AMSTERDAM — Akzo Nobel N.V. provided financial results for the second quarter of 2020, showing a strong focus on margin and cost savings in response to COVID-19 headwinds.
The company reported revenue was 19% lower at €1,987 million, compared to €2,451 million in 2019. Adjusted operating income for the quarter was €238 million, compared to €305 million in 2019. Market headwinds continued to ease during second quarter, although revenue for June was nearly 5% lower than the same month in 2019. As previously announced, revenue for May was around 20% lower than last year, while market headwinds were strongest during April, when revenue was almost 30% lower compared with 2019.
Trends have differed significantly per region and segment. Demand for Decorative Paints rebounded strongly in Europe – and faster than company planning assumptions. By the end of the second quarter, China had almost recovered to previous levels, although other regions continued to be impacted by varied degrees of lockdown. As expected, demand for Performance Coatings continued to improve during the quarter, although remained significantly below the previous year, especially for automotive and aerospace related markets.
The company indicated that strong margin management and strict temporary cost-saving measures have helped to compensate for lower end market demand.
AkzoNobel CEO, Thierry Vanlancker, commented, “Despite lower end market demand, our business return on sales increased 30 basis points to 14% for the second quarter as a result of continued focus on margin management and cost-saving measures.
“I’m extremely proud of our teams around the world, who have continued to focus on serving our customers and delivered this resilient performance while also helping many communities affected by the pandemic.
“Our rigorous cash management and strong balance sheet put us in a sound position to deal with the ongoing uncertainty from COVID-19 as we strive to deliver powerful performance as a frontrunner in our industry.”
AkzoNobel has suspended its 2020 financial ambition in response to the significant market disruption resulting from the pandemic. COVID-19 will continue to impact the second half of 2020, although demand trends differ per region and segment in an uncertain macro-economic environment. Raw material costs are expected to have a favorable impact for the second half of 2020. Continued margin management and cost-saving programs are in place to address the current challenges. The company targets a leverage ratio of 1-2 times net debt/EBITDA by the end of 2020 and commits to retain a strong investment-grade credit rating.