AMSTERDAM, the Netherlands - Akzo Nobel N.V. (AkzoNobel) issued a profit warning on Monday. The company reported that its second-quarter earnings will be negatively impacted by raw-material price increases, weak demand in mature markets and longer-than-expected maintenance periods at some plants.
AkzoNobel confirmed that revenue development year-to-date has met the company’s expectations, but that results for the second quarter will be adversely impacted by ongoing challenging trading conditions and one-off factors.
Recent performance has continued to be impacted by further raw material price inflation in the second quarter and, as a result, sequential second-quarter contribution margins are expected to be flat compared with the first quarter. Year-on-year raw material prices are estimated to be around 20 percent higher.
In addition, continued softness of demand in the company’s mature markets and prolonged maintenance stops within Specialty Chemicals will also impact results in the second quarter. These factors lead to an expected second quarter EBITDA of around EUR 550 million.
AkzoNobel expects full-year 2011 EBITDA to be at least in line with the prior year, assuming no further deterioration in economic conditions.
CEO Hans Wijers commented, “We are on track in terms of our medium-term growth ambitions. Our revenues for the first half will illustrate this, as they are expected to be ahead of full-year guidance, driven by positive price and volume development.
“Ongoing actions to mitigate raw material price inflation, company-wide cost containment actions, our continuing successful progress in turning around the performance of U.S. Decorative Paints and continued encouraging growth in high-growth markets will all help mitigate the weaker-than-expected market conditions.”