AkzoNobel Releases First-Quarter Results
AMSTERDAM - Akzo Nobel N.V. has published results for the first quarter of 2018, reporting progress on the transformation of the company into a focused paint and coatings company.
AkzoNobel (Paints and Coatings) successfully completed the dual-track process for the separation of Specialty Chemicals, with the anticipated sale of the specialty chemicals part of the business to The Carlyle Group and GIC for €10.1 billion. Revenue was down 8%, mainly due to adverse foreign currencies (1% lower excluding currency impact) at €2,176 million, and volumes were 3% lower, mainly due to continued adverse market conditions in the marine, and oil and gas industries.
Adjusted operating income was €149 million (2017: €208 million) due to adverse foreign currencies, higher raw material costs and lower volumes not yet fully offset by increased selling prices and cost discipline. Net income from total operations was up 5% to €253 million (2017: €240 million), including discontinued operations at €134 million (2017: €114 million).
Akzo Nobel N.V. CEO, Thierry Vanlancker, commented, "We delivered a key milestone in creating two focused, high-performing businesses with the agreement to sell Specialty Chemicals to the Carlyle Group and GIC for €10.1 billion.
"Headwinds continue for Marine and Protective Coatings, as well as currencies and higher raw material costs. Results were lower compared to an exceptionally strong quarter last year.
"We are ramping up our pricing initiatives and have implemented various cost discipline measures to deal with higher raw material prices. Initial savings from creating a fit-for-purpose organization are also being realized. The transformation is gaining momentum and we are on track for delivering 15% return on sales by 2020."
Outlook AkzoNobel Paints and Coatings
Higher raw material costs and adverse effects from foreign currencies are projected to continue in 2018, especially during the start of the year. The company anticipates ongoing positive developments for Decorative Paints in all regions, particularly Asia. Trends for Performance Coatings are expected to be positive for most segments and regions, while still challenging for Marine and Protective Coatings. The company continues to implement various measures to mitigate current market challenges, including increased selling prices and cost discipline. Its "Winning together: 15 by 20" strategy will create a focused paints and coatings company and deliver its 2020 guidance.
For the first quarter of 2018, Decorative Paints revenue decreased 8% mainly due to foreign currencies (down 1% excluding currency impact). Higher selling prices were offset by adverse mix effects. Volumes were 1% lower, despite growth in Europe. Volumes were lower in China compared to an exceptionally strong first quarter last year.
Performance Coatings revenue for the first quarter was 9% lower, mainly due to adverse currencies (down 1% excluding currencies). Pricing initiatives have continued to gain traction, with 2% price increases in the first quarter and further increases expected in the following quarters. Volumes were 5% lower, mainly due to adverse conditions in the marine, and oil and gas industries. Volumes increased for Powder Coatings, as well as Automotive and Specialty Coatings.