Akzo Nobel N.V. Publishes Results for Q3 2018

• Decorative Paints return on sales up at 12.1 percent (2017: 9.4 percent) with five percent positive price/mix driven by pricing initiatives;
• Performance Coatings return on sales up at 12.2 percent (2017: 10.3 percent) with higher selling prices contributing to price/mix up seven percent;
• Volumes were lower, partly driven by moving away from lower margins given the value over volume strategy;
• Continued focus on transformation delivered €35 million cost savings in Q3;
• Taking the next step in the transformation to deliver next €200 million cost savings by 2020;
• Completed sale of Specialty Chemicals on Oct. 1, 2018; returning a total of €6.5 billion to shareholders; 
• Acquisition of Xylazel in Spain; acquisition of Fabryo in Romania completed on Oct. 1, 2018

Q3 AkzoNobel (Paints and Coatings) 

• Revenue four percent lower, and flat in constant currencies, with positive price/mix offset by lower volumes;
• Adjusted operating income was up €18 million at €243 million (2017: €225 million) driven by pricing initiatives and cost-saving programs despite €10 million adverse impacts from foreign currencies;
• Operating income was up €22 million at €237 million (2017: €215 million) and includes a €6 million adverse impact from identified items, mainly related to the transformation;
• Return on sales improved to 10.4 percent (2017: 9.3 percent); return on investment at 12.6 percent (2017: 13.4 percent);
• Net income from total operations at €301 million (2017: €216 million), including discontinued operations at €152 million (2017: €95 million);
• An interim dividend of €0.37 per share, rebased for AkzoNobel as a focused paints and coatings company

“We made further progress towards becoming a focused, high performing, paints and coatings company thanks to the continued efforts of our dedicated organization. I’m encouraged by what we achieved, despite challenging market conditions, including higher raw material costs and adverse foreign currencies,” AkzoNobel CEO Thierry Vanlancker said. “Profitability increased for both Paints and Coatings as a result of our pricing initiatives and cost-saving programs. We also continued to build on our leading positions in the paints and coatings market with the acquisitions of Fabryo in Romania, Xylazel in Spain and expansion of our Dulux Decorator Centre network in the UK.
 
“Completing the sale of our Specialty Chemicals business was a key milestone in the long and proud history of AkzoNobel as we take the next step in our transformation, delivering towards our Winning together: 15 by 20 strategy,” he concluded.
 
Outlook
The company is delivering towards its “Winning together: 15 by 20” strategy and continues creating a fit-for-purpose organization for a focused paints and coatings company, contributing to the achievement of its 2020 guidance. Demand trends differ per region and segment. Raw material inflation is projected to continue for the remainder of 2018, although at a slower rate than during the start of the year. Robust pricing initiatives and cost-saving programs are in place to address the current challenges. AkzoNobel is taking the next step in our transformation to deliver the next €200 million cost savings by 2020, incurring total one-off costs of €350 million between 2018 and 2020.

The Q3 2018 report can be viewed and downloaded here.