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AkzoNobel Reports Q1 Profit Jump, Revenue Dip

Thursday, April 23, 2020

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Global coatings manufacturer AkzoNobel (Amsterdam) recently published its first-quarter financial report on Wednesday (April 22), highlighting a 31% profitability improvement year over year.

The company’s revenue, however, dropped about 6%.

Financial Overview

In the report’s highlights are descriptions on how the COVID-19 pandemic has impacted AkzoNobel’s business. The company points to the health crises as the culprit of lower volumes, leading to the lower revenue—total revenue reported for Q1 2020 was 2.06 billion euros, down from 2.19 billion euros in 2019.

Photos: AkzoNobel

Global coatings manufacturer AkzoNobel (Amsterdam) recently published its first-quarter financial report on Wednesday (April 22), highlighting a 31% profitability improvement year over year.

“Just like many around the world, we’re dealing with challenges from COVID-19,” said AkzoNobel CEO Thierry Vanlancker.

“Our top priority at AkzoNobel is the health and safety of our colleagues. As a business, we’re also taking all reasonable steps to continue serving our customers and make sure AkzoNobel remains in a strong position to weather the storm.

The company noted that, despite the drop in revenue, adjusted operating income was up from 163 million euros in Q1 2019, to 214 million euros.

Decorative Paints

The Decorative Paints category saw more of the same trends reacting to COVID-19. While adjusted operating income was up (64 million euros from 60 million this time last year), revenue was down about 10% all around.

The company points to its Asian market, however, which was impacted the most by the health crisis, suffering a 26% drop in revenue.

In addition to the revenue slides, however, the company notes that the ROS was up 1.3% at 8.5% (2019’s Q1 was at 7.2%).

“Our results for the first quarter demonstrate our transformation was fully on track, even though COVID-19already had a significant impact, especially in China and later in the quarter other regions of the world,” Vanlancker said.

The Decorative Paints category saw more of the same trends reacting to COVID-19. While adjusted operating income was up (64 million euros from 60 million this time last year), revenue was down about 10% all around. The company points to its Asian market, however, which was impacted the most by the health crisis, suffering a 26% drop in revenue.

“Our performance improvement accelerated, resulting in business return on sales 330 basis points higher at 12.4%. These results were possible due to the passion and commitment of everyone at AkzoNobel who have been working—and winning—together during unprecedented circumstances.”

Performance Coatings

Revenue was impacted the least in Q1 2020 in the Performance Coatings segment, which still saw a 3% drop overall, however. The company again pointed to Asia for the drop, in particular the automotive industry.

Both adjusted operating income and ROS were up, as with other segments, with income landing at 190 million euros (up from 2019’s 138 million) and ROS up 4.33% to 14.7%.

All subsegments saw around a 2% drop (Industrial, Marine and Protective, and Automotive and Specialty) except for Powder Coatings, which saw the most significant drop at 6%.

Looking Ahead

The company notes that it estimates it will continue to see the impact of COVID-19, especially in 2020’s Q2.

“While things are gradually returning to normal in China, COVID-19 headwinds are increasing for most of the world and will have a significant impact during Q2,” Vanlancker said.

“Although we’ve been forced to pause key parts of our transformation and suspend our 2020 financial ambition, we’re eager to quickly resume our positive momentum once markets normalize.”

   

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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