Source - GNW

October 19, 2016

AkzoNobel publishes Q3 2016 results

Profitability increased in an environment of mixed volume growth
Interim dividend increased. Currency headwinds continue

Akzo Nobel N.V. (AKZA.AS; AKZOY)

  • Volume growth in Decorative Paints and Specialty Chemicals, while volumes were flat overall
  • Revenue down 4 percent to €3.6 billion, due to adverse currency and price/mix effects
  • EBIT* up 1 percent at €442 million (2015: €436 million), reflecting continuous improvement initiatives and lower costs, partly offset by adverse currency effects
  • Operating income up 4 percent at €454 million (2015: €436 million) positively impacted by incidental items
  • Return on sales** was up at 12.3 percent (2015: 11.6 percent) and return on investment** improved to 15.2 percent (2015: 13.0 percent). ROS and ROI improved in all three Business Areas
  • Net income attributable to shareholders was €285 million (2015: €285 million)
  • Adjusted earnings per share (EPS) was €1.20 (2015: €1.24)
  • Net cash inflow from operating activities up at €600 million (2015: €583 million)
  • Interim dividend up 6 percent to €0.37 per share (2015: €0.35)
  • Further de-risking of pension liabilities
     
  • Outlook unchanged: The market environment remains uncertain with challenging conditions in several countries and segments. Deflationary pressures and currency headwinds are expected to continue. We maintain our financial guidance for 2016-2018

AkzoNobel today reported volume growth in Decorative Paints and Specialty Chemicals with further overall profitability growth in the third quarter, despite challenging conditions in several countries and segments. EBIT increased 1 percent to €442 million and return on sales improved to 12.3 percent (2015: 11.6 percent). Overall volumes were flat, and revenue was down 4 percent to €3.6 billion, due to adverse currency and price/mix effects. Return on investment was 15.2 percent (2015: 13.0 percent).

CFO Maëlys Castella:
"We achieved further growth in profitability in the third quarter, with returns up for all Business Areas and positive volume developments in Decorative Paints and Specialty Chemicals. We are delivering on our improvement programs and maintaining a strong cash discipline. We decided to increase the interim dividend by 6 percent to €0.37 per share.

"Our focus remains on driving continuous improvement and organic growth. We broke ground on a powder coatings plant in Mumbai that will bring us closer to our customers in the north and west of India. We also introduced innovative products that bring major sustainability benefits to our customers, including our Berol DR-B1 direct release surfactant and Aquasilk waterborne wood coating. Denim Drift was launched as our Color of the Year for 2017."

*Operating income excluding incidental items.
** ROS% is EBIT divided by revenue.  Moving average ROI% is 12 months EBIT divided by 12 months average invested capital.  

Q3 2016 in € million

  Q3 2015Q3 2016delta %
Revenue 3,760 3,600 (4)
Operating income 436 454 4
EBIT (operating income excl. incidentals) 436 442 1
Return on sales (ROS) %** 11.6 12.3  
Net income attributable to shareholders 285 285 -
       

Year-to-date January - September 2016 in € million

  YTD 2015YTD 2016delta %
Revenue 11,300 10,741 (5)
Operating income 1,228 1,302 6
EBIT (operating income excl. incidentals) 1,194 1,267 6
Return on sales (ROS) %** 10.6 11.8  
Net income attributable to shareholders 776 837 8

Decorative Paints: Volumes increased 3 percent due to positive developments in Asia and EMEA, while volumes continued to be lower in Latin America. Revenue was down 3 percent mainly due to unfavorable currency effects. We launched our 2017 Color of the Year, Denim Drift, part of our ongoing efforts to inspire customers to make confident color choices and drive growth for our business.

Performance Coatings: Volumes were down by 2 percent affected by adverse conditions in the marine and oil and gas industries, partly offset by positive developments in other segments, including automotive and specialty coatings. Revenue was down 6 percent due to unfavorable currencies, lower volumes and adverse price/mix effects. The intended acquisition of BASF's Industrial Coatings business is expected to be completed towards the end of 2016. We broke ground on a €9 million powder coatings plant in Mumbai which will bring us closer to our customers in the north and west of India and will also provide several innovative lines new to the Indian market.

Specialty Chemicals: Volumes were up 1 percent with positive developments, especially in Industrial Chemicals, partly offset by lower demand in the oil-related segments. Revenue was down 3 percent mainly due to price deflation in several markets. We launched Berol DR-B1, an essential ingredient for outdoor cleaning products which successfully meets stringent US Environmental Protection Agency (EPA) standards, without compromising on performance.

Sustainability, Human Cities and Innovation: We achieved several milestones in the quarter, including: The launch of Aquasilk, a waterborne wood coating that helps Chinese customers meet strict local environmental standards; an addition to our award-winning Intersleek marine foul release coating range which incorporates a bio-renewable raw material; and the signing of a flagship Human Cities project to help renovate four historic sites in the Jing'an district of Shanghai.
  

Business Area highlights in € million

Decorative Paints     
Q3 2015Q3 2016delta% YTD 2015YTD 2016delta%
1,052 1,021 (3) Revenue 3,076 2,937 (5)
121 132 9 Operating income 299 315 5
121 123 2 EBIT (operating income excl. incidentals) 299 306 2
11.5 12.0   ROS %** 9.7 10.4  
Performance Coatings 

 
Q3 2015Q3 2016delta% YTD 2015YTD 2016delta%
1,493 1,406 (6) Revenue 4,473 4,267 (5)
210 192 (9) Operating income 600 600 -
210 199 (5) EBIT (operating income excl. incidentals) 600 607 1
14.1 14.2   ROS %**   13.4 14.2  
Specialty Chemicals    

 
Q3 2015Q3 2016delta% YTD 2015YTD 2016delta%
1,235 1,202 (3) Revenue 3,821 3,614 (5)
163 168 3 Operating income 518* 511 (1)
163 168 3 EBIT (operating income excl. incidentals) 488 511 5
13.2 14.0   ROS %** 12.8 14.1  

The Q3 2016 report can be viewed and downloaded at www.akzonobel.com/quarterlyresults.

* Includes a book profit net of related costs of €30 million in Q2 2015 related to the divestment of the Paper Chemicals business.
** ROS% is EBIT divided by revenue.
  Moving average ROI% is 12 months EBIT divided by 12 months average invested capital.

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AkzoNobel creates everyday essentials to make people's lives more liveable 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 color 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.

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Source: AkzoNobel NV via Globenewswire