all of those cases, paybacks less than four years after startup of those units and would deliver EUR 500 million more revenue and EUR 200 million annual EBITDA increase. These are not blue sky investments. These are very concrete market pull and market demands for investing in those units that we have. When we go in the category emerging markets and high growth segments, we need expansion capacity in the next coming years for both Expancel and our Levasil, our colloidal silica product ranges. We just have started a new plant for polymer chemicals in Ningbo, China, but we already see that on the heels of that, we will need additional world-class capacity in Asia for similar products.
If you look at growing the pipeline with our customers, we see in the next three years the need for an additional chlorate total chemical island, as well as expansion of our chlorine capability in Europe. Last but not least, there's a whole list of very specific debottlenecking opportunities to get more out of our existing units. In summary, when I look at the summary of the journey for Specialty Chemicals, me and my team, we're very committed and we have the confidence in Specialty Chemicals as a business and to deliver the numbers we just talked about. It's a world-class business, highly profitable, highly interlinked, and a highly resilient portfolio. We have built a robust portfolio of leading positions. We have the customers, we have the markets, we have the processes, we have the people.
We have a strong plan to deliver, we're really ready for the journey to unleash this business to its full potential. Thank you very much. Before we have Ton, I believe we have a video. Thank you.
Thank you, Thierry. It's been a great presentation on Specialty Chemicals. It's also fantastic to see the team AkzoNobel in action ahead of the Volvo Ocean Race. This is a very deliberate sponsorship, which will not only bring AkzoNobel's brand further alive in all of our key markets, but it will also be a showcase of our products and what they do best in terms of making an object faster, more sustainable, more efficient, or simply better protected. We look forward to the race starting in Europe. Let's take a look at the new world of painting. As you can see, our new business will be a global Paints and Coatings business, will be very significantly present in the high growth markets. We are well-positioned to make the most of accelerating the growth around the world.
We're talking here about a company that is close to EUR 10 billion and close to 12% return on sales already last year. As you've seen similar charts at Specialty Chemicals, also the Paints and Coatings business has continuously increased over the last five years in the trajectory that I described earlier during my first presentation. We've substantially grown our return on sales and return on investments, and our 2020 guidance represents the next step up as we accelerate growth and enhance profitability in the direction of 15% return on sales and in excess of 25% return on investment. What you also see is that this trajectory to the 2020 guidance is not a trajectory that we haven't done in the past. It's actually a continuation of the basis points improvements that we've shown over the last couple of years.
At the Paints and Coatings company, we do create everyday essentials to make people's lives more livable and inspiring. We have a very clear vision to take our leading brands, our leading positions, and our leading talent, and use those to very much deliver leading performance for all our shareholders and other stakeholders. We're aiming to be the number one choice for our customers, and we will build world-class brands and color expertise while driving our digital and innovation agenda. All of these five boxes you see on this chart are key value drivers for the business going forward. We will continue to improve and excel as we've built continuous improvements, both in the businesses, in the factories, in the supply chain, as well as in the functions as part of the DNA of AkzoNobel.
We will continue to lead the way in sustainability while living our values and principles and developing our people going forward. As mentioned, these are the key drivers of value going forward, and we'll step into each of these values later. Before I do so, a very clear overview of some of the mega trends that of course, we as an organization have been very much adapting to make sure that we're best positioned to benefit from them. We see continuous urbanization, especially in the high growth markets, that requests a continuous increase of construction activities and people that want a livable and an inspiring home. Actually, while being there over different generations, continue to renovate and make their homes adapted to the new fashions as well as their new lifestyle. Globalization asks for stronger global brands.
Global brands that need to be built, they need to be supported, they need to be invested in, because only when you do that can they be a key driver of growth. Demographic shifts and clear wishes and desires for sustainability that come in consumers, because they see that their environment is being hurt by past activities, are creating regulations and are creating opportunities for products that actually can be very successful addressing their needs. As you've seen already with ourselves in terms of consumers, but it will only continue the internet proliferation in the way people look at things, find things, interact with the companies they want to buy something from, or actually do direct e-business when they want to be successful.
These five mega trends are translated in three catalysts here. They clearly positively impact the key customer segments that we as a company are active in. As mentioned, we aim to be the number one choice for customers driving above market growth rates. The market overview shows that AkzoNobel is a clear leader in its markets. All of our positions are number one, two, or three positions, and we occupy a significant portion of the applicable market for AkzoNobel. AkzoNobel is a large player with all of our revenue coming from these number one, two and three positions. These strong positions allow us to drive growth over average market growth going forward. Let's have a look at the individual market positions, in this case, for Decorative Paints. Here you see the true leadership that we have in so many regions.
We've also clearly split the European region up in a number of areas, so that we're not looking at this entire region when we look at number one positions, but even in the subregions, we are a clear number one in any of the activities related either to consumers or to painters who buy and use our products every day. What is also very apparent is the strong presence that we have in places like Latin America, in places like Southeast Asia and the Middle East, and of course, China, a key driver for us going forward. We are probably the only owner of true global brands when it comes to the Decorative Paints business.
We have, of course, seen them as part of some acquisitions, but then we've truly invested in them to make them bigger and to make sure that we can use these global brands going forward. The combination of these brand strengths, the combination of these market positions, will allow us to grow faster than the markets over here. Markets are indicated at 2%-3% in our plans. We're looking at a 4% growth rate. One of these key markets that has been growing significantly because we have been driving that growth ourselves on top of the growth that the market itself has had. We've been seizing the growth in China very effectively. Geographically, we've continuously increased our points of sale that have driven, of course, the access of our customers to our products and our services. We have also continued to elaborate on the portfolio of sustainable products.
You may say China and sustainable products. Yes, very much so. Every time I visit China, the consumers and the painters that deal with these consumers are continuously being asked about what is in these products that I put into the rooms of myself and my kids, and how can I make sure that they are truly not affecting the health of our family. This is something that is a key driver in China. Together with color, they have become, certainly in the premium segment, a very strong criteria also already in the past, but it'll continue to be the case going forward.
When it comes to the individual segments, we are an absolute leader when it comes to the premium and super-premium sector, and we have continued to expand the width of the brand and the width of our point of sale to also address selectively mid and mass segments in such a way that we can do so while increasing our profitability as opposed to the other way around. This China growth plan is something that we've seen really taking traction for many years, and the foundation we have over there makes us very confident that we can do this going forward. The actual example you see here from a sustainable product is actually a product launch under the name of Forest Breath, which actually features an antibacterial property to improve indoor air quality. Looking at the Performance Coatings business, a very similar situation.
Clear leading positions that we have in each of the Performance Coatings segments. Market growth in these segments in the aggregate is also around 2% to 3% and also here with the very strong global brands that we have, we believe that we can clearly aim to grow faster than the market. In our plans, we've put 4% in. Also here, not only the brands, but very much also the global technologies that we've actually brought forward and have transported around the world in the different locations have really helped us and have been a key driver of value. We're expanding our coatings capacity across the world to be close to our customers in emerging markets. Here you see where our capital expenditure has gone in the last number of years.
It's highlighted by the recent investments that we've announced in India and China and have added capacity there in a number of our businesses. We've even created campus-like environments where a multitude of our businesses are working together and are integrated in the way they're being served by supporting functions, tools, and systems. 100% of the new production capacity for coatings in 2017 will be deployed in emerging markets. That is something that we will continue to do, adapting to where the markets continue to grow. Let me step into these five key drivers for growth and margin that we highlighted in the earlier chart. A key driver for value will be our efforts on digital and innovation. We will drive our digital capabilities further to deliver growth. We believe we're absolutely leading in the industry.
We recently opened a virtual reality center for our customers in the U.K., and if you look at the Visualizer app that some of you may have used, we have actually had 13 million downloads of this Visualizer app, clearly showing this is not a small app. It not only gets us closer in the way we interact with our customers, but it gives us a wealth of data to show trends and the way we work. The great thing of this app is that we've now introduced it towards painters who will use it on a daily basis, giving us even more big data to put our marketing plans and our key drivers for growth and margin going forward. Our Interplan mobile app helps our protective coatings. This is a Performance Coatings business customers with effective maintenance and planning.
Our Intertrac Vision tool enables marine customers to predict the risks of hull fouling. These tools have really brought us closer to customers, and we will continue to invest in these digital tools going forward. Innovation has been and will continue to be a big driver. We will invest EUR 1 billion in the Paints and Coatings business from here until 2020. Our commitment to drive innovation includes that enormous investment. Meanwhile, a couple of examples of which I'll show you a few slides later, like Dulux Velvet Touch and Dulux Ambiance, really show the next level of innovation when it comes to interior paints. Also in the Performance Coatings area, our Chartek fire protection coating systems delivers essential protection for buildings and constructions around the world, making a real impact on the safety and the sustainability credentials of our customers.
You saw the video, our approach to building world-class brands really is a key driver for not only growth, but also for margin. While respecting the local nature of the industry, building those global brands makes it possible for us to replicate campaigns, to replicate ways of working in such a way that we don't have to individually cost for the regions around the world. We take such global assets like branding, advertising, digital, and commercial insights, and localize them to ensure that they are brought to life in the right way to the crucial point of sale. This creates real value and is a true competitive advantage.
As we saw earlier in the video, this is one of the best examples we have to share with you, showcasing some of our most exciting products in action, also combined with a digital platform that not only products, but also the interactions are taking place with our customers. We are the number 1 supplier when it comes to the marine and yacht coatings in the world. AkzoNobel Coatings will not only be on the AkzoNobel boat of the Volvo Ocean Race, it'll be on all of the Volvo Ocean Race boats. The International brand is the truly global brand when it comes to Performance Coatings going forward. I mentioned 2 slides. I will go through them very quickly. Again, building global brands and seeing what paints can do to the environments is really helpful when it comes to seeing where value drivers are.
This allows us to ask for a premium price just to offer additional features, additional possibilities to create exciting environments. Similar of this particular rollout, this is one, again, that we can carbon copy over different regions, and significantly save on the rollout of very different locations that this particular type of premium paint can be introduced. Color expertise is a truly important expertise for AkzoNobel. We invest on it significantly, and it is a clear value driver for the company overall. We are a world leader when it comes to color knowledge and technology. As I mentioned earlier, in the digital age, this has never been more important than today and going forward. Our ColourFutures and our Color of the Year trend reports have been an industry bible for 20 years, and they are used by both our Decorative Paints and our Performance Coatings business.
The color palettes we now offer across our brands include Dulux, Sikkens, and allow our customers the widest choice available in the market. Building on my previous comments on digital, we are also having industry-leading capabilities to digitize color and to actually make it possible to re-engineer color in a very quick way, which is very helpful for our refinish business to be having the most extensive and precise digitization of color capabilities in the world, and that drives extensive customer loyalty. Key driver for the Paints and Coatings business is continued commercial excellence focused on driving above-market growth rates. We've done a tremendous amount of things when it comes to building the foundation of growth. We've looked at all of our product market combinations, made a clear map, and created differentiated target setting for each of these product market combinations in the regions where they're applicable.
We have holistically defined what we call our seven routes to markets. These seven routes to markets, we assigned owners to it who are real specialists in building these routes to markets in the most efficient way. These sales people have been allocated to these routes to markets, the ones that fit their skills best. Trainings programs have been set up. CRM systems and Net Promoter Score measurements are taking place on a regular basis, therefore, we are also able to drive our sales force in the right direction, in the perfect direction, I would say. On top of what we've done is we've actually adapted the sales force incentive systems to be totally aligned, both with a differentiated target setting as well as the routes to market. This is a great value driver going forward. You've seen the effect on it in the last quarters.
We've clearly seen accelerating growth in Decorative Paints and in Specialty Chemicals, and we've also seen in Performance Coatings in areas other than marine and oil and gas, that the acceleration of growth has taken place. That doesn't mean this is only about growth. It is about growth and maintaining, of course, our discipline on the cost and efficiency side. During the last few years, we've been able to deliver significant productivity improvements, over EUR 200 million a year for AkzoNobel as it is today. By delivering on our continuous improvement drive, we moved from a restructuring mode in the early days since 2012 to continuous improvements, and we've now been able to show two years of real traction, where with a small amount of restructuring costs in the area of EUR 70 million-EUR 75 million, we've been able to take EUR 200 million of cost out of the organization.
In the future, our AkzoNobel Leading Performance System, as well as our Global Business Services program, the two examples that you see over here, will ensure we continue to improve and excel by delivering more than EUR 150 million savings per year for the focused Paints and Coatings company alone. We will continue to implement ALPS, as we call it, in our manufacturing side, and we'll roll it out into the supply chain as well as into the functions across the company. We're already seeing the impact of these two, with 50% of sites have gone to the ALPS system, you can see the potential that is still out there. With the statistics you see on GBS, you see there's still a significant way to go, and the team is excited to make these potentials become real.
If we look at what are the buckets of these savings, you may ask, what are the individual parts? Clearly, it is about increased efficiency, and at times it is about bottlenecking and productivity improvements taking place. It is also clearly about value engineering, taking our products, modularizing it, making sure that we actually can modularize it in a way that we take cost out of the products. We are working on an increased flexibility to change raw materials if they do move in individual prices. We're looking clearly at the indirect procurement, as Thierry already mentioned it for Specialty Chemicals, that is also an area of improvement for Paints and Coatings. We're certainly looking at combining some of these core value drivers that we showed you earlier as a key driver for potential further efficiencies and cost takeout.
We will all do this as part of a strong culture that we've developed in the last number of years. We have a clear set of core principles where safety is very high up into our rankings. We truly care about how our safety performance is, and after a number of years, we have clearly become part of the top quartile safety performers in the industry. Something where we're really differentiating ourselves when it comes to treating our people. We have clear values, well penetrated into the organization, annually tested through engagement surveys, really being lived, and people being asked, "Do you and your colleagues live these values?" The engagement of the organization has increased six years in a row. We have an incredibly energized crowd that truly believes in the plans that we have developed together and absolutely wants to deliver them going forward.
Additionally, as I mentioned earlier, also for the Paints and Coatings business, sustainability and innovation truly is something that we want to continue to lead the way. It does generate money. It does create value. We really see that in those products where we can differentiate from our competition in benefits that we provide to our customer base, we can clearly look at additional margins because the actual benefit is so tangible for our customers. We're continuing to drive our own energy usage into more renewable usage, therefore preparing ourselves for the times where carbon can be more priced than it is today, and other examples you see over here. Coming back to the five core drivers of value and growth. Strategically, we have been driving them, but we can clearly accelerate them as part of the fit for purpose organization.
We talked about accelerating growth to 4% a year by seizing opportunities in the emerging markets, by investing in brands and innovation, by leveraging digital and color expertise, and by continuing to drive that commercial excellence with the examples that I provided earlier. On the operational excellence side, I provided you the buckets. Where are these buckets where those costs will come from? It's a continuation of the drive that you've already seen the proof of in the last couple of years with the AkzoNobel Leading Performance System, with the Global Business Services, with the leverage of the combined supply chain, and the top quartile working capital management that we already have. With that, I would like to hand over to Maëlys to provide you more on the financial side.
Before I do so, I guess a repetition of the guidance that we had, these five drivers, these actions that we show are resulting in the guidance that we've done, a guidance that is a continuation of what we've done in the last number of years, and a guidance that's really underpinned by actions going forward. Maëlys?
Good morning, everyone, thank you, Ton and Thierry, for presenting our exciting plan for the future. Those plan are clearly building on a strong foundation for growth and value creation. I will start by summarizing our Q1 results that we published this morning. Very strong and great results that are clearly showing the strong momentum of growth, and we think we can continue in the future to build on this growth momentum and enhance further our profitability with the new target we've just present to you. We will accelerate, as I said, and we will also create two focus business, which is a logical next step of the strategy, as clearly explained by Ton. We will unlock the value of our Specialty Chemicals business within 12 months.
The vast majority of the proceed, net proceed, will be returned to the shareholder, and I will explain you how we do that. We will advance a part of this proceed with a special dividend that will be returned to you this year in a form of a EUR 1 billion for a EUR 4 per share. On top of that, we will increase our dividend by 50%, clearly showing our confidence in the future of this step change in growth and value creation. If we look at our Q1 results, after a record year in 2015, where we exceeded our financial target, we also made a 2016 record. This morning when we highlight our Q1 result, you could see that it's another record for Q1 in term of profit, return on sale, return on investment.
Our revenue was up 7% overall, an increase in all the business area, and that was the result of a 4% higher volume and a 2% contribution from acquisition. Our EBIT was also up 13% overall, and that reflect this positive effect of our growth momentum and our continuous improvement progress and the cost discipline across all our businesses. Our profitability improved with our return on sale of 10.3% and a return on investment of 15.2%. We're also seeing a progress on our adjusted earning per share, which increased by 8%. This is a very strong set of results, and that's why we are confident that we can, in 2017, increase our EBIT overall by EUR 100 million compared to 2016. Of course, provided there is no major economic change in the dynamic we're seeing today. This will bring us at the top of our current guidance.
Together with the fact that we are announcing a new step with the creation of the two businesses, we are confident we can announce new financial guidance for 2020 for both businesses, Paints and Coatings, and Specialty Chemicals, as I presented before. We are also very confident in the future based on the fact that we have substantially improved our cash generation. When you look at this chart, you clearly see that there has been a clear change of direction in terms of the cash performance of the company. I am very proud to see that the culture that Ton presented you, the new culture of the company, is really about delivering on performance, passion for excellence, and we have clearly created a new culture of cash generation in all our businesses. That has been made possible by the fact that we have increased the profitability substantially, that we have reduced our interest rate payments.
We have also adopted a much more disciplined approach to CapEx, while at the same time driving the growth. During this time, we will also continue to really manage very tightly our working capital, and we have a leading working capital management performance. In parallel with this improvement in cash generation, what you have seen also is that the pension top-up payments were progressively reduced, and that was following a significant de-risking of our pension liabilities. Since 2014, if you look at the number of buy-ins that we have been executing in the U.K., that represents a total amount of GBP 8.7 billion, and we also made a significant buyout in the U.S. for EUR 0.7 billion equivalent. This de-risking of the pension liability has played a crucial role, as explained by Ton, in allowing us today to create those two separate businesses, with both having strong, sound financial positions.
As Ton says, we are in this moment at a change in direction because of this situation, which has been enabled by our strong financial position. We are accelerating our growth momentum and our profitability, and that is why we are convinced that we can deliver another step change in profitability with this new guidance for 2020. We have a clear plan. I think Thierry has clearly explained to us how we are going to grow above our market. Very strong position, leading position in all our markets, with also performing margins in all those businesses. In terms of Coatings, Ton has also highlighted to you the strong trend in each of our markets. We think we can definitely have a strong position in terms of growth thanks to our leadership position, our brands.
The strong drive in terms of innovation and sustainability, which will definitely create superior value and increase our margins. We will also improve our guidance thanks to our performance plan and additional savings to the current performance plan we have. If you look at the improvement overall for both businesses, that will represent 300 basis points of additional margin. If you look at our track record between 2012 and 2016, we have been able to improve our return on sale by more than 400 basis points. This is really a trajectory we feel confident we can continue to reach. Indeed, the separation of the Specialty Chemicals business we have announced will help us also to go a next step further in terms of efficiency, creating even leaner company and more focused businesses with a strong customer focus and organization fit for purpose.
That will clearly move us forwards to our vision of leading market position, delivering leading performance. The way we're gonna construct those two business is also a logical next step, thanks to the way we're gonna construct our balance sheet. With all the improvement we have made in term of cash generation and debt reduction, we have now a very strong situation and a balance sheet with a A- rating for Standard & Poor's. This is the results, as I mentioned to you, of the cash generation, and also the fact that we were able to de-risk our pension liability. Going forward, we're going to create two separate businesses, which will benefit also for different capital allocation. We know, and as highlighted Thierry, that the capital spending in Chemical are higher than the one in Paints and Coatings.
We will design a new capital structure to aim for BBB+ for Paints and Coatings and for Specialty Chemicals, depending on the separation which we will choose, we will have a rating that be equivalent to a BBB. With the strength of the balance sheet we have today, we believe we can indeed optimize further in the way we're gonna create this company. And we will continue, in the same time, to manage our pension liability as we have done in the recent years, and we will ensure we fulfill our obligation. Now, if you look a little bit about how we're going to do this dual-track process, Ton has explained to you this process. We are confident we can do it within 12 months.
If you look at other separation, it's indeed a quite challenging timeline, but we are very confident we can do it within this timeframe for three reason. First, as we have explained to you, we have been already preparing and looking at this option for a while. What we have done this year is to pull forward the decision, but we had already been working on this solution and working on several options. We are prepared. Secondly, we have also discussed and put in place advisor and bank already on this separation, along with internal team, to be able to prepare this separation. We have full team running right now, and we also have confirmed, based on the way we run the business, that this separation will be able to be done within this timeframe.
We are, and Thierry highlighted, managing this business in a quite separate way from the way we manage Paints and Coatings. When it come to the support function, we have built indeed some functional competency in the past year, taking account the possibility that one day we could have this separation happening. We are in a good place for the timing, and one of the critical point also, which is the IT system, as mentioned by Thierry, we have been aligning our Specialty Chemicals business with one single ERP, which is different from Paints and Coatings, and that will allow us also to move quicker on this separation. Why do we think it's important to manage a dual-track process? We think it's the best way to maximize the overall value for this separation.
We really want to do it the right way and maximize the value out of it. This dual-track process will, in parallel, run, as we say, possibility to list this company to create a separate company for a spin-out and an IPO, or we will also, in the same time, look at all the selling option. The only option we have already disregard is the fact to sell in multi-parts. Why so? Thierry has highlighted to you, the very strong business we have altogether, they are indeed very strong interlink within this business. Therefore, a multitude separation will, in this case, lead to a lot of leakage of value and destruction of value, and we think the other way will indeed be much more value creating.
We are really looking for the best solution to maximize the value, taking into account all the criteria we have put in this slide, and this is something we have, as I mentioned, been working on. As Thierry had shown you, we have a fantastic business. We are very proud of our Specialty Chemicals business. I think since we have announced this separation, a lot of people start to look different at this business. Before, I think we didn't get a lot of question. We're very pleased to see there are more, and I think with the information we also have given you this morning, you can start to really appreciate the potential.
Not only the value as today, which is a very strong business with leading position compared to the peers and leading performance, but also a business with a strong potential in term of growth and also enhancement of its profitability. That's why we are convinced that the value of this business will be important, and the value we have mentioned on this slide is indeed the estimation currently by broker in the market from $8 billion-$12 billion. I also want to mention that we receive already a lot of interest for this business. We have, as I said, banks working with us and though we are positive in this separation. It is a great journey and we are ready, really, for this change. Now, if we look at our confidence for the future and also the return we want for shareholder.
In this slide, we show you that we want to also give to you a part of this increasing return. In term of the separation, as I announced, we are confident we can execute it in the 12 months period. Therefore, we are pulling forward a part of the proceed with a distribution of a special dividend this year of EUR 1 billion, and that will be paid in November. Furthermore, the vast majority, as I mentioned, of the net proceed will be returned to the shareholder. Of course, the way we will return depend on the method of separation. It could take various form. If it's a listed entity by a split or IPO, it could be in form of share. It could be also taking in form or dividend or share buyback. We will return to you majority of the net proceed.
We may elect to reserve a part of this proceed for our pension obligation, but what then we would put aside will improve the cash generation of our Paints and Coatings business. In addition to this special return linked to this separation, we have also shown you that for the Paints and Coatings, we have an increased guidance for the future. Therefore, to show you our confidence, we also increasing our regular dividend by 50% to EUR 2.5 per share, which represents an average amount of EUR 0.6 billion. That's why for 2017, in total, we will return EUR 1.6 billion to the shareholder. Going forward, our confidence in our plan mean that we will continue to distribute a higher return and a higher dividend with, for this Paints and Coatings, the same dividend as we are doing today for AkzoNobel at EUR 1.65.
It's a clear step up in the return to shareholder. To summarize, we are today increasing our financial guidance for the future, building on our strong growth, and the enhanced profitability. We have a clear plan to do so, and I hope we are giving you the confidence that we can deliver on it based on our track record and also the strong management team and the engagement of all our people around the world. Secondly, we also are unlocking the value by separating our Specialty Chemicals to create two focused business. The project team are already in place, therefore, we can deliver on this separation within 12 months, and the vast majority will be returned to the shareholder.
Last but not least, we increasing our return to shareholder with a special dividend, in advance of the net proceed for the Specialty Chemicals and an increased dividend of 50% for our regular dividend. That's really a step up, which show you that we are best placed to unlock the value ourself, and we are confident in our value creation in the short term and the long term for all our shareholder and stakeholder. Thank you very much. Now I will turn it to Ton.
Thank you, Maëlys. Two slides left. Two important slides summarizing the messages that we've provided before. One, of course, is the key slide that I started off with. A clear step change summarizing all of the things that you've seen during the course of today's presentation, as well as the commitments made when it comes to the guidance for 2017, as well as the Paints and Coatings guidance for 2020. From Thierry, you heard the 2020 guidance for Specialty Chemicals. Not only are we separating within 12 months, which is a foreseeable period with a clear timeline, we're choosing a maximizing process by choosing the dual track one, and we're also accelerating some of the fit-for-purpose organizational buildups that we have.
We will create two focused businesses that can really be assessed both by the market in a very clean way, as well as from the management team perspective, focusing on their customers, their innovations, their brands, and their success. Of course, as Maëlys already highlighted, we are also clearly talking about increased shareholder returns with a 50% higher dividend for 2017, a EUR 1 billion extra dividend, and a commitment to return the vast majority of the net proceeds for the separation of Specialty Chemicals to our shareholders. We can do this because we have built this strong financial and operational foundation. We continue to drive the operations going forward, and the management team, Maëlys, myself, the colleagues, all of the managers and people of AkzoNobel are truly driven by making this happen. There is an incredible excitement, an incredible thrill in the organization.
They have seen what we were able to achieve, they really want to deliver this plan going forward as well. As I mentioned, we at AkzoNobel believe that by being a management team that knows the businesses that we operate, by being a management team that has been managing and improving this business and creating that momentum, not only in operational excellence and financial results, but also when it comes to growth, as you have seen in the last quarters. This management team is best placed to unlock that value, because this plan, in our eyes, provides you, the shareholders, superior value. It really is a plan that lifts us to the next level of value. It is a faster timing than things that you have seen otherwise. We are talking about a dividend in May, a special dividend, including a 50% increased interim dividend in November.
You are talking about an increased guidance for the end of the year. You are talking about a separation of Specialty Chemicals in 12 months. A very foreseeable and near-term time plan, but always, from where we stand, keeping the long-term strategy of AkzoNobel intact going forward. There is more certainty. We do not need regulatory approvals for anything that we are doing over here. We know the track record. We know the road map. We have really had the same dedication going forward as we have had in delivering our commitments of the past. This is certainly one where the stakeholder engagement aspects are truly positive when it comes to the growth aspects of the business, the investment in return in research and development, the commitment to the talent of our people. This is a team that wants to deliver this plan.
It is designed it as the next logical phase of creating value going forward. We want to deliver it and we will deliver it. Thank you very much. Could I herewith ask Maëlys and Thierry maybe for questions? There will be two people in the room with microphones. Diana on the left, Lloyd on the right. We hope that we can take a significant number of questions, and I think we have about 30-40 minutes addressed for it. Lloyd, you want to take the first?
Thank you very much for your presentations. Tom Wrigglesworth from Citi. Two questions, if I may. Firstly, on the strategy. Obviously a strong focus on organic growth. Could you talk to us a little bit how you think about M&A, given that, as you've highlighted, with the separation of the businesses you'll have lower credit ratings and obviously you're paying out a significant amount of cash in returns to shareholders. The second question is, in your Specialty Chemicals step change in growth post-separation, the looks of it, you've got effectively a 40% EBITDA margin coming through from these new projects. Could you elaborate on your conviction on getting such an elevated margin relative to the business from those projects? Thanks.
All right. Thank you for your questions. I'll answer the first one. I'll hand the second one to Thierry.
Okay.
The AkzoNobel strategy clearly includes, on the one side, continued operational excellence with cost takeouts that exceed the inflation that we have in the system. Clearly includes organic growth, of which we've shown you many of the core drivers of value, not only on the growth side, but also on the margin side, and it does include acquisitions. What you also see is that these acquisitions, when they exceed a certain size, we would have to come back to the shareholder who say, "Do you agree?" With the vast proceeds of Specialty Chemicals being returned to shareholders, we can certainly do bolt-on acquisitions going forward. They can even be of a rather reasonable size, but for large acquisitions, we would have to come back to you, the shareholders.
Okay, maybe on the 40% and the additional growth investment. The reason why we are pretty convinced that this is going to happen, is that if the examples I gave are either markets which we are constraining ourselves right now, the market is there, not only in the existing applications but also the growing application. That is correct for a product like Expancel and for our Levasil product range. The other examples I gave are, as it is typical in the chemical industry, if you're joined to the hip with your customers, key customers who have given us the planning, that that's when they need more capacity from us and are willing to commit to that.
Of the projects I mentioned, which is the vast majority for it, those are projects that have a high degree of certainty and a high degree of commitment for those people who are going to be receiving our products. The debottlenecking that I mentioned is in the similar category. We have a vast area of our supply chains where if we can get 3%, 5%, 7% more product out, the market demand is there.
Diana, could you take the next question?
Yeah. Thanks very much. It's Paul Walsh from Morgan Stanley. Morning, Tom, Maëlys and Thierry. Two questions, please. On the cost savings that you've talked about today, can you just differentiate what's new versus the existing ALPS program? I know in Specialty Chemicals there are some reduced costs because of separation. Can you just help us understand what's really new in those additional savings. Secondly, it seems from the commentary, if you're using the proceeds to return to shareholders that a spin seems somewhat unlikely. If we assume, either a trade sale of that business or an IPO, can you talk a little bit about the tax implications of those processes and how we should think about that, please?
Right. Maybe you want to take the second question. When it comes to the cost takeout that we described, I think Thierry was quite clear in what he was saying about the continuous improvement within Specialty Chemicals. For those of you that seen that chart where there is the AkzoNobel Leading Performance System as well as the Global Business Services on, actually for AkzoNobel as a whole, the number of sites where it's been rolled out is actually 75, right? For Paints and Coatings is 50. You see that there's still a significant potential in Paints and Coatings to do more when it comes to site rollouts of ALPS and in terms of the rollout of Global Business Services going forward.
By the time you've done the sites, what is a logical next step is that you go into the front-end supply chain, that you actually go into logistics, that you go into warehousing, that you go into looking at the efficiency of those processes. You lift it at the same time into the functions. This is the nice part of this AkzoNobel Leading Performance process. It never stops on the one side within the area that you do it, but you can roll it out new into the next step of the areas. You're seeing 50% in the sites. That is where you normally start, and then you roll it forward into the other areas, including the functions.
What you see as well is that when it comes to the indirect procurement that both Thierry and myself have meant is this is an area where we do believe ourselves. It's the part related not to the raw materials for the production, but all of the other stuff that we there have next steps to make that we haven't made so far yet. You can always ask, why didn't you do it yet? The thing is, we have priorities. We took the big cost buckets first, and we roll into the next ones. In this way, I can go through several steps of things that are new, that are different, and we'll continue that drive for improved margin.
On your question about the spin versus the return of the proceed. The way we have designed this EUR 1 billion of advance proceeds, even in taking into account all the possibility of separation, including the spin. If we would separate it, we can leverage the company as we have mentioned it, and therefore this EUR 1 billion is taken into account the leverage we can put in the new entity and also taking into account the other type of liability and including potentially, as we say, some fund that we would have to reserve for the pension fund. We don't want to exclude this part because as you mentioned, it's also a tax efficient way to separate, though we want to keep, as we say, in the dual process, all the option open to maximize, and therefore, this route is still a way forward.
We have shown you the strong potential of chemicals, we know that whatever the route, we can make a value. In the tax leakage, as I say, this route will minimize it. On the other way to sell it, we're working to indeed also try to optimize the tax, that will be clearly one of the criteria we'll take into account to separate. The return indeed, to the shareholder of EUR 1 billion is independent of the separation. That is something we will do and execute fully in November.
Lloyd, you have another question?
Thanks. It's Martin Dunwoodie from Deutsche Bank. If I can come back to acquisitions and M&A a little bit there. If I take the middle of the range that you've put on the slide, EUR 10 billion that you get for Specialty Chemicals, your intention's obviously to return the vast majority of the proceeds. Would you be ruling out a large acquisition if the right opportunity became available? I know you said small bolt-ons. If a large acquisition was the right thing, are you ruling that out or is that something you would still consider? Secondly, again, the strong financial position you're in obviously allows you to invest in the business a bit more. You flagged that chemicals will get a little bit more CapEx going forward.
I wonder if you can just outline the kind of guidance you would give for Paints and Coatings CapEx, and maybe the Specialty Chemicals CapEx as the percentage of sales may be going forward. Thanks.
Okay. The last question I will provide to Maëlys. When it comes to the clear commitment that we make that the vast majority of proceeds will be returned to shareholders, that inherently does not provide the immediate opportunity for a very large acquisition. The definition of large is in the eye of the beholder. It does restrict us, and as I said earlier, to the question I think of Paul or to yourselves, where we will then, in the case of a significant and a very large acquisition, we'll have to come back to the shareholders. First, we want to get through this process. We want to clearly make this a process that provides proceeds either in the form of shares or cash. We are giving an advance payment on it.
We're making a clear commitment, which certainly makes certain size acquisitions not possible out of our own funds anymore. Therefore, we would have to come back to shareholders.
On the guidance for CapEx for Paints and Coatings, I think you can consider around 3%, which is clearly below what we had in the past because we know Specialty Chemicals are indeed more in the range of 7% or plus with the new guidance that Thierry had lighted. This is clearly also one of the benefits of the separation is you have two different businesses with clearly different capital allocation and different way to consider the CapEx. We are unleashing the possibility for Specialty Chemicals to invest while Paints and Coatings will have a lower CapEx.
Good. Diana?
Hi, it's Jeremy Redenius from Bernstein. Thanks for the presentation. Basically, I think the key message here is we really have to believe in volume growth. Look at the costs that you've talked about. I think the message from before, and again today, is that you're managing costs better than cost inflation, which is very clear. The new information really is the volume growth, the new targets. That leads to a few different questions, actually. I guess, looking back at the October 2015 presentation, you said returning the company's focus to a balance of volume and growth. What's the key thing you're doing differently related to growth today versus what you talked about in October 2015?
Secondly, we've always talked about the operating leverage being something like 20%-30% in the company. You've always talked about as an average of averages, and I calculate the incremental margins that we're talking about here are something like 35%. I'm wondering if something's changed in your mind to give you greater operating leverage than before. Thirdly, in Specialty Chemicals in particular, just looking back at the older presentation, I think your predecessor had growth targets between less than one and a half to maybe greater than three, which is smaller than everything on the page you've got today. I'm wondering what was misjudged or what are you seeing differently, other than market recovery, that leads to those higher numbers?
All right. Let me start with the first two. Thierry can take the latter one. What's different from October 2015 when we provided the financial guidance on the second phase of our trajectory, where we are now clearly embarking on the third phase. At that point in time, markets were in a very different shape. At that point in time, we clearly saw already then that the Marine and the Oil & Gas segments were turning down. We were seriously concerned around the situation in Latin America. Recovery in Europe had not been tangible at all at that point in time. Asia had question marks in terms of how it were going.
What we decided to do internally is to make sure that we actually, after building that DNA of operational excellence and proving that with this continuous improvement, that we wanted to add an additional DNA of organic growth. The examples I gave earlier when it came to clearly making a very granular assessment around product, markets, geographies, and then assess differentiated targets to those, was a very important step associated with a very clear delineation of the routes to markets that these businesses have, put owners in terms of people that know that route to market well. They design it as a process. They hire the right salespeople for these routes to markets. They create the right educational programs to make it happen.
We've done that while going through these adverse market conditions in Latin America, as well as Marine and Oil & Gas and several of the others. We continue to change our salesforce incentive systems. We've been working with a very simplified but very effective set of salesforce incentive systems, where previously we had a very large number of salesforce incentive systems throughout the organization. All of these things created that next foundation, the foundation first we built in operational excellence, that next foundation then to have the underlying tools, systems, processes, owners, and conceptual clarity when it comes to driving organic growth. It's interesting to see that during the course of 2016, several headwinds did not make it very visible, but that visibility has clearly accelerated in the last quarters that you've seen.
Decorative Paints growing five quarters in a row, clearly showing growth even despite the Latin American situation. You see accelerating growth in Specialty Chemicals when it comes to the volumes that you see, despite some of the difficulties and the raw material challenges and energy challenges that were there. The fact that Performance Coatings has been able to compensate entirely for the very significant downturn in the two negative segments is also a good signal. These signals prove that these structural changes that we've made to drive organic growth are actually starting to bite.
For what Specialty Chemicals is concerned, maybe one correction. There is quite an amount of margin management in there versus just volume, it's not just volume on it. Answering your question around why was it more careful in October 2015? I would have to echo what Ton was saying. I mean, the oil and gas industry was down. There was a part of the agrochemical business that we were catering to that wasn't necessarily doing too well. There was still a high exposure to the paper industry, which has now been, as I indicated, has gone to the cardboard and tissue market, which is developing completely different. If you look at the lines, I would say to credit, and there's many credits to my predecessor, who was a class act and left behind a class act business, he was actually correct.
We saw the volumes only coming back in 2016. His prediction was pretty much correct. Hence, the business developing the muscle on continuous improvement, cost, working capital, et cetera, which as volumes come back, as evidenced by the last three quarters, that is going to be a tailwind to deliver more of the bottom line. It's a combination, and it's in fact looking at what we can, as I indicated, how much we can get to our own network. It's pretty balanced volume, margin, and cost picture.
The question I didn't answer was the question around leverage. Nothing has fundamentally changed. Especially for Decorative Paints, the first quarter is generally a smaller quarter. It very much depends on where the volume growth takes place that establishes that leverage. Fundamentally, nothing has changed. It really depends on which geography, which segment, and which factory that leverage, and that's which supply chain that leverage comes on top of. Therefore, fundamentally, it's still the same. Generally spoken, of course, with Specialty Chemicals, the leverage is a bit less than it is for Paints and Coatings. That, again, depends on which region that takes place. Fundamentally, nothing has changed.
Lloyd?
Yes. Thank you, Ton. It's one for you to begin with. The coatings margin, the 300 basis point improvement. On my numbers, that closes the gap with the top best-in-class, basically.
That's suggesting mix for mix, but maybe not geography. I'm just wondering the confidence you have of achieving that.
On performance excellence, maybe a bit of operating leverage coming through.
Not hard cost cutting. Following on from that, again, a bit like Jeremy's question about this growth target, I think 4% across all divisions. You've had no volume growth in the last 10 years in the three businesses, Performance Coatings, Decorative Paints, or in the Specialty Chemicals business. I can see that there's some momentum now for the growth coming through, but obviously, a key part is the emerging markets here.
The real operating leverage of the work you've done is something like Deco in Europe, where the growth remains pretty lackluster, I think, on your estimates. Just squaring those circles. On the margin, on the coatings, and also the operating leverage question really coming through.
Yeah, there's two things. I think, yes, growth is an integral part of the plan that you've seen today. Growth was also an integral part of the plan in 2012, right? We have, I think, shown that if we actually don't see the growth to the extent that we see it coming, we have the ability to go and have a look at our cost structures. Growth is an integral part over here. Leverage is an integral part of the plan that is there. It is not entirely true that we haven't grown over the last 10 years. We've certainly divested a number of businesses. The company is about the same size as prior to the divestments of these businesses, so therefore, that underlying growth is partially not visible because of the divestitures that have taken place. Overall, we have seen growth.
We have not had the underlying processes, systems, simplicity that I described as an answer to Jeremy's question to drive that growth structurally. Therefore, we believe that the basis that we have right now, both in driving that growth on the front end, as well as executing that growth with a very high on-time delivery in full to our customer base, it is that combination. You can sell something, but you need to be able to have the underlying process to then deliver it. In that, the DNA of the company has improved so much in the last five years that we have a true confidence in delivering.
Yeah. Hi. Chetan Udeshi from J.P. Morgan. I had similar question to the ones asked. If I look at your 2015 capital markets, their presentation was mentioned, maybe you can correct me if I'm wrong, that 50% of the business of specs chems or Specialty Chemicals is actually mature below GDP growth. Now you're talking about growing faster than the market about GDP. What has changed in 18 months' time? That is number 1 question. The second question is on the sustainability of the increased dividend. If I look at the free cash flow at the moment, it's EUR 700 million plus or minus, including Specialty Chemicals. If that goes away, will you have the coverage to cover your dividends in full?
Okay. I'll first ask Thierry to answer the differences on the market side, and maybe you can describe the dividend.
Yeah. Maybe I think I've answered part of the question before on that. The plan is not just volume, it is margin, it is improvement, it is in cost. It's a number of elements around it. What has changed is basically a number of markets have changed. What would probably be worthwhile is to walk you through the list of the end use segments, because frankly, that is data that comes back from our customers and what they see happening. Again, since we are, in many cases, the supplier or one of the two suppliers to big producers, they are very keen to know are we going to be able to supply them as they see their forecast. It's kind of a combination of what those markets are. Again, I think you should not underestimate the shift in focus from segments from before.
Again, we are not predicting a 4% volume growth over the next five years, although we are operating at a higher volume growth. That would not be realistic. We are looking at what is the traction, the revenue growth that would come from it. It's probably good to go to each one. It's either legislation. It's either items that have changed. One example I could mention is the situation for high purity salt in Europe, where Specialty Chemicals of AkzoNobel has a real strong position in there. It is a significant change in that market where, frankly, we have to put all hands on deck to supply, even with asset-light strategies, to supply the amount of high quality and high purity salt that the market needs in there. It's a shift in dynamic in some of the markets.
It's a shift in segments we look at, I think there's a general, I would say, tailwind, versus 18 months ago in some of the key segments we operate in.
I think you've seen it as part of our guidance as well, that we truly see positive developments in many of our segments and our geographical markets. That is a clear change if you track our guidance from the time that we were in October 2015, where many of these markets were still either just in anticipation of a downturn or at least relatively lackluster in the terms of the way they were moving. As we've shown already from our Q4 result presentation, a clear set of positive signs. Maëlys, on the dividend question?
On the dividend question, as I mentioned, there is two things that were different. First, the fact that we will consider the different way of structure of balance sheet with more leverage. We also may consider to a part of our pension obligation secures for part of the separation, which will free up the pension top-up partly that we are paying today. This, with the combination of the increased guidance we have, that mean an increased cash generation will enable us to continue to distribute in the painting and coating only the same dividend as we are. This year, as we mentioned, for whole of the company, we will have a higher leverage.
Yes.
Thank you. Tim Jones from Deutsche Bank. I'm a bit surprised I'm the first person to actually mention PPG in this whole set of presentations. I apologize to be the first person to bring it up. I have two sort of PPG-related questions. The first is, Ton, in your eyes, is there no realistic share price offer within the current ranges PPG could make that offsets your concerns over other stakeholder issues, whether it's antitrust or workers' rights or jobs, and that that is the reason why the board refuses to engage at the moment? The second issue on PPG is, if Akzo remains independent and we go sort of 12 months down the line, does this PPG approach turn out to be a good thing for you?
In that I presume in any organization the size of Akzo, there's always going to be groups that are reluctant to change. This obviously gives you an opportunity really to push through those changes, which helps you accelerate the cost-cutting, helps you break up the conglomerate structure. Any thoughts around that would be great. Thank you.
Thank you for the two questions. We have today been able to present the plan that we have been developing and that we have been assessing over a period of time. This plan, in our eyes, creates superior value. The plan also is executable along a clear timeline. It is a plan that contains significantly less uncertainty and risks and does take better care of the stakeholders that we have. In the case of PPG, we have received two offers. We have very clearly assessed these two offers. We've assessed them with our legal and our financial advisors, and we've really dissected the different parts. We've given two very clear responses, and that's really where we stand today. We have a plan that we believe has superior value to any of the proposals that has been on our table.
That superior value is what we are excited about to deliver because it's not only a value matter, but also a timing, a clarity of plan, a higher level of certainty because of a complete lack of any form of regulatory approval that you would require. From these perspectives, this is the plan that our energy is going to delivering. This is what we are focused on going forward. Your second question was?
It was in relation to Sorry. Since you took over as CEO, you've instigated-
Oh, the urgency question
huge amount of cultural change.
Sense of urgency.
There must be some groups that are resistant to that. Does this really give you a nice final push to get it all through the stuff you've wanted to do for years, ultimately?
Overall, I think what you've seen since 2012, and I have received that feedback from shareholders, that they do seem to notice a clear change of culture, a clear change of urgency, a clear change of incremental steps in profitability improvement, a clear change of how to run things, a clear change in coherence in the organization and the culture that people are driving. We've actually been able, and part of that was by, of course, also changing some of the people that you indicate may have been hesitant pre-2012. Overall, there's been a significant change of culture already taking place. That sense of urgency has been there. What of course has been clear is that there's three phases in the way we've worked.
The market sometimes supports you in a phase, and sometimes it doesn't support you in a phase, and then you keep adapting to what's happening overall. What I really want to emphasize is that the sense of urgency is high. People want to deliver this plan. They're excited about this plan. We as a management team are excited about this plan. When I walk through the various buildings and facilities that I've walked through in the last number of weeks, the amount of energy is actually incredibly high. Do not worry about the sense of urgency. It is truly high today.
If I may add, as a newcomer to the company, I think the alignment was there. I think we just talk about it more now.
Yeah. Okay. Good. Diana, you have the next?
Hi, good morning. Thank you for the presentation. You talk a lot about the margin goal before the corporate cost, the fact is that corporate expenses are a cash drain on the business. You're losing potentially EUR 1 billion of EBITDA, and along with that, you're shedding about EUR 50 million of central cost, which still leaves you with EUR 200 million of central cost for the remaining two smaller businesses. Do you feel like that level of corporate expense is necessary to run a business that's now smaller? That's my first question. The second one is, I hear your point about the broker estimates for the Specialty Chemicals business between EUR 8 billion and EUR 12 billion. If you discovered in six months' time that actually you could only get EUR 6 billion-EUR 8 billion, for example, would you still sell the business?
Would you prefer to keep it and wait until such date that you could get the price you wanted? Thank you.
Yes, indeed. To make sure that all of you could actually compare our different guidances that we've provided in the past with each other, as opposed to having a different jolting of guidance with different definition. It's the reason why we provided the guidance going forward. To incorporate the support functions and corporate costs, we've also created what I would call a slightly artificial number, which is when you have that corporate cost included into the AkzoNobel organization as it is today, even for 2020. That shows you that 300 basis point improvements. We're trying to be very transparent in saying, this is how we've done it so far, so you can compare it, and this is what it would be if you include these costs there.
We believe that if we take EUR 50 million costs out of these corporate structures, and in case that depends on the separation option, you would then split it between the two businesses, that that is an efficient way of running these businesses, but we will continue to drive efficiency going forward. In terms of the separation option, I don't know, Maëlys , if you want to provide an option. We will update you while we go along. That is an effect of having pulled forward slightly the decision on the separation of Specialty Chemicals. I guess you will get very regular updates with communication points that have been set. Our commitment is to the separation of Specialty Chemicals and to actually provide the fast proceeds, the net proceeds back to shareholders. I don't know if you want to add something to that.
Coming back on your comment about the market and the good time, I think we clearly show you that we are at a moment where Specialty Chemicals have really worked on its portfolio, on its potential, and you really have a clear strategy forward where we're thinking the timing is right, though in terms, indeed, of the separation, we are running internally to be ready within this 12 months. We do also think right now that having the dual track to have all the option open will enable to act when we can, depending on the market. That's why we want to run this dual track process till the end to ensure we both keep tension in the process and we maximize also the chance to best value this business.
Lloyd, do you have a next question? Sorry.
Thanks. Christian Faitz from . Three questions, if I may. First of all, Maëlys, you already mentioned that you might think about other pension plan options, but status quo, if you did split the companies to a coatings company and a specialty chemical company, would the assumption be correct that looking at your historical acquisitions, that most of the pension obligations would actually stay with the Paints and Coatings business? Ton, you mentioned in your early part of the presentation that you would split the Paints and Coatings business into three different segments. Can you elucidate which three different segments that would be? Deco plus two others, I would believe. A third question. Looking 10 years down the road, let's assume you lived in a PPG-free world going forward. I see the deco and coatings business as having two bigger gaps.
One is the North American deco exposure. I believe you sold that business to a company which slipped my mind. Second of all, automotive OEM, where you have no exposure. Other automotive OEM companies are claiming that refinish and automotive OEM actually fit quite nicely together. Any plans on that, looking at your longer term strategy? Thanks.
For your first question, indeed, the majority of our pension liability in the U.K. are linked to the paint and coating. That's why also I mentioned clearly that through the separation, we may like to have a part to dedicate to the pension obligation to ensure that the paint and coating indeed have less burden in the future. That will be part under consideration when we'll separate the business.
When I tackle your last question, when it comes to our positions, we have in the last years, especially in the start of the period around 2012, said we want to put our money in those places where we are absolutely leading. You've seen the leading market positions in the slides that I've presented. Therefore, you see that, yes, we have taken, for example, a conscious choice in 2012 to say we are not leading in the U.S. We need to spend significant money to become leading. Therefore, why don't we take that money and put it in those places where we can build the brands, where we can build the distribution networks, where we can build the technologies for those people.
These were conscious choices, and I do believe that if a company like us would step back either into the U.S. or into an automotive business, we would only do so when we provided a strong strategic position and not just a partial position. We are a very successful player in the vehicle refinish business, which proves that you can be a premium player, a positive player in that business without being in the OEM business. We would not embark on going into a half position in some of these very relevant markets. That is exactly what we decided not to do in 2012. Your second question, can you quickly repeat?
The three different points.
Okay. What, of course, we said is that we're going to create three more even organizational units. They're going to be more markets facing groups. We are going to be able to coordinate digital innovation, supply chains, and other aspects more as a company overall. We want to have the discussions with the workers' councils first before we would actually give the entire clarity. We will update you while we go. Yes.
Thank you for the invitation to the Capital Markets Day. It's Victor Slavinski from Elliott Advisors here. As you know, we became shareholders in AkzoNobel on the belief that significant value could be created by the separation of the specialty chemical business. We appreciate the additional detail and information that you provided us with today. What we, as owners of the business, hoped to hear today was a comprehensive and objective evaluation of the standalone strategy that Akzo has alongside a comparison of the potential alternative with a transaction with PPG. We didn't get that. We think that the board of Akzo is really failing in their corporate governance duties to present to shareholders an objective and fair evaluation of the two strategies.
That led us, basically, that forced us to call the EGM to remove the Chairman of the company, and we would've hoped that by doing that, you would take your corporate governance duty seriously and present today an objective and fair evaluation of the two options, rather than just focusing on one of these options. When we convened the AGM, I think the comment you made publicly was that, and let me quote here, "The proposed agenda item to remove Mr. Burgmans will be rejected." Frankly, we don't know what that means. I think I've seen four different interpretations in the Dutch media of what that means. Maybe today, in this public forum, you could clarify what you meant by that.
Also, as you know, under Dutch law, shareholders holding in excess of 10% of the capital of the company can actually have an AGM convened with such an agenda item. Perhaps you could explain on what basis Akzo claims to have the right to reject that. We would really appreciate some clarity on this point.
Let me start about what today is truly about. Today is truly about our plan of generating value going forward. We have asked you to have us present it today. We're very happy that there is so much interest of people coming here. It is our conviction that the plan today is a plan that creates superior value with significantly lower risks and a very clear timing associated with it. What we intend to do going forward is to continue to reach out to our shareholders as we've done in the last weeks, months, and years, and have the discussion around the questions that people may have, the clarity that they ask.
Of course, listen, as we've done very carefully, and I believe you do recognize a number of issues that shareholders, in their interactions with us, have said in today's presentation, and then clearly provide answers to questions that people have and provide input on those questions. That is what today is about. That is what our focus is. We do believe strongly that this is the better plan for AkzoNobel, that this is the plan that has a higher value creation, as I mentioned, with a clearer timing aspect attached to it, with less regulatory or other risks. This is a conviction that we have quite strongly. When it comes to your question on governance, I think we've been in communications on the governance side of things, where the supervisory board fully support Mr. Burgmans. They are strongly supporting him based on his experience.
They have unanimously decided, together with the board of management, to the approach that we have taken. This unanimous decision is part of what we've communicated to the market transparently. We've received two proposals. These two proposals we have deemed, after very detailed analysis, to be inadequate. On the governance side of things, I guess the articles of association and the Dutch law and the potential statutes of AkzoNobel are very clear on it, and the supervisory board is doing nothing else than following their fiduciary duty in making their decisions.
Thanks. Andrew Stott from UBS. I've got a couple. The first is antitrust. You've mentioned antitrust. You mentioned it before today in many of the press conference and public comments, but you haven't tackled it head-on, and I just wondered if you could share some math around the potential, perhaps value dilution, that PPG's equity offer, which ultimately is part of the offer.
How that impacts the math. I'm wondering why you haven't tackled that head-on, and if you can do that.
the second one is the disposal process. You have ruled out one thing, which is to sell chemicals in parts.
In a multitude of parts, yes.
In a multitude of parts. Is that a specific set of reasons, maybe physical separation of assets, or is it an implied message on the interest you have in the asset as a whole?
Okay. Let me answer the two parts. Do you want to answer the second question, or if one of you wants to answer and add to it? Overall, we are two leaders in the industry. We lead in many of the geographies. We meet, and that means in the form of competing, virtually every day, every hour when it comes to running this business. As you've seen, we are a number one in many of our places. In those places where we're not, we're mostly a number two or a number three, and we do see them as a co-leader in many of these industries. We believe that this will result in certain discussions. This will result in potential divestitures. It will certainly result in a requirement of time that is unclear in the way it would happen.
It is not for us to provide detailed numbers that you may be asking for, but it should be clear that this is not a trivial topic. It is a relevant topic that will determine an insecure timeline. It will also be determined by an outcome that cannot be predetermined, and this is one of the reasons why we've mentioned it as a relevant aspect of the evaluation of the proposal. Maëlys, in terms of the separation?
Yeah. On the separation, as we say, one thing is clear is you need to separate Specialty Chemicals from Paints and Coatings. This is, as we say, relatively easy in terms of operation because they are two separate businesses. If we look at chemical as a whole, indeed, there as you start to really looking at putting in part, there you have a lot of inter-tanglement between the business. Thierry has shown you the different platforms. There are clearly supplier interactions, procurement that is linked, the way we operate all these plants, even the physical location. That's why we had studies, and as we say, we have been working on this project for a while. We clearly have assessed that will not create benefit.
Last but not least, as you say, we also see that there is a potential on the market and market of interest we have for the business overall. We do clearly believe that selling in multiple parts will not be a way that will create the most value. We will continue, as we say, to assess in parallel all the other ways to make sure we get it the best way we can.
All right. I see a signal over here. One last question there from the back of the room.
That's Oren Farb from Evercore ISI. Two questions if I can. Quick ones. The first one, can you talk about the flex that you may have to get to the margin target for 2020 if the 4% volume growth doesn't come through? I end up with the same number as Jeremy on operating leverage at 35% versus 20%-30% that you've talked about in the past. The second one on antitrust, and uncertainties on the PPG side. Can you talk about the uncertainties that an appropriate breakup fee could untangle? Thank you.
When it comes to the leverage, as Jeremy already said, we always talked about this kind of the 25 plus-ish percent, as an average of averages. An average between Specialty Chemicals and Paints and Coatings. An average between what is happening in Asia, when we have to reinvest to increase capacity, or in Europe where we actually have the capacity, which is determined by the proximity to the customer base, and we can actually load it up with either an extra shift or maybe even two extra shifts. In the individual businesses, those leverages are slightly different, especially if there's small growth in the mature areas, the leverage is quite high. When the leverage now is taking place on an asset base that we've built in Asia that actually has an ability to accommodate additional volume, the leverage is also becoming quite healthy.
These would all kind of confirm the things that you've made. That certainly on the chemical side, you generally need to invest significantly, which generally kind of throttles the leverage a little bit. Whereas on the Paints and Coatings side, we do have the capacity in place because the manufacturing facilities are less determined by sweating the assets, but by being close enough to the customer with a product that doesn't travel so far. That's part of the leverage question overall. Again, we have raised, on your second question, the antitrust issue because of the clear timeline difficulty, the actual unclarity of what the outcome would be.
Of course, what people sometimes underestimate is the actual impact it has on the operations when these things are actually taking place in terms of our customers responding, our talent and our employees responding, our suppliers responding to a situation like that. Money doesn't do all the answering on that. It is something that we've looked at in detail, and we believe that having these two true leaders in the market, we're talking about the two out of the top three players out there, that you can expect significant issues in the discussions affecting both timeline as well as outcome. Good. With that, I thank you very much for all of the questions, for the listening to the presentation. We look forward to future discussions that will undoubtedly happen in the near weeks and months.
We really, as an organization, are committed to delivering what we've told you today. Thank you very much.