2010 Media Releases

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) has initiated coverage of DuluxGroup (ASX: DLX) with a Hold rating following its demerger from Orica.

Research analyst Mark Wilson said “We believe the demerger will allow better focus of the business strategies, growth objectives, and core competencies of the business, while increasing flexibility.

“DuluxGroup is a well managed company with strong market position. We expect its earnings growth profile to remain robust, and cashflows and return on capital are at 45%.”

DuluxGroup has market leading positions in all the major Australian and New Zealand markets in which it operates and key segments include coatings, home improvement and garden care products. While Deutsche Bank is forecasting compound annual earnings growth of 5% to 2012, Wilson believes this growth may be constrained by recent market share gains and changes in the markets such as increasing competition and a new distribution entrant. However, despite additional key risks identified by Deutsche Bank as rising raw material costs, increasing competition, and changes in the marketplace, Wilson says, “We believe the higher multiple for DuluxGroup can be justified on the company’s strength in market positions, management and brands.”

DuluxGroup is a manufacturer and marketer of premium branded products that enhance, protect and maintain the places and spaces in which people live and work. Key brands include Dulux, Selleys and Yates.

For further information, please contact:

Amy King +61 (0) 2 8258 2505