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AkzoNobel Reports Revenue Growth in Q2

Thursday, July 22, 2021

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Global coatings company AkzoNobel released its 2021 second-quarter financial report Wednesday (July 21), revealing a 26% increase in revenue (29% in constant currencies) along with a 13.3% ROS.

The company attributes the growth to strong end market demand, also reporting operating income up 86% from 207 million euros to 384 million euros, adjusted operating income up 41% from 238 million euros to 335 million euros, and net income up 102% from 129 million euros to 261 million euros.

“We’re very proud of our teams for delivering another strong quarter, including top line growth, despite the significant raw material headwinds impacting our industry,” noted AkzoNobel CEO Thierry Vanlancker.

Half-Year Review

When looking at numbers for the first half of the year, AkzoNobel’s revenue landed at 4.77 billion euros, up from 4.05 billion this time last year. This is noted to be an 18% increase from last year and 23% higher in constant currencies (compared with the first half-year of 2019: up 9% in constant currencies).

Volumes were 22% higher. Price was up 3%, while mix was 3% lower overall due to geographic and segment mix Adjusted operating income was also up year over year from 452 million euros to 642 million euros. While operating income revealed a 74% increase as well, increasing from 384 million euros documented in mid-2020 to 687 million euros in its mid-2021 earnings report.

AkzoNobel attributes both it’s second-quarter earnings and half-year success to a series of highlights and incentives the company has completed or is working to finalize. This includes AkzoNobel’s intention to acquire Colombia-based paints and coatings company Grupo Orbis, which is slated to be finalized by the end of 2021 or early 2022, in addition to its creation of a more sustainable yacht industry, solar projects in China, Paint the Future startups, and its highest possible ESG rating (AAA) from MSCI for the sixth consecutive year.

AkzoNobel

Global coatings company AkzoNobel released its 2021 second-quarter financial report Wednesday (July 21), revealing a 26% increase in revenue (29% in constant currencies) along with a 13.3% ROS.

The company also noted the cost of sales, which showed an increase of 128 million euros for raw materials and other viable costs, in addition to the impact of higher volumes, compared with the second quarter of 2020. The increase was reported to have been mainly driven by raw material inflation which continued to intensify.

“In view of the ongoing raw material inflation, we continue to take firm and necessary actions on pricing initiatives and maintaining our cost discipline, while remaining focused on serving our customers,” said Vanlancker. “Our People. Planet. Paint. approach to sustainability has again been recognized with the highest possible ESG rating (AAA) from MSCI for the sixth consecutive year, making us the frontrunner in paints and coatings.”

Decorative Paints

In the Decorative Paints segment, revenue was reported to be 21% and 23% higher in constant currencies (compared with Q2 2019: up 18% in constant currencies), rising from 899 million euros in 2020 to 1.09 billion euros. For the half-year, the segment’s revenue also increased from 1.65 billion euros to 2.02 billion euros.

Adjusted operating income, too, increased to 191 million euros (from 2020’s 175 million euros). The company stated in its report that these increases were mainly driven by higher volumes and a strong demand across all regions, resulting in ROS of 17.6% (compared to 2020’s 19.5%).

Performance Coatings

The Performance Coatings segment reported a 31% revenue increase % (compared with Q2 2019: up 4% in constant currencies), which was attributed to strong performance in Powder Coatings and Automotive and Specialty Coatings. For the half-year, the segment’s revenue increased from 2.38 billion euros to 2.76 billion euros.

Adjusted operating income was up to 179 million euros from the 103 million euros reported last year, a 74% increase; the company points to volume growth, margin management and cost discipline as the main drivers of the second quarter’s success.

Looking Ahead

The company noted that moving forward, it plans to target growth through initiatives in line with its relevant markets. Trends differ per region and segment with significant raw material inflation expected to continue in the second half of 2021.

Margin management and cost discipline are also in place to deliver an average annual 50 basis points increase in return on sales over the period 2021-2023. The company targets a leverage ratio of 1-2 times net debt/EBITDA and commits to retain a strong investment grade credit rating.

A full copy of AkzoNobel's second-quarter and half-year earnings report can be viewed, here.

   

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

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