Add AkzoNobel NV, the world’s largest paint and coatings company, to the list of relieved industry suppliers with glowing—even record— first-quarter financial reports.
The Netherlands-based chemical and coatings conglomerate has reported a 16% increase in Q1 revenue, compared with the same period in 2010. Group revenue was nearly €3.8 billion (about $5.4 billion US), thanks to increases in both sales volume and selling prices, the company said.
Double-Digit Gains
AkzoNobel reported double-digit revenue growth in all three of its businesses. Performance Coatings was up by 18% over the first quarter of 2010; Specialty Chemicals increased by 17%; and Decorative Paints, by 13%.
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AkzoNobel |
| The first quarter featured increases in marine coatings’ sales volume and revenue, as well as a new marine product, AkzoNobel said. |
“Specialty Chemicals continues to experience both strong demand and revenue, and EBITDA grew strongly,” said CEO Hans Wijers. “Performance Coatings achieved considerable growth in high-growth markets and benefited from the acquisitions made last year.”
Decorative Paints, meanwhile, enjoyed stable demand in the mature markets and a major shot in the arm from AkzoNobel’s exclusive new deal with Walmart. The world’s largest retailer announced in September that it was dropping Sherwin-Williams’ Dutch Boy brand in favor of AkzoNobel’s Glidden. About 3,500 Walmart stores in the U.S. have made the changeover.
Highlights
Overall, high-growth markets remained strong, and mature economies are recovering, AkzoNobel reported after its first quarter, ended March 31.
Compared to the first quarter of 2010, the company saw:
- Total net income up 58%, to €128 million ($186 million US);
- EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) up 10%, to €437 million ($635 million US);
- Mitigation of raw material cost increases; and
- A 38% increase in Adjusted Earnings Per Share, to €0.72 ($1.04 US).
Protective and Marine Coatings
Revenue increased for Marine and Protective Coatings, supported by good sales volume and favorable currencies. Marine showed increased revenue and volumes, mainly in Korea’s and China’s new construction markets, where yard output remains high. Deep sea activity also showed signs of recovery.
Protective Coatings saw increased volumes in all regions, especially in heavy industry and the oil and gas segment. In Asia Pacific, the high-value infrastructure sector also continued to grow, partly driven by stimulus packages. The yacht sector slowed somewhat.
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Source: AkzoNobel |
In Marine, the company launched a new product called Intergard 9001, calling it “a step change in performance for chemical/product tanker owners.” The coating is AkzoNobel’s first move into this product technology area.
Segment Results
The Performance Coatings segment traced its 18% revenue increase to increased sales volumes, acquisitions and currencies. All businesses except Wood Finishes and Adhesives saw volume growth. Revenue was especially strong in high-growth markets in Eastern Europe, Latin America and Asia. The company is continuing to increase selling prices in the segment.
Within the segment:
- Powder Coatings saw a 48% increase in revenue in the first quarter, 31% of it from acquisitions. AkzoNobel said its purchase of the former Rohm & Haas powder coatings business had strengthened the company in North America and Western Europe. It also noted expansion plans for its powder coating business in Vietnam, Thailand and Asia.
- Industrial Coatings’ revenue increased by 26% for the quarter. Packaging Coatings and Coil Coatings both performed well, while Specialty Plastics had slightly lower volumes. Coil Coatings’ construction-related business enjoyed strong first-quarter volumes.
The Specialty Chemicals segment continued to see the positive demand that began in 2010, led by the recovery of manufacturing and industrial production in Asia and North America. Sales volume rose 6% over the first quarter of 2010, fueling the 17% overall revenue increase.
‘Further Progress’
Like other coatings manufacturers, AkzoNobel noted that it has been hit hard by skyrocketing raw materials prices. And, like other suppliers, it says it is fighting back with cost controls and selling price increases.
“[W]e remain confident that we will be able to compensate for these increases,” Wijers said.
Overall, he said, the first-quarter results “demonstrate further progress” toward the company’s medium-term strategic goals and instill “confidence that we have been able to maintain or improve market share across the portfolio.”
Outlook Reaffirmed
AkzoNobel reaffirmed its outlook for the rest of the fiscal year, aiming for more than 5 percent revenue and EBITDA growth in 2011.
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