Half-Year Revenue up 4% at AkzoNobel
AMASTERDAM – For the first half of 2017, AkzoNobel reported an increase in volumes by 2%, driven by Decorative Paints and Specialty Chemicals, and an increase in overall revenue of 4%, mainly due to volume growth and acquisitions.
For the second quarter of 2017, the company reported an increase in volume for Decorative Paints and Specialty Chemicals, and flat overall. The company also reported a revenue increase of 2%, driven by Performance Coatings and Specialty Chemicals.
Looking forward, AkzoNobel continues to anticipate positive developments for EMEA (excluding the UK), North America and Asia, improving during the year, while Latin America is expected to stabilize. Market trends will remain challenging for the marine and oil and gas industries.
The company has improved its ability to respond to developments in its markets and continues taking appropriate measures, including structure to drive operational excellence and additional cost control, to deal with higher raw material prices in an inflationary environment.
AkzoNobel continues to expect EBIT for 2017 to be around €100 million, higher than 2016, as a result of growth momentum and continuous improvement, assuming no further material changes in market and economic dynamics, including foreign currencies.
The company also announced that it plans to hold an Extraordinary General Meeting of Shareholders (EGM) of Akzo Nobel N.V. in Amsterdam Sept. 8, 2017. The meeting will offer further explanation and discussion regarding AkzoNobel's response to the unsolicited and non-binding proposals made by PPG in March/April 2017.
CEO Thierry Vanlancker, commented, "It is a privilege to lead AkzoNobel, a company full of great people focused on delivering for our customers every day.
"I was involved in developing our strategy to accelerate sustainable growth and value creation for all our stakeholders. We will continue to deliver on the plans for the creation of two focused, high-performing businesses - Paints and Coatings and Specialty Chemicals. The separation process remains on track.
"During the first half of the year, we invested to significantly increase our production capacity around the world and launched two of our premium Decorative Paints brands in key markets. We also announced two acquisitions to strengthen our Performance Coatings business.
"We are putting in place a new Executive Committee structure designed to build momentum across the business and maintain our focus on operational excellence.
"Following a record performance for AkzoNobel in the first quarter, we continued to see growth across all our business areas with the exception of challenging market conditions in the marine and oil and gas industries, and inflationary pressures, which impact part of our business. Mitigation plans are in place and we will see the benefit of these later in the year.
"As part of our ongoing program to strengthen the relationship with our shareholders, we are announcing a range of new activities including an EGM, which will be held on September 8.
"We remain focused on executing our new strategy and continue to expect EBIT for 2017 to be around €100 million higher than 2016, as a result of growth momentum and continuous improvement. This assumes no further material changes in market and economic dynamics, including foreign currencies."
In Decorative Paints, half-year revenue was up driven by strong volume growth. Positive volume developments were partly offset by adverse price/mix. Volumes were up 6% with volume growth in Asia and Latin America. The favorable impact from the Brazilian real was offset by the weakening of the pound sterling. EBIT increased 8% mainly as a result of improved volumes and cost control.
The company has made a series of product launches in key markets including the Levis premium coating brand in the professional market segment in China and its EasyCare brand in Brazil.
In Performance Coatings, half-year revenue was up 4%, driven by the acquired Industrial Coatings business. Positive volume developments for Industrial and Powder Coatings were more than offset by continued weak demand in Marine and Protective Coatings. Excluding Marine and Protective Coatings, volumes were higher. EBIT was down due to ongoing weakness in the marine and oil and gas industries. Excluding Marine and Protective Coatings EBIT was up. Return on sales and return on investment were affected by Marine and Protective Coatings and the acquired Industrial Coatings business.
In Specialty Chemicals, half-year revenue was up 6%, with growth in all business units and regions. Several of the businesses benefitted from improved market conditions in the oil drilling, agrochemicals and building and construction segments. Strong growth in China was driven by the new organic peroxides plant in Ningbo and plant closures at competitors driven by an increased focus on implementation of health, safety and environmental standards.