The various steps taken to continue serving customers and rapidly reduce costs are proving successful, while at the same time keeping the organization intact and able to respond quickly to changes in end market demand.
During the first quarter, COVID-19 adversely impacted revenue by around minus 5%. Asia was most affected throughout Q1, with other regions impacted only from the second half of March onwards.
In more recent months, end market demand has evolved in line with company planning assumptions. Market headwinds were strongest during April and resulted in revenue almost 30% lower versus last year. Demand improved as some lockdown measures started to ease, although revenue for May remained around 20% below 2019.
Distribution channels for Decorative Paints have mostly reopened in China and Europe, with demand returning towards previous levels. Varying degrees of market disruption persist in the rest of Asia and South America. Demand for Performance Coatings has also improved, although at a much slower pace than for Decorative Paints. Segments related to automotive and aerospace industries continue to be more significantly impacted than others. Market headwinds are expected to ease further throughout June, although continue to differ per region and segment.
Various cost-saving measures and strict margin management continue to be implemented throughout the organization to help compensate. AkzoNobel has also maintained a strong balance sheet due to rigorous cash management and robust working capital controls.
Commenting on the evolving situation, AkzoNobel CEO, Thierry Vanlancker, said: “We’re weathering the COVID-19 storm, taking care of our employees while protecting our business. Thank you to everyone at AkzoNobel for working hard to continue serving our customers and provide many essential products for critical industries, while following all necessary health and safety measures.
“Although the pandemic situation forced us to pause key parts of our transformation, our teams have focused on minimizing all discretionary costs, as well as carefully managing cash and working capital. The actions we’ve taken, together with our strong balance sheet, provide a solid platform for AkzoNobel to perform as an industry frontrunner.”
Financial results for the second quarter will be announced on July 22, 2020.