AkzoNobel Announces First-Quarter Results
April 25, 2010
AMSTERDAM, The Netherlands - Akzo Nobel N.V. (AkzoNobel) announced its results for the first quarter of 2010, with improved volumes in most businesses underpinning revenue growth of 6 percent. Continued margin management and cost-reduction programs also contributed to EBITDA growth of 38 percent. The one-year rolling EBITDA margin reached 13.6 percent.
The Decorative Paints business got off to a good start in 2010, with revenue up 7 percent due to a 5 percent increase in volume. In higher growth markets, revenue growth was strong (Asia increased 30 percent), while revenue remained stable in the mature markets compared with the previous year. Synergies and restructuring benefits contributed to better results in the mature economies. The closure and integration of multiple sites across Europe is running according to plan. The EBITDA margin was 7.8 percent, an improvement of close to 3 percent compared with 2009, despite severe winter conditions in the Northern Hemisphere and a weak commercial-property market. In line with its strategy, Decorative Paints increased investments in advertising and promotion by 0.5 percent of sales to accelerate growth in key high-growth markets.
It was a strong first quarter for Performance Coatings, with revenue increasing 6 percent. After a difficult first quarter last year, with reduced volumes for most businesses, there has been a recovery in 2010, although most businesses are still below pre-recession levels. During the first quarter, volume recovery was evident in all businesses, with the exception of the late-cycle Marine and Protective Coatings business.
Specialty Chemicals showed improved demand in mature and high-growth markets. Revenue increased by 6 percent, with volumes up 15 percent. EBITDA increased 37 percent to EUR 207 million, compared to EUR 151 million in 2009. EBITDA margin was 17.9 percent, compared to 13.8 percent in 2009. Strong results were most notable in the Functional Chemicals and Surface Chemistry divisions.
Overall margins improved during the quarter but declined from the levels of the fourth quarter of 2009. The higher growth markets displayed the most visible signs of recovery. All businesses benefited from margin management and cost reduction programs, resulting in an EBITDA of EUR 143 million, 36 percent higher than in the first quarter of 2009. The EBITDA margin was 13.6 percent, 3 percent ahead of the first quarter of 2009.
Commenting on the results, CEO Hans Wijers said, "We've had a good start to 2010, particularly in higher growth markets, where our performance was strong. While revenue growth across all AkzoNobel's businesses has been solid, our first-quarter performance compares with a particularly weak first quarter in 2009."
Wijers added, "We expect pressure from further raw material cost increases during the year and remain cautious about the strength of the recovery. AkzoNobel will continue to focus on customers, cost reduction and cash generation, but we will also prioritize investments and initiatives to ensure that the company is able to capture growth."
AkzoNobel has received renewed expressions of interest in National Starch, which has accordingly been reclassified as a discontinued operation.