PaintSquare.com


The First Word in Protective & Marine Coatings

A Product of Technology Publishing / PaintSquare
JPCL | PaintSquare News | Durability + Design | Paint BidTracker

Paint and Coatings Industry News

Main News Page


AkzoNobel Swings to $89M Loss in Q4

Thursday, February 16, 2012

More items for Coating Materials

Comment | More

AkzoNobel, the world’s largest paint and coatings maker, ended a tough fiscal year on a stunning low note Thursday (Feb. 16), reporting a 37 percent plunge in its 2011 net profit and an $89 million loss in the fourth quarter.

Hammered by more than $1 billion in raw-material price hikes, the European economic crisis, construction slowdowns in China and other issues, the Dutch coatings maker reported a fourth-quarter net loss of €68 million, compared to a profit of €162 million in the same quarter of 2010.

 AkzoNobel CEO Hans Wijers
CEO Hans Wijers expressed confidence in the future, but has already announced his retirement in April.

In its fourth-quarter and 2011 earnings report, AkzoNobel reported €469 million (about $614.7 million US) in 2011 net income from continuing operations—a drop of nearly 30 percent from the comparable full-year 2010 figure of €664 million (about $870 million US).

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) declined 9 percent in 2011 from 2010; fourth-quarter EBITDA plummeted by 20 percent.

Sales Results

Full-year 2011 sales revenues rose 7 percent to nearly €15.7 billion from €14.6 billion in 2010, but the gains were built almost entirely on widespread price increases AkzoNobel imposed to absorb the shock of a €1 billion ($1.3 billion US) increase in raw material costs, the company said.

Hardest hit was the company’s Decorative Paints segment, which supplies paints to Wal-Mart and includes AkzoNobel’s well-known Dulux and Sikkens brands and other architectural coatings, wood care products and building adhesives. The segment was battered by rising costs of titanium dioxide, a key paint pigment.

The company’s coatings and chemicals arms saw relatively mild declines in operating profit, also due to rising raw materials costs.

Bruising Quarters

The report followed several bruising quarters for AkzoNobel. The second-quarter report was preceded by a rare warning designed to lower investors’ expectations, and the third-quarter report was so weak that it was issued with a three-year “performance improvement program.”

On Thursday, outgoing AkzoNobel CEO Hans Wijers said that the improvement program was “on track,” with the first update due in the company’s half-year 2012 report. The program is designed to “strengthen competitiveness, enhance the company's ability to grow, simplify support structures and significantly reduce the cost base.”

Already, AkzoNobel said, it has laid off nearly 800 employees.

‘A Challenging Year’

"2011 was a challenging year against the background of weaker global economic conditions and unprecedented raw material price inflation,” said Wijers, who will retire in April as CEO. His successor will be Ton Büchner, of Swiss multinational Sulzer AG, which manufactures industrial machinery and equipment.

Wijers said the price increases had offset most of the raw-materials hit, “and for the year ahead we expect to see the full-year benefit of these increases.” The notable exception was TiO2, whose cost continues to rise and will necessitate more pass-through price hikes, he said.

Wijers noted that AkzoNobel benefits from complementary businesses. He added: “Our strong fundamentals, geographical spread and commitment to deliver—in combination with the improvement program—give us confidence in the future."

The company said its medium-term goals include growing to €20 billion in revenue, increasing EBITDA each year while maintaining a 13-15 percent margin, and paying “a stable to rising dividend.”

Still No. 1?

Despite the upbeat assessment, AkzoNobel’s challenges may well open new opportunities for other coatings companies, especially PPG Industries of Pittsburgh.

PPG, the No. 2 paint and coatings company worldwide, recently reported a record fourth quarter and a banner year, notching nearly $15 billion in  sales for 2011, an 11 percent increase over 2010.

AkzoNobel seemed to feel that heat on Thursday, noting that the economic environment remains a “major uncertainty” in its future performance.

“The concerns are focused on the risk of recession in Europe, delayed recovery of the US property market, and the potential for a slowdown in China,” said Akzo Nobel. “Each of these can have a significant impact on customers in these regions that would in turn impact AkzoNobel's sales volumes.”

Perhaps most remarkable, however, was AkzoNobel’s departure from its perennial self-description as “the largest global paint and coatings company.”

On Thursday, AkzoNobel said it “aspires to be” the world's leading coatings and specialty chemicals company.

AkzoNobel chart

AkzoNobel

   

Tagged categories: AkzoNobel; Architectural coatings; Earnings reports; PPG; Protective coatings

Comment from Wayne Wright, (2/17/2012, 4:06 PM)

Come on Akzo, you have the best industrial chemists in the world. It's time to add more R&D muscle to create a TiO2 substitute, whether it be synthetic or organic. You can do it! :)


Comment Join the Conversation:

Sign in to our community to add your comments.

International Paint LLC

International Paint Engineered Coatings

Learn about our solutions for:
  • Structural Steel
  • Piping & Equipment
  • Storage Tanks
  • Pressure Vessels
  • Secondary Containment


    BASF
    New resins from BASF will have metals loving water:

    Excellent corrosion resistance, low VOC, high gloss, thin films basf.us/industrialcoatings
    polyorders@basf.com
    800-231-7868


    Mitsubishi Gas Chemical America
    Performance Amine 1,3-BAC

    A highly reactive cycloaliphatic diamine offering superior performance. Reasonable cost and curing efficacy makes it suitable for all types of epoxy resin applications.


    Wasser High-Tech Coatings Inc.
    Wasser Coatings Protect

    some of the most important bridges in the country; learn about our NEPCOAT-approved system and our entire range of MCU & Polyurea coatings. 1-800-627-2968 www.wassercoatings.com


    SSPC: The Society for Protective Coatings
    http://www.sspc.org/

    Join SSPC and Enhance
    Your Career !


    Hempel (USA) Inc.
    HEMPEL PROTECTIVE COATINGS

    Efficient systems and high quality products to reduce your maintenance costs. Visit Hempel Protective for more information.


    ITW Binks
    Built for Tough Jobs

    From Epoxies to Urethanes to other high solid coatings, the new Binks Airless 75 delivers a great finish using an ergonomic design. Visit binks.com for more information.

  •  
     
     
    Technology Publishing

    The Technology Publishing Network

    The Journal of Protective Coatings & Linings (JPCL) PaintSquare
    Durability + Design Paint BidTracker JPCL Europe

     
    EXPLORE:      JPCL   |   PaintSquare News   |   Interact   |   Buying Guides   |   Webinars   |   Resources   |   Classifieds
    REGISTER AND SUBSCRIBE:      Free PaintSquare Registration   |   Subscribe to JPCL   |   Subscribe to PaintSquare News
    MORE:      About PaintSquare.com   |   Privacy policy   |   Terms & conditions   |   Site Map   |   Search   |   Contact Us
     

    © Copyright 2000-2014, Technology Publishing / PaintSquare, All rights reserved
    2100 Wharton Street, Suite 310, Pittsburgh PA 15203-1951; Tel 1-412-431-8300; Fax 1-412-431-5428; E-mail webmaster@paintsquare.com