Akzo Nobel Profits Slip in Q2

Akzo Nobel, owner of the Dulux, Cuprinol, Hammerite and Polycell brands in the UK, published their Q2 2018 results on Wednesday, with net income falling 10% year on year to €271m. The Dutch paints and coatings business said the decline was due in part to adverse currency effects and non-recurring costs.

Here's a summary:-

• The company says they have implemented phase one of their transformation plan 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.

Source: Insight DIY & Akzo Nobel Media Release.

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