AkzoNobel Releases Q3 Financial Report
Global coatings company AkzoNobel released its 2021 third-quarter financial report Wednesday (Oct. 20) and reported increased revenue and lower adjusted operating income year-over-year.
The company reports that adjusted operating income was lowered 10% at 241 million euros ($280.8 million)—down from 353 million euros in 2020. ROS decreased to 10.0% from 15.5%.
The company noted that while revenue was up 6%, volume decreased 6%, citing raw material and other variable costs for the impact of lower volumes.
“During the third quarter, as predicted, extraordinary levels of raw material costs and supply disruptions impacted our business. Despite supply constraints and the resulting backlog, we were able to demonstrate 6% revenue growth,” said Theirry Vanlacker, AkzoNobel CEO.“I’m very proud of our team’s focus on our own pricing, as demonstrated by the 10% increase run rate by the end of the third quarter. We’re on track to have our own pricing actions offset the raw material inflation by year-end.”
Overall, revenue landed at 2.41 billion euros, up from 2.27 billion during the third quarter of 2020.
In the Decorative Paints segment, revenue was up 1% (11% in constant currencies) at 1.01 billion euros, up from 1 billion euros this time last year. Operating income decreased to 147 million euros (2020: 202 million), as pricing initiatives were more than offset by raw material cost inflation and lower volumes, the company noted.
Adjusted operating income also decreased to 151 million euros (2020: 208 million). Revenue was down 1% (2% in constant currencies) in the EMEA, but increased 13% (25% in constant currencies) in South America and remained flat (2% lower in constant currencies) in Asia, respectively.
In the Performance Coatings segment, revenue came in at 10% (9% in constant currencies) higher than last year, increasing to 1.39 billion euros from 1.27 billion.
Adjusted operating income was 136 million euros, decreasing from 2020’s 195 million. AkzoNobel said that impact comes from raw material inflation, partly offset by pricing initiatives. Operating income was 133 million euros, down from 2020’s 179 million.
The biggest increase was seen in the Marine and Protective Coatings subsegment, which saw a 12% (11% in constant currencies) increase in revenue, followed by Industrial Coatings at 13% (15% higher in current currencies), Powder Coatings at 7% (6% higher in constant currencies) and Automotive and Specialty Coatings at 6% (2% lower in constant currencies).
That company says that it targets to grow at least in line with its relevant markets, but significant raw material cost inflation and supply constraints are expected to continue through mid-2022, with trends differing per region and segment.
Margin management and cost discipline are in place to deliver an average annual 50-point basis points increase in ROS over the period 2021-2023, the company notes, adding that they are still intent on meeting the 2-billion-euro EBITDA target for 2023, in line with its Grow & Deliver strategy.
“As we’ve already indicated, the headwinds are likely to be with us going into 2022. However, we’ve established a strong pathway for our Grow & Deliver ambition and remain confident in the 2-billion-euro EBITDA target for 2023,” Vanlancker said.