AkzoNobel published its 3Q 2017 results:

• Volumes 2 percent higher driven by decorative paints and performance coatings;
• Revenue up 1 percent, mainly due to volume growth and acquisitions, partly offset by unfavorable currencies;
• EBIT at €383 million (2016: €442 million), impacted by unfavorable currencies, temporary disruption to the manufacturing and supply chain, continued headwinds for marine and protective coatings and margin pressure from raw material cost inflation;
• Direct impact of around €25 million on EBIT related to Hurricane Harvey and other events;
• Adjusted EPS at  €1.07 (2016: €1.20);
• Initiating phase one of transformation plan to create a fit for purpose Paints and Coatings organization to deliver €110 million savings in 2018 contributing towards the 2020 financial guidance;
• Extraordinary General Meeting (EGM) to be held on Nov. 30, 2017;
• Creating two focused high-performing businesses: Separation of Specialty Chemicals is on track to be completed by April 2018; €1 billion special cash dividend as advance proceeds to be paid on Dec. 7, 2017, following shareholder approval for the separation;
• Capacity expansions in the UK (Decorative Paints), China (Performance Coatings) and Sweden (Specialty Chemicals);
• No. 1 in the Chemicals Industry Group on the Dow Jones Sustainability Index for the fifth time in six years

"We have also initiated phase one of our transformation plan to create a fit for purpose paints and coatings organization which will deliver €110 million annual savings in 2018 contributing towards our 2020 financial guidance,” CEO Thierry Vanlacker said. "EBIT for 2017 is now expected to be in line with 2016, due to adverse foreign exchange, ongoing industry specific headwinds and supply chain disruptions, including the adverse impact of Hurricane Harvey in the US."

Outlook:
AkzoNobel said it anticipates positive developments for EMEA (excluding the U.K.), North America and Asia, while Latin America is expected to stabilize.
 
Industry specific headwinds continue, including higher raw material prices and challenges for marine and protective coatings.
 
The company said it is implementing various measures to mitigate current market challenges, including increased selling prices and additional cost control.

Q3 2017 in € million 

	Q3 2016	Q3 2017	Delta %
Revenue	3,600	3,624	1
EBIT1	442	383	(13)
Return on sales (ROS)2 %	12.3	10.6
Net income attributable to shareholders	285	216	(24)

Year-to-date January - September 2017 in € million 

	YTD 2016	YTD 2017	Delta %
Revenue	10,741	11,070	3
EBIT1	1,267	1,220	(4)
Return on sales (ROS)2 %	11.8	11.0
Return on investment (ROI)3 %	15.2	14.2
Net income attributable to shareholders	837	757	(10)

Decorative Paints 
Third quarter volumes increased by 5 percent due to positive developments in Asia. Revenue was down 1 percent, with positive volume development more than offset by adverse currency and price/mix effects. EBIT was adversely impacted by continued higher raw material costs in the paints and coatings industry, not yet fully compensated, and geographical/product mix effects. Appropriate measures are being taken to address higher raw material costs, including increased selling prices and additional cost control.
 
AkzoNobel opened a new facility in Ashington, UK, which is the world's most advanced and sustainable paint factory. This high-tech plant is the new center of production for Dulux, the world's leading decorative paint brand.

Performance Coatings
Volumes were up by 1 percent in the third quarter, with growth for Industrial and Powder Coatings, partly offset by adverse conditions in the marine and oil and gas industries. Revenue was up 2 percent, due to volume growth and the acquired industrial coatings business, partly offset by currency effects. EBIT was adversely impacted by ongoing weakness in the marine and oil and gas industries, as well as increased costs of raw materials in the paints and coatings industry and adverse currency effects. Measures being implemented to mitigate current industry specific headwinds include increased selling prices and additional cost control.
 
The company opened a facility in Dongguan, China, dedicated to producing aerospace coatings for the North and South Asian aviation market.

Specialty Chemicals 
Third quarter volumes were flat, despite significant global supply chain disruptions including Hurricane Harvey in the Houston area of the US. Revenue was up 1 percent due to positive price/mix effects, mostly offset by adverse currencies. EBIT was up 1 percent with favorable price/mix developments and cost savings partly offset by unfavorable currencies and global supply chain disruptions. Positive price/mix reflects the successful pass through of raw material price inflation.
 
During Q3, AkzoNobel announced a novel technology platform for producing a wide range of ethylene amines and their derivatives from ethylene oxide. The process involves lower raw material consumption and has an improved cost and sustainability profile when compared with existing processes. Construction of a demonstration unit will start next year.

Business Area highlights in € million
 

Decorative Paints
Q3 2016	Q3 2017	Delta %		YTD 2016	YTD 2017	Delta%
1,021	1,007	(1)	Revenue	2,937	2,975	1
123	95	(23)	EBIT1	306	293	(4)
12.0	9.4		ROS2 %	10.4	9.8
Performance Coatings
Q3 2016	Q3 2017	Delta%		YTD 2016	YTD 2017	Delta%
1,406	1,428	2	Revenue	4,267	4,403	3
199	147	(26)	EBIT1	607	536	(12)
14.2	10.3		ROS2 %	14.2	12.2
Specialty Chemicals
Q3 2016	Q3 2017	Delta%		YTD 2016	YTD 2017	Delta%
1,202	1,209	1	Revenue	3,614	3,757	4
168	169	1	EBIT1	511	524	3
14.0	14.0		ROS2 %	14.1	13.9

 

The Q3 report can be viewed and downloaded here.