Following the March 12 announcement regarding the intended sale of Organon BioSciences (OBS), the results for the company’s Pharma activities will, in line with IFRS, be shown under Discontinued Operations until the closing of the transaction, foreseen in the second half of 2007.
|EUR mln||Q1 2007||Q1 2006||% change|
|EBITDA margin*, in %||12.3||11.3|
|Net income* Coatings/Chemicals||133||113||18|
|Net income* Organon BioSciences||111||102||9|
|Total net income||246||249||(1)|
- Autonomous growth of Coatings/Chemicals 6%
- EBITDA margin further improved to 12.3%
- Operational results of Coatings/Chemicals 18% higher
- Coatings—higher EBITDA margin on 8% revenue growth
- Chemicals—strong EBITDA margin maintained on 4% autonomous growth
- EUR 11 billion cash deal for Organon BioSciences announced
- Good quarter for Organon and Intervet
- EUR 1.6 billion share buyback to commence May 3, 2007
Arnhem, the Netherlands, April 24, 2007 – Akzo Nobel (Euronext Amsterdam: AKZ; Nasdaq: AKZOY) has reported a strong start to the year for the refocused company. The combined Coatings and Chemicals business posted autonomous growth of 6%, while operational results before incidentals were 18 percent higher than the corresponding period last year. The Pharma activities also performed well, with first quarter operating results jumping 8%.
EUR 2.5 billion, revenues for Coatings and Chemicals were 1% above the Q1 figure for 2006, with autonomous growth of 6% being largely offset by a negative currency impact. The refocused company posted EBITDA of EUR 307 million, an increase of 10% compared with last year. The operating result was up 18%. Incidentals only had a minor impact during the quarter, in contrast to Q1 2006, when the company booked significant positive incidentals.
incidentals—but including the Pharma activities—total net income rose 13%, from EUR 215 million to EUR 244 million. Including incidentals, net income was virtually unchanged.
on the company’s first quarter results, CFO Rob Frohn said: “The operational performance during the first quarter was very positive. I’m pleased that strong autonomous growth and the effects of our margin improvement programs, both in Coatings and Chemicals, resulted in an operating income increase of 18 percent. In addition Intervet reported a record quarter.”
Coatings—higher EBITDA margin on 8% revenues growth
Coatings turned in a strong quarter, with revenues up 8% on 2006. The European businesses improved, and emerging markets continued to drive growth. Before incidentals, EBITDA rose 11% to EUR 153 million. Autonomous growth was 8%, with 5% due to higher volumes and 3% higher prices. Acquisitions added 4%, while currencies had a negative impact of 4%. Decorative Coatings delivered a promising start to the year, with both volume growth and improved margins, while the company’s Marine & Protective activities enjoyed double digit revenues growth, led by Aerospace and Protective Coatings. The Industrial activities delivered a healthy performance, although the slowdown in the U.S. housing industry affected some parts of the businesses. Car Refinishes continued to report improved EBIT margins on both cost control and growth in emerging markets.
Chemicals—strong EBITDA margin on 4% autonomous growth
Chemicals revenues increased by 1% to EUR 917 million, with volume growth of 1% and price increases of 3% being partially offset by a negative currency impact of 2%. Before incidentals, EBITDA amounted to EUR 164 million, in line with last year. The EBIT margin improvement was a result of the margin management programs in all units. Pulp & Paper Chemicals benefited from higher margins for bleaching products in Europe and the Americas. Base Chemicals delivered a strong operational performance, driven by strong demand for chlor-alkali products. Functional Chemicals achieved increased margins in Chelates, Sulfur Products and Cellulosic Specialties, and the production issues in Ethylene Amines at our Swedish plant were resolved. Despite headwinds from currencies and higher raw material prices, the EBIT of Surfactants improved due to price increases and improved operational efficiency. EBIT of Polymer Chemicals was well ahead of 2006 due to cost savings and benefits from the margin improvement program.
Discontinued operation—Organon BioSciences
quarter revenues for Pharma amounted to EUR 920 million, equal to the same period in 2006. The EBIT of OBS before incidentals was up 4% to EUR 147 million. Organon’s autonomous growth of 4% was more than offset by currency effects and the loss of Avinza® sales. NuvaRing® is continuing to do well. The EBIT was unchanged at EUR 84 million. Intervet reported a record quarter, driven by autonomous growth of 12%. The European region and products for companion animals were particularly strong contributors. The Intervet EBIT margin improved to 21.7%. The preparations of the transfer of Organon BioSciences are on track.
Akzo Nobel’s workforce in Coatings and Chemicals was 42,880 employees, up from 42,690 at year-end 2006. The number of employees at Organon BioSciences was 19,140.
Strong financial position
The company’s strong financial position improved further due to a decrease of EUR 0.1 billion net interest-bearing borrowings to EUR 1.0 billion.
Akzo Nobel is well positioned for profitable growth. Assuming no important change in the major economies of the world, the company believes that it is well placed to outgrow its markets and improve the financial returns in Coatings and Chemicals.
Report and Presentation for the 1st quarter can be read on the company’s corporate website