• Revenues from present operations up 6% at EUR 3,299 mln (2004: EUR 3,112 mln)
• EBIT excluding one-offs down 7% at EUR 315 mln (2004: EUR 339 mln)
• Growth in all units – in particular in emerging markets
Organon – revenue growth; R&D expenses up; pharmaceutical ingredients continue to suffer
Intervet – excellent quarter
Coatings – signs of recovery in industrial activities; decorative coatings under pressure in mature markets
Chemicals – steady performance despite higher energy and raw material prices
• Negative one-off items of EUR 35 mln (2004: EUR 353 mln positive; mainly divestments)
• Net income down 66% at EUR 175 mln (2004: EUR 510 mln, including one-off gain from chemicals divestments). Net income excluding one-offs down 2% at EUR 200 mln.
• Renewed focus on cost in mature markets
• Strong financial position
• Interim dividend unchanged – EUR 0.30
• Outlook unchanged.
Arnhem, the Netherlands, October 19, 2005 – Akzo Nobel (Euronext Amsterdam: AKZ; Nasdaq: Akzoy), the international pharmaceuticals, coatings and chemicals company, reports 6% top-line growth from present operations with revenues of EUR 3.3 bln. Net income of EUR 175 mln was down 66% on the corresponding period of 2004 (EUR 510 mln), which included the one-off gain from the 2004 Chemicals divestments. Net income excluding one-offs was slightly down. EBIT from present operations and excluding one-offs was down 7% at EUR 315 mln.
on the Company’s third quarter 2005 performance, Rob Frohn, Akzo Nobel’s CFO said: “We continue to see positive developments throughout our businesses with higher top-line growth and reduced margin pressure compared with earlier quarters. Organon’s top-line grew and, as planned, R&D expenditures are being ramped up substantially. Intervet had another excellent quarter with 10% top-line growth.
“Coatings’ top-line grew and successful price increases continue to limit the impact of higher raw material costs. While conditions in mature markets remained difficult, emerging markets continue to be a growth story, with China delivering above average performance. Chemicals, despite high energy prices impacting virtually all businesses, delivered stable performance across all five growth platforms. The divestment program is on track.
– revenue growth; R&D expenditure ramping up; pharmaceutical ingredients continue to suffer
• Revenues: EUR 590 mln (2004: EUR 579 mln) autonomous growth 1%
• EBIT excluding one-offs: down 17% at EUR 68 mln (2004: EUR 82 mln)
NuvaRing® – sales steadily increasing
Infertility products – strong growth on Q3 2004
R&D expenditure ramping up – investing in the pipeline
Pharmaceutical ingredients – continue to suffer; cost saving measures being carried out
• Settlement of remaining Remeron® court cases – USD 75 mln
• Conditional settlement with Barr Pharmaceuticals, Inc. on their alleged infringement of the Mircette® patent – Organon to receive USD 142 mln.
Organon continued to see positive or recovering sales trends across most treatment areas with revenues showing 2% growth in the third quarter. On balance, volumes were flat while prices increased 1%. Operational performance decreased as contributions from higher sales were more than offset by the substantial increase in R&D expenses, which were 18.3% of revenues. Performance was also impacted by the weak business climate for pharmaceutical ingredients. The EBIT margin, excluding one-offs, was 11.5% (2004: 14.2%).
quarter results were affected by a net one-off charge of EUR 60 million, mainly concerning the settlement of the remaining Remeron® court cases. In 2004, the net balance of one-off items was a charge of EUR 41 million.
Frohn: “Organon continued to show top-line growth across the board in the quarter with NuvaRing and the new Puregon Pen delivering strong contributions. We continue to invest in the future with R&D expenditures ramping up significantly as we make further pipeline progress.
“Pharmaceutical ingredients suffer from weak market conditions and cost-saving measures are being carried out. We have settled the outstanding Remeron legal cases and taken the impact during the quarter. In addition, we intend to settle the Mircette patent infringement case with Barr, for which, subject to the granting of FTC approval, Organon will receive USD 142 million.”
Intervet – excellent quarter
• Revenues: up 10% to EUR 277 mln (2004: EUR 252 mln); 9% autonomous growth in all regions and virtually all franchises
• EBIT excluding one-offs: increased 24% to EUR 56 mln (2004: EUR 45 mln)
EBIT margin of 20.2%
Benefiting from efficiency improvement in manufacturing
• Feed additives divestment completed
• Acquisition AgVax – enhancing market position in New Zealand.
Intervet (animal healthcare products) revenues were up 10% at EUR 277 million. Autonomous growth was 9%, while currency translation had a positive effect of 2%. Intervet further expanded its strong market position in Europe due to improved supplies and to strong growth of Cobactan® (anti-bacterial).
in North America grew substantially, driven by new product introductions in the companion animal segment, including Vetsulin® (the first insulin to treat diabetes in dogs) and Continuum® (combination vaccine with long-lasting immunity), and in the cattle segment, where the recently introduced cattle bio line Vista® received very positive response. Sales in Latin America were boosted by substantial growth in Brazil and Chile (mainly fish vaccines).
excluding one-off items jumped 24% to EUR 56 million, attributable to autonomous revenue growth and efficiency improvements throughout the unit. The EBIT margin excluding one-offs improved from 17.9% to 20.2%.
Frohn: “Efficiency improvements at Intervet continued to drive up performance, resulting in another excellent quarter across the business. With revenue up 10%, of which 9% is autonomous growth, we continue to grow in all regions and virtually all franchises and are expanding in attractive areas such as the Americas. The Asian region continues to improve. We completed the feed additives divestment, while the AgVax acquisition in New Zealand further increases our focus in that market.”
– signs of recovery in industrial activities; Decorative Coatings under pressure in mature markets
• Revenues: up 5% to EUR 1,457 mln (2004: EUR 1,385 mln)
• EBIT excluding one-off items: down 6% to EUR 142 mln (2004: EUR 151 mln)
Autonomous growth 4% – prices up 4%; volumes maintained
Pressure from increased raw material prices
Decorative Coatings – slow market conditions in Europe; showing vigor in emerging markets
Industrial activities – regaining strength
Car Refinishes – improving again
• Acquisition Toide Paint Manufacturing – further strengthening of China base
• Powder Coatings investment in Russia started.
revenues continued to grow in the third quarter, up 5% to EUR 1.5 billion. At 4%, higher selling prices volumes were maintained. Currencies had a positive effect of 1%.
one-off items, EBIT decreased 6% to EUR 142 million, with an EBIT margin of 9.7% (2004: 10.9%). Capital expenditures amounted to EUR 24 million, with investments focused towards participation in the booming growth in emerging markets.
“We continue to see revenues improving in the third quarter with virtually all businesses contributing to a 5% increase with volumes kept stable,” commented Frohn. “While emerging markets continue to be a growth story for Coatings, margins in mature markets are not what they should be and we are addressing this. Raw material costs in the quarter are up 9% compared with last year.
“Decorative Coatings activities in Western Europe remained under pressure from weak economic circumstances. However, in emerging markets and in Turkey, we see improvement. Industrial activities delivered enhanced performance, particularly the wood, plastics and powder coatings sectors. Coil coatings activities remain under pressure, especially in Europe. Marine Coatings showed strong developments in both shipbuilding and maintenance markets. Car Refinishes, currently implementing major worldwide restructuring, is getting back on track.”
the course of the quarter, Marine & Protective Coatings introduced next generation fireproofing material designed to give unprecedented protection to high-rise structures and public buildings. Based on technology created for NASA, Interchar® offers the construction industry significant benefits in terms of keeping buildings – and their occupants – safer. The business also announced the successful completion of the first Intersleek® foul release coating application at a shipbuilder in Korea.
Chemicals – steady performance despite higher energy and raw material prices
• Revenues present operations: up 4% to EUR 966 mln (2004: EUR 927 mln)
• EBIT excluding one-off items: down 1% to EUR 83 mln (2004: EUR 84 mln)
Autonomous growth of 3% : 1% higher selling prices; 2% higher volumes
Pressure from raw material and energy prices
Pulp & Paper Chemicals – distinct improvement; major new plants in Brazil opened
Base Chemicals – continued strong performance
Divestment program – progressing well.
quarter revenues of EUR 966 million were up 4% on last year with selling prices up 1%, and volumes up 2%. Currency translation had a positive effect of 1%. The emerging markets are delivering strong growth and a number of investment opportunities in China are currently under consideration with two new projects – a polysulfides plant and a paper chemicals production facility – announced recently.
one-off items, EBIT was virtually unchanged at EUR 83 million while the EBIT margin excluding one-offs was 8.6% (2004: 9.1%). Proceeds from higher revenues were largely offset by higher energy and raw material prices – affecting almost all businesses. Earnings of Pulp & Paper Chemicals improved, while Base Chemicals continued delivering strong performance.
Frohn: “Chemicals delivered steady performance across the group despite continuing high energy and raw material prices. Pulp & Paper Chemicals rebounded strongly from the second quarter and we inaugurated two new plants in Brazil to serve that country’s rapidly growing pulp and paper industry. The strategy to concentrate on five new chemicals platforms is in place and the underlying businesses are focused on their performance roadmaps. The divestments are on track and we currently expect to conclude the first deals in the first quarter of 2006.”
dividend unchanged – EUR 0.30
Nobel will declare an interim dividend for 2005 of EUR 0.30 per common share, unchanged from last year. Starting October 20, 2005, Akzo Nobel shares will trade ex-dividend. The interim dividend will be made payable on October 27, 2005.
confirm that we expect to realize our earlier expressed aspiration to achieve a full-year net income within the range of 2004, which was approximately EUR 800 million on an IFRS basis. This outlook excludes restructuring and impairment charges, charges related to major legal, antitrust and environmental cases, results on divestments, the impact of the new pension scheme in the Netherlands, and the intended deal with Barr to settle their infringement of Organon’s Mircette® patent.