AkzoNobel Reports Lower Second-Quarter Revenue
July 30, 2009
AMSTERDAM, the Netherlands - Akzo Nobel N.V has announced its results for the second quarter of 2009. Trading remained tough throughout all of the businesses. As a result, the company reported a revenue decline of 10 percent to EUR 3,668 million, while EBITDA was EUR 527 million, 9 percent lower.
AkzoNobel's CEO Hans Wijers commented, "In March, we saw early indications that markets may be stabilizing, and we have seen that trend continue into the second quarter. However, this gradual stabilization is at significantly lower levels than 2008. With the exception of some emerging markets, we see little significant recovery of growth. Due to the continuing economic uncertainty, forward visibility still remains limited. Therefore, management actions continue to focus on customers, costs and cash. Our Q2 results show that these actions are beginning to bear fruit."
In Decorative Paints, revenue was down 5 percent. Synergy programs and restructuring are ahead of plan, and the net workforce has been reduced by more than 2,100 employees (8 percent) compared with 2008. EBITDA margin is at 13.1 percent and remained strong due to margin management and stable raw material costs. In Europe, the professional segment continued to be weak due to low construction activity, while the retail business was more resilient. The U.S. paint market continued to experience soft demand, but the contraction in the second quarter was less severe than during the first quarter of 2009. Integration savings and strong cost-management initiatives have helped to mitigate the volume shortfall. AkzoNobel gained market share in Latin America, while markets across the Asia region were mixed. The Chinese market continued to stabilize in the quarter. Performance in India was positive, despite pressure on revenue and margins. Overall, margins were positively impacted by price increases implemented in 2008.
In Performance Coatings, revenue decreased by 14 percent and EBITDA margin improved to 15.8 percent. Margin management initiatives delivered value, and cost levels decreased as restructuring programs gathered pace. The segment saw strong performance in Marine and Protective Coatings and Packaging Coatings. In the Industrial Activities businesses, the company has closed or restructured eight production sites in mature markets and will continue to align the cost structure with lower trading levels. Marine Coatings again had a good quarter, despite lower new construction and maintenance demand. Car Refinishes experienced improved demand in tough market conditions, compared with the first quarter of 2009.
In Specialty Chemicals, revenue declined by 8 percent. The surface chemistry and polymer chemicals markets remain under pressure. However Pulp and Paper and Functional Chemicals had a strong performance. Market conditions remained weak, with a volume decline of 18 percent that was partly compensated by favorable prices (5 percent), currencies (1 percent) and acquisitions (4 percent). Despite the continued challenges, uncertain feedstock costs and heightened competitive pressure in the market, an unchanged EBITDA margin of 16.6 percent was realized. Industrial Chemicals acquisitions offset the volume decline, where sourcing actions, aggressive cost control and effective margin management resulted in a Surface Chemistry EBITDA on a par with 2008, despite a 27 percent volume decline.