Brief overview:
* Revenue declined 10 percent to ¤3,668 million
* Volumes down 16 percent (Q1 2009: 17 percent)
* ICI integration and additional restructuring well on track
* Cost reduction, margin management and innovation
underpinned EBITDA margin
* EBITDA before incidentals of ¤527 million, margin at 14.4
percent (year-to-date: 11.9 percent)
* Net income of ¤155 million down 13 percent (Q1 2009 ¤7
million loss)
* Operating working capital reduced to 16.3 percent (Q2
2008: 17.1 percent)
* Forward visibility limited due to continuing uncertain
economic development
Financial highlights
+--------------------------------------------------------+
| ¤ million | Q2 2009 | Q2 2008 | % |
|-----------------------------+---------+---------+------|
| Revenue | 3,668 | 4,085 | (10) |
|-----------------------------+---------+---------+------|
| EBITDA* | 527 | 577 | (9) |
|-----------------------------+---------+---------+------|
| EBITDA margin (in %)* | 14.4 | 14.1 | |
|-----------------------------+---------+---------+------|
| EBIT* | 370 | 422 | (12) |
|-----------------------------+---------+---------+------|
| EBIT margin (in %)* | 10.1 | 10.3 | |
|-----------------------------+---------+---------+------|
| Net income total operations | 155 | 179 | (13) |
+--------------------------------------------------------+
* Continuing operations before incidentals
Akzo Nobel N.V (AkzoNobel) today announced its results for the second
quarter of 2009. Trading remained tough throughout all of the
businesses and, as a result, the company reported a revenue decline
of 10 percent to ¤3,668 million, while EBITDA was ¤527 million, 9
percent lower.
AkzoNobel's CEO Hans Wijers commented; "In March, we saw early
indications that markets may be stabilizing and we have seen that
trend continue into the second quarter. However, this gradual
stabilization is at significantly lower levels than 2008. With the
exception of some emerging markets, we see little significant
recovery of growth. Due to the continuing economic uncertainty,
forward visibility still remains limited. Therefore, management
actions continue to focus on customers, costs and cash. Our Q2
results show that these actions are beginning to bear fruit."
Revenue growth for Q2 2009 developed as follows:
+--------------------------------------------------------------------------+
|Q2 2009 | Volume| Prices| Acquisitions/ | Exchange | Total|
|in % vs Q2 | | | divestments | Rates| |
|2008 | | | | | |
|-------------+--------+---------------------------+---------------+-------|
|Decorative | (10)| 4| 1| -| (5)|
|Paints | | | | | |
|-------------+--------+----------------+----------+---------------+-------|
|Performance | (19)| 5| -| -| (14)|
|Coatings | | | | | |
|-------------+--------+----------------+----------+---------------+-------|
|Specialty | (18)| 5| 4| 1| (8)|
|Chemicals | | | | | |
|-------------+--------+----------------+----------+---------------+-------|
|Total | (16)| 5| 1| -| (10)|
+--------------------------------------------------------------------------+
Decorative Paints
* Revenue was down 5 percent (Q1 2009: 11 percent)
* Synergy programs and restructuring ahead of plan, net
workforce reduced by more than 2,100 employees (8 percent) compared
with 2008
* EBITDA margin at 13.1 percent (2008: 14.1 percent)
remained strong due to margin management and stable raw material
costs
* Marketing initiatives focusing on innovation and
sustainability
In Europe, the professional segment continued to be weak due to low
construction activity, while the retail business was more resilient.
The US paint market continued to experience soft demand, but the
contraction in the second quarter was less severe than during the
first quarter of 2009. Integration savings and strong cost management
initiatives have helped to mitigate the volume shortfall. AkzoNobel
gained market share in Latin America, while markets across the Asia
region were mixed. China further stabilized in the quarter.
Performance in India was positive, despite pressure on revenue and
margins. Overall, margins were positively impacted by price increases
implemented in 2008.
Performance Coatings
* Revenue decreased by 14 percent
* EBITDA margin improved to 15.8 percent (2008: 14.0
percent)
* Margin management initiatives delivered value
* Cost levels decreased as restructuring programs gathered
pace
* Strong performance in Marine and Protective Coatings and
Packaging Coatings
Performance Coatings benefited from margin management and cost
improvement programs. In our Industrial Activities businesses, the
company has closed or restructured 8 production sites in mature
markets and will continue to align the cost structure with lower
trading levels. Marine Coatings again had a good quarter, despite
lower new construction and maintenance demand. Car Refinishes
experienced improved demand in tough market conditions, compared with
the first quarter of 2009.
Specialty Chemicals
* Revenue declined by 8 percent
* Cost and cash savings initiatives contributed in all
businesses
* EBITDA margin maintained at 16.6 percent
* Surface Chemistry and Polymer Chemicals markets remain
under pressure
* Strong performance in Pulp and Paper and Functional
Chemicals
Market conditions remained weak, with a volume decline of 18 percent
that was partly compensated by favorable prices (5 percent),
currencies (1 percent) and acquisitions (4 percent). Despite the
continued challenges, uncertain feedstock costs and heightened
competitive pressure in the market, an unchanged EBITDA margin of
16.6 percent was realized. Industrial Chemicals acquisitions to a
large part offset the volume decline, where sourcing actions,
aggressive cost control and effective margin management resulted in a
Surface Chemistry EBITDA on a par with 2008, despite a 27 percent
volume decline.
Improved cash management
AkzoNobel has already outlined its initiatives to conserve cash and
improve working capital utilization. Compared with Q1 2009 operating
working capital decreased by ¤142 million due to lower sales and
focused working capital management.
Debt maturities lengthened
Following the recent completion of refinancing activity, the weighted
average maturity of AkzoNobel's debt has been extended from below 2
years at June 2008 to in excess of 4 years at June 2009. In May 2009,
a ¤1 billion bond matured. In March 2009, the company refinanced
through a 7.25 percent ¤750 million bond, maturing in 2015. Early
April 2009, AkzoNobel also issued a 8 percent £250 million bond,
maturing in 2016. At the end of June 2009, the company issued ¤150
million new private debt.
ICI synergies and restructuring
The company remains on track to meet 2011 savings targets of at least
¤540 million, made up of ICI synergies (¤340 million) combined with
further significant additional restructuring (¤200 million). Major
restructuring and integration projects are ongoing in Decorative
Paints particularly in relation to the supply chain and
standardization. In Performance Coatings, significant headcount
reduction programs have been implemented in Industrial Activities and
Car Refinishes, particularly in mature markets. In June 2009,
AkzoNobel announced the intention to reduce headquarters staff by 20
percent by 2010.
Outlook and medium-term targets reiterated
AkzoNobel has strong market positions in a number of highly
attractive sectors with a wide geographical spread. Continuous focus
is being given to margin management, cost reduction, and cash
generating actions so that the company is well positioned to meet the
current challenges and, as a result, will be in good shape to take
advantage of the recovery when it comes. The economic outlook remains
uncertain which makes it difficult to make predictions with any
certainty. AkzoNobel remains committed to achieve its medium-term
target of an EBITDA margin of 14 percent by the end of 2011, deliver
the combined ¤540 million synergies and restructuring initiatives,
drive margin management programs and rigorous cost and cash control
across the company.
The Half-yearly report for 2009 and the report for the 2nd quarter
can be read on www.akzonobel.com/quarterlyresults.
Note to editors - not for publication
AkzoNobel is proud to be one of the world's leading industrial
companies. Based in Amsterdam, the Netherlands, we make and supply a
wide range of paints, coatings and specialty chemicals - 2008 revenue
totaled ¤15.4 billion. In fact, we are the largest global paints and
coatings company. As a major producer of specialty chemicals we
supply industries worldwide with quality ingredients for life's
essentials. We think about the future, but act in the present. We're
passionate about introducing new ideas and developing sustainable
answers for our customers. That's why our 59,000 employees - who are
based in more than 80 countries - are committed to excellence and
delivering Tomorrow's Answers Today(TM).
Not for publication - for more information
Corporate Media Relations, tel. +31 20 502 7833
Corporate Investor Relations, tel. +31 20 502 7854
Contact: Tim van der
Zanden Contacts:
Huib Wurfbain and Ivar Smits
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
