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AkzoNobel Reports Q3 Operating Income Increase

Thursday, October 24, 2019

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Global coatings manufacturer AkzoNobel released its third-quarter earnings report on Wednesday (Oct. 23) highlighting a 23% increase in adjusted operating income at 300 million euros ($333.6 million), up from 243 million euros this time last year.

The company also saw increases in return on sales for both the Decorative Paints and Performance Coatings segments as well as slight revenue increases.

Overview

Revenue was up 3% and 2% in constant currencies—coming in at about 2.39 billion euros compared to 2018’s 2.32 billion euros. Operating income was reported at 247 million euros, up from 237 million euros reported this time last year.

Images: AkzoNobel

Global coatings manufacturer AkzoNobel released its third-quarter earnings report on Wednesday (Oct. 23) highlighting a 23% increase in adjusted operating income at 300 million euros ($333.6 million), up from 243 million euros this time last year.

Net income from total operations was reported at 162 million euros and included no net income from discontinued operations, a stark contrast from this time last year, which saw 301 million euros in net income with 152 million euros of that coming from discontinued operations from the company’s Specialty Chemicals divestiture.

“The advances we made during Q3 were largely due to our ongoing pricing initiatives and cost-saving programs,” said AkzoNobel CEO Thierry Vanlancker. “Our focus on value over volume continued to deliver results.

AkzoNobel also reported progress toward its “Winning Together: 15 by 20” initiative, which aims for the company’s ROS to hit 15% and its ROI to be greater than 25%. This quarter, the overall ROS was 13.8%.

Decorative Paints

Revenue for the Decorative Paints segment as a whole was up 3%—reported at 977 million euros compared to 951 million euros this time last year. ROS was up at 13.8% compared to 2018’s 12.1%.

Adjusted operating income also increased to 135 million euros, up from 2018’s 115 million euros while volumes were 5% lower.

In the different regions, revenue was up in both the EMEA and South America Regions, but dipped by 2% in Asia. Akzo noted that the acquisition of Colourland Paints in Malaysia contributed 1% to revenues.

Performance Coatings

Revenue for the Performance Coatings segment as a whole was up 2% at 1.41 billion euros compared to the 1.39 billion euros reported at this time in 2018. ROS was up at 13.7% compared to 2018’s 12.2%.

Revenue for the Performance Coatings segment as a whole was up 2% at 1.41 billion euros compared to the 1.39 billion euros reported at this time in 2018. ROS was up at 13.7% compared to 2018’s 12.2%.

Adjusted operating income was up at 194 million euros, up from 2018’s 170 million euros.

Revenue was up across the board in all segments including Powder Coatings, Marine and Protective Coatings, Automotive and Specialty Coatings and Industrial Coatings.

Looking Ahead

“The results are a testament to the great work of the entire organization,” Vanlancker said. “We continue to focus on our plans for the future to keep the company on its improvement trajectory and remain the reference in the paints and coatings industry.”

Akzo noted that it will continue the goal to deliver the previously announced 200 million euros in cost savings by 2020, incurring one-off costs in 2019 and 2020.

The company is targeting a leverage ratio of between 1-2 times net debt/EBITDA by the end of 2020 and commits to retain a strong investment grade credit rating.

   

Tagged categories: AkzoNobel; Asia Pacific; Business matters; Earnings reports; EMEA (Europe, Middle East and Africa); Finance; Good Technical Practice; Latin America; North America; Z-Continents

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