AkzoNobel Publishes Results for Second Quarter
AMSTERDAM - AkzoNobel 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% to €491 million. Overall volumes improved by 1%, although this increase was not reflected in second-quarter revenue, which was down 6% at €3.7 billion, strongly affected by currencies. Return on sales improved to 13.2% and return on investment was up at 15.1%.
CEO Ton Büchner commented, "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."
In the Decorative Paints business segment, positive developments in Asia contributed to an increase in volumes and also drove an improvement in EBIT that was up 2%. 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%. The company launched its Unexpected Courts project in Rio de Janeiro. 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.
In 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%. Higher volumes, continuous improvement initiatives and lower costs contributed to an increase in EBIT, although this was limited to 1% due to unfavorable currencies. The company completed phase one of the expansion of its protective coatings facility in Cikarang, Indonesia. The expansion will increase capacity at the facility by 40% and will help the company meet growing domestic demand.
In the Specialty Chemicals business unit, volumes were flat overall, with positive developments in some segments balanced out by lower demand in oil-related segments. Revenue was down 7%, mainly due to the divestments of Paper Chemicals in 2015, adverse currency effects and price deflation in several segments. EBIT rose 10% due to operational efficiencies and lower costs. The company’s Expancel Microspheres gained approval from the U.S. 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.