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AkzoNobel Q2 results 2013

July 24, 2013

Akzo Nobel N.V.  reported a four percent decrease in revenues in the second quarter compared with the same period last year. The company reported that this was due to divestments and adverse currencies against a backdrop of continued challenging market conditions. Operating income for Q2 was 17 percent lower at €322 million. Net income attributable to shareholders for the quarter rose to €429 million, buoyed by recognition of a deferred tax asset and profit on the divestment of Decorative Paints North America. The acceleration of AkzoNobel's performance improvement program is on track to achieve the full EBITDA benefit of €500 million by the end of this year, while additional charges are expected in the second half of the year as restructuring activities are stepped up.

Decorative Paints second quarter revenue declined 1 percent, mainly due to negative price/mix and unfavorable currency effects. The slowdown in global markets continues to affect the top line. In general volumes stabilized, with some markets, in particular China, making a positive contribution in the quarter. Operating income for the second quarter totaled €102 million, 9 percent lower than the previous year, mainly as a result of restructuring costs in mature markets.

Revenue in Performance Coatings declined one percent on largely stable overall volumes compared with the previous year as a result of adverse currency effects. Operating income was down five percent at €163 million due to investments in growth and business excellence initiatives, partially mitigated by margin management and structural cost benefits.

Revenue in Specialty Chemicals was 12 percent lower as a result of the divestment of Chemicals Pakistan and lower overall volumes. Operating income was down 21 percent at €121 million, mainly due to the lower volumes and the conclusion of value chain issues from the previous quarter. During the quarter, the Functional Chemicals Business Unit initiated a large restructuring program as part of the performance improvement program, the implementation of which will start as of Q3.

"While I am pleased to report that our Decorative Paints and Performance Coatings businesses have reported an improved or stable return on sales for the first half of the year, our end markets remain challenging and this was particularly visible at the end of this second quarter,"said CEO Ton Büchner. "Conditions remain tough and, as we have previously indicated, we do not expect an early improvement in the external trends our businesses are facing. With this pressure on our top line, we are stepping up our restructuring activities to secure the delivery of our 2015 targets which drive cash generation and quality of earnings. As a consequence, full year restructuring costs are expected to be higher, with the benefits of these additional restructuring costs visible in 2014. These expected higher restructuring charges and continued weak markets mean that our full year operating income is unlikely to exceed last year."