Press release -
AkzoNobel executing on transformation, creating a fit-for-purpose organization, and strong pricing momentum dealing with headwinds
AkzoNobel executing on transformation, creating a fit-for-purpose organization, and strong pricing momentum dealing with headwinds
Akzo Nobel N.V. publishes results for Q2 2018 (AKZA; AKZOY)
- Implemented phase one of transformation to create a fit-for-purpose organization delivering €25 million in Q2
- Decorative Paints return on sales1 up at 12.2% (2017: 11.6%) driven by 5% higher selling prices
- Improving trend for Performance Coatings with return on sales at 11.8% (2017: 13.4%); pricing initiatives gaining traction and closing the gap
- Investing in attractive markets: acquisition of Fabryo in Romania and opening of new powder coatings plant in China
Q2 AkzoNobel (Paints and Coatings):
- Revenue 3% lower, although up 2% in constant currencies2, with positive price/mix partly offset by lower volumes
- Adjusted operating income3 at €225 million (2017: €294 million) mainly impacted by €21 million adverse foreign currencies and €20 million non-recurring items
- Operating income includes the adverse impact of identified items of €33 million, mainly related to the transformation
- Return on sales at 9.2% (2017: 11.6%), up for Paints and improving for Coatings; return on investment4 at 12.2% (2017: 14.4%)
- Net income from total operations at €271 million (2017: €301 million), including discontinued operations at €164 million (2017: €134 million)
AkzoNobel CEO, Thierry Vanlancker, commented:
“Disciplined execution on the first phase of our transformation into a focused Paints and Coatings company is creating a fit-for-purpose organization and delivering cost savings.
“Revenue in constant currencies increased in all Performance Coatings segments except Marine and Protective Coatings. Decorative Paints delivered a particularly strong performance with pricing initiatives and cost savings compensating for higher raw material costs.
“We continued investing in our market leading positions, including the acquisition of the Fabryo decorative paints business in Romania and the opening of a new powder coatings plant in Changzhou, China.”
Outlook:
We are delivering towards our "Winning together: 15 by 20" strategy by creating a fit-for-purpose organization for a focused Paints and Coatings company, contributing to the achievement of our 2020 guidance. For the remainder of 2018, we expect positive developments for Decorative Paints and Performance Coatings, excluding Marine and Protective Coatings, where market conditions are still challenging. Demand trends differ per region and segment. Raw material inflation is projected to continue for the remainder of 2018, although at a slower rate than during the start of the year. Robust pricing initiatives and cost-saving programs are in place to mitigate the current challenges.
| AkzoNobel in € millions | Q2 20175 | Q2 2018 | Δ % | ∆% CC2 |
| Revenue | 2,533 | 2,446 | (3) | 2 |
| Adjusted operating income3 | 294 | 225 | (23) | |
| ROS% excluding unallocated corporate center costs | 12.8 | 12.1 | ||
| ROS%1 | 11.6 | 9.2 | ||
| ROI%4 | 14.4 | 12.2 | ||
| Net income from total operations, including discontinued operations | 301 | 271 |
- Revenue up 1%
- Adjusted operating income up 50% at €252 million (2017: €168 million), caused by held for sale effects (Q2 impact: €74 million) and stronger underlying performance in Specialty Chemicals
- In Specialty Chemicals, adjusted operating income was higher, mainly due to stronger price/mix effects and productivity improvements, partly offset by adverse currencies, restructuring costs related to manufacturing network optimization projects and other one-off costs
| Discontinued operations in € millions (including Specialty Chemicals) | Q2 20175 | Q2 2018 | Δ % | ∆% CC2 |
| Revenue | 1,252 | 1,264 | 1 | 7 |
| Adjusted operating income3 | 168 | 252 | 50 | |
| ROS%1 | 13.4 | 19.9 | ||
| ROI%4 | 15.6 | 20.7 |
2Constant Currencies calculations exclude the impact of changes in foreign exchange rates
3 Adjusted operating income = operating income excluding identified items (previously called EBIT)
4 ROI% is adjusted operating income of the last 12 months as percentage of average invested capital
5 Represented to present the Specialty Chemicals business as discontinued operations
This is a public announcement by Akzo Nobel N.V. pursuant to section 17 paragraph 1 of the European Market Abuse Regulation (596/2014).
About AkzoNobel
AkzoNobel has a passion for paint. We’re experts in the proud craft of making paints and coatings, setting the standard in color and protection since 1792. Our world class portfolio of brands – including Dulux, International, Sikkens and Interpon – is trusted by customers around the globe. Headquartered in the Netherlands, we operate in over 80 countries and employ around 35,000 talented people who are passionate about delivering the high performance products and services our customers expect. The sale of our Specialty Chemicals business is expected to be completed by the end of 2018.
About AkzoNobel Specialty Chemicals
Industries worldwide rely on our essential chemistry in the manufacture of everyday products such as paper, plastics, building materials, and personal care items. Building on the dedication of our 9,500 employees and our shared commitment to safety, sustainability, and open innovation, we have established a world-class business and built strong partnerships with our customers. We operate in over 80 countries around the world and our portfolio of industry leading brands includes Eka, Dissolvine, Trigonox, and Berol.
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AkzoNobel creates everyday essentials to make people’s lives more livable and inspiring. As a leading global paints and Coatings Company and a major producer of specialty chemicals, we supply essential ingredients, essential protection and essential colour to industries and consumers worldwide. Backed by a pioneering heritage, our innovative products and sustainable technologies are designed to meet the growing demands of our fast-changing planet, while making life easier. Headquartered in Amsterdam, the Netherlands, we have approximately 45,000 people in around 80 countries, while our portfolio includes well-known brands such as Dulux, Sikkens, International, Interpon and Eka. Consistently ranked as a leader in sustainability, we are dedicated to energizing cities and communities while creating a protected, colorful world where life is improved by what we do.
