Weak Demand in Europe Impacts AkzoNobel’s First Quarter
AMSTERDAM, The Netherlands - Akzo Nobel N.V. (AkzoNobel) reported a 7 percent revenue decrease in the first quarter compared with the same period last year, due to weak demand in European markets and divestments. Operating income for the first quarter was 8 percent lower at EUR 217 million. The acceleration of AkzoNobel's performance improvement program is progressing toward achieving the full EBITDA benefit of EUR 500 million a year early, as announced at the company's strategy update in February 2013.
Revenue in Decorative Paints declined 5 percent, mainly due to lower volumes in Europe, price/mix effects and currencies. Operating income at EUR 43 million was higher than in 2012, reflecting lower restructuring charges and lower costs in mature markets.
Revenue in Performance Coatings declined 3 percent compared with the previous year. The slowdown in Europe impacted all businesses. Operating income was up 2 percent, and margins improved due to a combination of margin management activities and ongoing cost control.
Revenue in Specialty Chemicals was 11 percent lower due to divestments and lower volumes, mainly in construction-related products and the pulp-bleaching and plastics industries. The cold weather affected seasonal segments such as agriculture, and the exit from the merchant fatty acids business in China also contributed to the volume decline.
In December 2012, AkzoNobel completed the divestment of Chemicals Pakistan, which accounts for the divestment impact in revenue.
The divestment of Decorative Paints North America was completed on April 2013 and is reported in discontinued operations. The cash inflows and the deal result will be reported in the second quarter.