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Sales Up for AkzoNobel as Separation Nears

Friday, March 9, 2018

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Global coatings manufacturer AkzoNobel (Amsterdam) reported positive volumes and earnings for 2017 in its fourth-quarter and year-end report, issued Thursday (March 8), as the company prepares to spin off its specialty chemicals business into a separate entity.

Images: AkzoNobel

“In 2017, we delivered another year of increased EBIT with revenue growth for all Business Areas, driven by a combination of higher volumes and bolt-on acquisitions,” said AkzoNobel CEO Thierry Vanlancker.

Revenue was up 3 percent at 14.5 billion euros ($17.9 billion) on the year, with both Decorative Paints and Performance Coatings contributing 2 percent growth. For Q4, the respective subdivisions pulled in a 3 percent growth and a 2 percent dip over the same quarter in 2016.

Both volumes and earnings before interest and tax were also up 2 percent on the year to 1.5 billion euros, though net income clocked in at 832 million euros, down from 970 million euros in 2016.

“In 2017, we delivered another year of increased EBIT with revenue growth for all Business Areas, driven by a combination of higher volumes and bolt-on acquisitions,” said AkzoNobel CEO Thierry Vanlancker. “We are taking various measures amongst which cost control to deal with industry-wide headwinds, including higher raw material costs and challenges for the Marine and Protective Coatings business.”

“In September, we were ranked number one on the Dow Jones Sustainability Index. During the year, we put particular emphasis on increasing our energy efficiency, reducing material waste and continuing to deliver more eco-premium solutions for our customers.”

Performance by Segment

Decorative Paints led the positive outlook in Q4. In addition to the 3 percent revenue growth, volumes increased by 12 percent due to what the company called “positive developments in all regions.” EBIT was also up 14 percent.

On the year, in addition to the revenue up by 2 percent (3.9 billion euros over 3.8 billion) volumes were up 7 percent overall though EBIT was 2 percent lower.

Decorative Paints led the positive outlook in Q4. In addition to the 3 percent revenue growth, volumes increased by 12 percent due to what the company called “positive developments in all regions.” EBIT was also up 14 percent.

The Performance Coatings segment wasn’t too far behind with its 2 percent revenue increase on the year (5.8 billion euros over 5.7 billion). 2017 also saw, however, a 1 percent dip in volumes and a lower EBIT, from 749 million euros in 2016 to 669 million.

Q4 also saw a 2 percent dip in volumes and a lower EBIT, from 152 million euros in 2016 to 133 million, in addition to a 2 percent slump in revenue.

The company attributes much of the losses to adverse market effects and steep increases in raw material costs.

“We continue to implement various measures to mitigate current market challenges, including increased selling prices and cost discipline,” the report noted. “Our ‘Winning Together—15 by 20' strategy will create a focused Paints and Coatings company and deliver our 2020 guidance.”

Additional Announcements

The company noted the opening of several new facilities, including what it touts as the “world’s most advanced and sustainable paint factory” in Ashington, United Kingdom. The company also opened a specialty coatings facility in Dongguan, China.

AkzoNobel also noted various acquisitions and divestments from 2017, including the acquisitions of V.Powdertech, Flexcrete Technologies Ltd. and Disa Technology.

AkzoNobel performance coatings

The Performance Coatings segment wasn’t too far behind with its 2 percent revenue increase on the year (5.8 billion euros over 5.7 billion). 2017 also saw, however, also saw a 1 percent dip in volumes and a lower EBIT, from 749 million euros in 2016 to 669 million.

Though listed as discontinued operations, Akzo did list numbers for its Specialty Chemicals division and noted that revenue was up 4 percent (4.9 billion euros over 4.8 billion), volumes were up by 3 percent and EBIT was up 10 percent.

The company reiterated that it is still on track to completely spin off Specialty Chemicals into a separate business next month. The company originally announced its plan to separate the businesses last year.

“We are on track to create two focused, high performing businesses,” Vanlancker said. “The internal separation of the Specialty Chemicals business is complete and a full separation remains on track for April 2018. The transformation of AkzoNobel into a focused Paints and Coatings company is progressing well, with phase one on track to achieve 110 million euros savings in 2018, contributing directly toward delivering the 2020 financial guidance.”

With the Specialty Chemicals spin-off, next month will also bring the release of AkzoNobel’s 2018 first-quarter numbers (April 24) and its annual general meeting of shareholders (April 26). An agenda for the meeting has yet to be made public.

   

Tagged categories: AF; AkzoNobel; AS; Asia Pacific; Business matters; Earnings reports; EMEA (Europe, Middle East and Africa); EU; Finance; Latin America; NA; North America; OC; Program/Project Management; SA

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