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Double-digit gains in Performance Coatings and Specialty Chemicals boosted AkzoNobel to a 13% overall increase in third-quarter revenue, the company reported Thursday (Oct. 21).
The world’s largest paints and coatings company, also a major producer of specialty chemicals, reported €3.9 billion (about $5.4 billion US) in revenue for the third quarter ended Sept. 30, compared with €3.4 billion (about $4.7 billion US) for the third quarter of 2009.
EBITDA for the third quarter rose 9% to €574 million (about $800 million US), with total net income rising 21% on 2009 to €238 million (about $332 million US).
Performance, Specialty Groups
Performance Coatings and Specialty Chemicals reported the strongest revenue increases of 18% and 15%, respectively; Decorative Paints revenue was up 8%. Performance Coatings revenue increased by 15% in the first nine months of 2010, while Specialty Chemicals was up 12% for the same period.
Performance Coatings’ strong showing was supported by the acquired powder coatings activities (5%) and a favorable currency translation effect (8%), AkzoNobel said. Volumes increased in all businesses, especially in high-growth markets.
Demand remained strong across the Specialty Chemicals portfolio. Demand from most end-use markets improved over the previous year, particularly in Asia and the Americas. Revenue increases were driven by a 10% volume improvement in combination with favorable currency effects and increased pricing.
Strong revenue gains continued to be achieved in high-growth markets across all business areas, while revenue development in the mature markets remained weak, the company reported.
‘We are Confident’
The company noted completion of the $1.3 billion sale of its National Starch business on Oct. 1. It also reported two acquisitions in its Performance Coatings business during the quarter: Sweden’s Lindgens Metal Decorating Coatings and Inks (now known as SouthCoat AB) and China’s Changzhou Prime Automotive Paint Co. Ltd.
“Our Q3 results clearly illustrate that, in line with our recently announced medium-term ambitions, our three business areas are growing revenue,” said CEO Hans Wijers. “Although there is reason for caution in mature markets, we are confident that we are in good shape to benefit from our geographic spread and leading positions.”
The company is “particularly optimistic about our strong revenue growth in high-growth markets and our ongoing efforts to capture value,” Wijers said. “Our disciplined focus on customers, cost and cash remains strong, and we are making excellent progress in driving top line growth.”
Medium-Term Goals, 2010 Outlook
On Sept. 28, AkzoNobel announced new medium-term ambitions to increase revenue to €20 billion (about $27.8 billion US), increase EBITDA each year while maintaining a 13% to 15% margin, reduce OWC percent of revenue year-on-year by 0.5% toward a 12% level, and pay a stable to rising dividend.
It also announced these sustainability ambitions: to remain in the top three on the Dow Jones Sustainability Indexes and to be in the top quartile of its peer group in safety performance, diversity, employee engagement and development, and eco-efficiency improvement rates.
For the rest of 2010, construction and housing markets are expected to remain soft, particularly in mature markets, the company said. However, officials also expressed “cautious optimism,” driven by “leading positions, scale and presence in diversified markets, together with a strong balance sheet and evidence of sustained industrial demand beyond re-stocking.”
The report for the third quarter of 2010 is available at www.akzonobel.com/quarterlyresults.
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