The company has structurally improved its ability to respond to developments in its markets and continues taking appropriate measures to deal with higher raw material prices in an inflationary environment. EBIT for 2017 is expected to be around €100 million higher than 2016, as a result of growth momentum and continuous improvement, assuming no material change in market and economic dynamics.
AkzoNobel CFO Maëlys Castella said of the results: "Our record performance continued this quarter, showing the substantial growth momentum we have across the business. Significant progress continues across all our Business Areas, reflecting both our strong customer focus and great portfolio of brands. We remain focused on increasing returns to shareholders, including a €150 million share repurchase program that began in the quarter. We made another industry-leading commitment to sustainability, announcing our ambition to become carbon neutral by 2050 and use 100% renewable energy. Our R&D efforts will be strengthened with a new innovation hub at Felling in the UK, and we announced more key partnerships for our Human Cities Program around the world. Our strong financial and operational foundation has enabled us to embark on the next phase of our strategy, with a review of options for the separation of the Specialty Chemicals business to further unlock value for shareholders. We look forward to updating the market on our new strategy."
A breakdown of AkzoNobel's segments is as follows:
Decorative Paints: Revenue was up 7%, mainly driven by strong volume growth. Volumes were up 9%, with positive developments in all regions. Volume developments were positive for the sixth consecutive quarter. EBIT increased by 48%, mainly as a result of higher revenue and continued focus on cost measures, while recognizing that Q1 is a seasonally smaller quarter. Communities in more than 40 countries will benefit from a partnership between AkzoNobel and MasterPeace, a global peace movement, to paint 100 "Walls of Connection," part of the company's Let's Colour initiative.
Performance Coatings: Revenue was up 6%, driven by positive volume development across a number of segments and the acquisition of BASF's Industrial Coatings business. EBIT was up 1%, with positive development in segments including Industrial and Powder Coatings and Automotive and Specialty Coatings offsetting continued weak demand in the marine and oil and gas industries and integration costs. More than 100 scientists will be brought together in a new €12.6 million research and innovation hub in Felling, UK. The facility will focus on developing protective coatings for the energy, mining, infrastructure and oil and gas industries.
Specialty Chemicals: Revenue was up 7%, due to positive volume developments in all business units and regions and favorable currency effects. Volumes were up 5%, with several businesses benefiting from improved market conditions in the oil drilling, mining, agrochemical and building and construction segments. EBIT increased by 7%, mainly due to improved volumes and operational efficiencies, partly offset by price increases which were not yet fully recaptured through increased selling prices. AkzoNobel's Imagine Chemistry open innovation challenge generated more than 200 ideas to solve real-life chemistry-related challenges as well as uncovering sustainable commercial opportunities for the Specialty Chemicals businesses.
Sustainability: AkzoNobel has committed to accelerating its sustainability agenda by announcing a new ambition to use 100% renewable energy and become carbon neutral by 2050. The company was also awarded a top grade on the Influential Supplier Climate A List for its efforts to combat climate change. The Dutch government recognized AkzoNobel's latest contribution to meeting national sustainability targets resulting from investments at its chemicals complex in Rotterdam.
Human Cities: AkzoNobel joined forces with SOS Children's Villages to drive a positive impact on youth unemployment including professional training through the company's painter academies.
More than 200 children in Egypt have benefited from a major renovation of their school's facilities by AkzoNobel volunteers. The company's Human Cities projects have touched the lives of more than 9 million people in the past year.
Innovation: AkzoNobel signed an agreement with specialty chemicals company Itaconix to explore opportunities for the production of bio-based polymers. A new online tool which can track and certify the amount of bio-based raw materials in products was launched as a pilot by AkzoNobel and partners. Another partnership involving AkzoNobel is developing a drone capable of remotely inspecting enclosed spaces, helping to improve safety in the marine and oil and gas industries.