AkzoNobel Q2 2016 Results: Continued volume growth with improved profitability across all Business Areas
19 July 2016 - 3:01PM
July 19, 2016
AkzoNobel publishes Q2 2016
results
Continued volume growth with
improved profitability across all Business Areas
A strong adverse currency impact
Akzo Nobel N.V. (AKZA.AS; AKZOY)
-
Volumes up 1 percent,
driven by Decorative Paints and Performance Coatings
-
EBIT (operating income
excluding incidental items) up 9 percent at €491 million (2015:
€452 million), reflecting continuous improvement initiatives and
lower costs, partly offset by adverse currency effects
-
Revenue down 6 percent to
€3.7 billion, strongly adversely affected by currencies
-
Return on sales* improved
to 13.2 percent (2015: 11.4 percent); return on
investment* improved to 15.1 percent (2015: 12.2 percent). ROS
and ROI improved for all Business Areas
-
Adjusted earnings per share
(EPS) up 2 percent at €1.32 (2015: €1.30)
-
Net income attributable to
shareholders up at €312 million (2015: €331 million, which
included positive incidental items)
-
Net cash inflow from operating
activities up at €453 million (2015: €407 million)
-
Launched €500 million ten year
bond at a coupon of 1.125 percent in April 2016
-
Further de-risking of UK
pension liabilities
-
Outlook: The market
environment remains uncertain with challenging conditions in
several countries and segments. Deflationary pressures and currency
headwinds are expected to continue
AkzoNobel today reported a second
quarter with positive developments in profitability in all three
Business Areas, despite currency pressures and a challenging market
environment. EBIT increased 9 percent to €491 million. Overall
volumes improved by 1 percent, although this increase was not
reflected in Q2 revenue, which was down 6 percent at €3.7 billion,
strongly affected by currencies. Return on sales improved to 13.2
percent and return on investment was up at 15.1 percent.
CEO Ton Büchner:
"During the quarter we increased volumes while improving
profitability across all Business Areas, showing the ongoing
resilience of our business. The market environment in 2016 remains
uncertain, with challenging conditions in several countries and
segments. Deflationary pressures and currency headwinds are
expected to continue. Our ongoing focus will remain on driving
continuous improvement and organic growth across our Business
Areas.
We were delighted to open our largest technology
center in China, which will support product innovation and the
development of next-generation paints, coatings and specialty
chemicals. We were also ranked number one in our industry on the
influential FTSE4GOOD index of sustainable companies, reinforcing
our commitment to embedding sustainability at the heart of our
business strategy."
Q2 2016 in € million
|
Q2 2015 |
Q2 2016 |
Delta % |
Revenue |
3,949 |
3,711 |
(6) |
Operating
income |
486 |
491 |
1 |
EBIT
(operating income excl. incidentals) |
452 |
491 |
9 |
Return on
sales (ROS) %* |
11.4 |
13.2 |
|
Net
income attributable to shareholders |
331 |
312 |
(6) |
|
|
|
|
H1 2016 in € million
|
H1 2015 |
H1 2016 |
Delta % |
Revenue |
7,540 |
7,141 |
(5) |
Operating
income |
792 |
848 |
7 |
EBIT
(operating income excl. incidentals) |
758 |
825 |
9 |
Return on
sales (ROS) %* |
10.1 |
11.6 |
|
Net
income attributable to shareholders |
491 |
552 |
12 |
Decorative
Paints: Positive developments in Asia contributed to an
increase in volumes and also drove an improvement in EBIT which was
up 2 percent. These gains were more than offset by unfavorable
currency effects. Volumes continued to be down in Latin America and
slightly lower in Europe, with overall revenue down 7 percent. We
launched our Unexpected Courts project in Rio de Janeiro, Brazil.
It involves using paint in an imaginative way to create areas where
children are inspired to try out different sports, such as
basketball, hockey and volleyball in surprising places.
Performance
Coatings: Demand trends differed per region, with higher
volumes being more than offset by adverse currencies. This resulted
in a revenue decrease of 5 percent. Higher volumes, continuous
improvement initiatives and lower costs contributed to an increase
in EBIT, although this was limited to 1 percent due to unfavorable
currencies. We completed phase one of the expansion of our
protective coatings facility in Cikarang, Indonesia. The expansion
will increase capacity at the facility by 40 percent and will help
us to meet growing domestic demand.
Specialty
Chemicals: Volumes were flat overall, with positive
developments in some segments balanced out by lower demand in
oil-related segments. Revenue was down 7 percent, mainly due to the
divestments of Paper Chemicals in 2015, adverse currency effects
and price deflation in several segments. EBIT rose 10 percent due
to operational efficiencies and lower costs. Our Expancel Microspheres gained approval from the US Food
and Drug Administration as a constituent in wine
corks. The product helps to ensure
wines are kept as perfect as possible and can be enjoyed as
intended.
Business Area highlights in €
million
Decorative Paints |
|
|
|
|
|
Q2 2015 |
Q2 2016 |
Delta % |
|
H1 2015 |
H1 2016 |
Delta% |
1,134 |
1,055 |
(7) |
Revenue |
2,024 |
1,916 |
(5) |
128 |
131 |
2 |
Operating income |
178 |
183 |
3 |
128 |
131 |
2 |
EBIT (operating income
excl. incidentals) |
178 |
183 |
3 |
11.3 |
12.4 |
|
ROS %* |
8.8 |
9.6 |
|
Performance Coatings |
|
Q2 2015 |
Q2 2016 |
Delta % |
|
H1 2015 |
H1 2016 |
Delta % |
1,550 |
1,473 |
(5) |
Revenue |
2,980 |
2,861 |
(4) |
220 |
222 |
1 |
Operating income |
390 |
408 |
5 |
220 |
222 |
1 |
EBIT (operating income
excl. incidentals) |
390 |
408 |
5 |
14.2 |
15.1 |
|
ROS %* |
13.1 |
14.3 |
|
Specialty Chemicals |
|
|
Q2 2015 |
Q2 2016 |
Delta % |
|
H1 2015 |
H1 2016 |
Delta % |
1,290 |
1,206 |
(7) |
Revenue |
2,586 |
2,412 |
(7) |
192 |
179 |
(7) |
Operating income |
355 |
343 |
(3) |
162 |
179 |
10 |
EBIT (operating income
excl. incidentals) |
325 |
343 |
6 |
12.6 |
14.8 |
|
ROS %* |
12.6 |
14.2 |
|
The Q2 2016 report can be
downloaded via the AkzoNobel Report iPad app
http://bit.ly/obljrf or read
online at www.akzonobel.com/quarterlyresults.
* ROS% is EBIT divided by
revenue
Moving average ROI% is 12 months EBIT
divided by 12 months average invested capital
- - -
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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Media Relations |
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Investor Relations |
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Contact:
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Contact:
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Q2 Report - AkzoNobel
Image - AkzoNobel CEO Ton Büchner
Q2 Infographic - AkzoNobel
Media Release - AkzoNobel
Image - AkzoNobel CFO Maëlys Castella
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