media release Akzo Nobel 2000: best year ever - net income up 25% February 23, 2001 Reaping benefits of enhanced portfolio. Net Sales : EUR 14.0 billion, up 15%(USD 13bln, GBP 8.5 bln, NLG 31 bln)Operating income : EUR 1.652 billion, up 16%(USD 1.5 bln, GBP 1.0 bln, NLG 3.6 bln)Pharma : Sales up 34% at EUR 3.8 billion (1999: EUR 2.9 bln),income up 30% at EUR 772 million(1999: EUR 595 mln)Coatings : Sales up 6% at EUR 5.6 billion (1999: EUR 5.3 bln),income up 3 % at EUR 455 million(1999: EUR 441 mln) (for ongoing business +13%)Chemicals : Sales up 14% at EUR 4.7 billion (1999: EUR 4.2 bln),income up 16% at eUR 456 million(1999: EUR 392 mln)Net income before : up 25% to EUR 946 million (1999: EUR 759 mln)extraordinary anditemsExtraordinary and : EUR 20 million net (1999: EUR -555 mln)nonrecurring itemsNet income after : EUR 966 million (1999: EUR 204 mln)extraordinary anditemsNet income per share:2000: EUR 3.31 (1999: EUR 2.66)Dividend : 2000: EUR 1.20 (1999: EUR 1.00)Gearing : 2000: 1.6 (1999: 2.3)Interest coverage : 2000: 6.1 (1999: 5.0)Outlook : Targeting net income of EUR 1 billion1 All figures for ongoing business (excluding Acordis and other divestments)2 Before nonrecurring itemsHighlights 2000 25% increase in net income (excluding extraordinary and nonrecurring items)Dividend EUR 1.20 per share (1999: EUR 1.00)Sales up 15%, of which 6% organic growth and 7% from currency translationOperating income up 16%Pharma – record growth; now 47% of Akzo Nobel’s operating incomeCoatings and Chemicals – strong start; softening market conditions later in the yearHuman healthcare – joint venture for pentasaccharides, a newly developed antithromboticAnimal healthcare – harvesting strong synergies of recent acquisitionsAerospace Coatings now globalized through acquisition of Dexter CoatingsBolt-on acquisitions at ChemicalsChefaro, Over-The-Counter activities, divested for EUR 140 millionProvisions for antitrust cases and restructurings more than offset by gains on divestmentsInterest coverage 6.1 (1999: 5.0)Gearing improved from 2.3 to 1.6Cees van Lede, Chairman of the Board of Management "2000 was the best year ever for Akzo Nobel""This was the first year of operation of the new Akzo Nobel after the divestment of Fibers. It has made us a more balanced company. Our company was clearly reaping the benefits of its improved portfolio. 2000 was the best year ever for Akzo Nobel."By organic growth and also through a number of acquisitions and divestments, we were able to further strengthen our industrial base. Geographically we were also able to strengthen our position by growing the business in the right places. In the United States, growth clearly surpassed our plans. Pharma’s growth of over 30% has been spectacular. Akzo Nobel’s sales in the United States now represent well over 25% of the total. In Asia, we benefited from a remarkably quick recovery from the crisis that erupted in 1997, where our Asian network - stemming from former Courtaulds – proved most useful. The integration of Kanebo, acquired in 1999, strengthened our position in the human healthcare market in Japan.For 2001, we expect a somewhat lower growth rate in Europe than in 2000. In the United States, economic activity has fallen significantly, but an improvement later in the year is assumed. The Euro has recovered at the end of 2000 and may appreciate further from its present level.Against this background we have set ourselves the goal of achieving a net income of EUR 1 billion, excluding extraordinary and nonrecurring items, contingent on economic circumstances not further developing to our disadvantage."2000 - enhanced portfolio; reaping benefitsMillions of euros 2000 1999 %income excluding extraordinary and nonrecurring items 946 759 25Net income966204 Per share in EUR Net income excluding extraordinary and nonrecurring items 3.31 2.66 Net income3.380.71 Net sales*14,00314,432(3) Operating income before nonrecurring items - Pharma77259530 - Coatings4554413** - Chemicals45639216 - Other(31)(2) 1,6521,42616 - Acordis - Total1,6521,36421 Total - Return on sales11.8%9.5% - Return on invested capital20.4%15.5% Number of employees, at year-end68,40068,000 * Excluding Acordis, sales and operating income before nonrecurring items grew 15%. 16%** Coatings sales and operating income of continuing operations (excl divestments) grew% and 13% respectively. On this basis return of sales in 1999 was 8.0%Arnhem, the Netherlands, February 23, 2001 – At EUR 14.0 billion, full-year net sales (excluding Acordis) were 15% above the prior year. Operating income grew 16% to EUR 1.652 billion, showing the benefits of the enhanced portfolio of Akzo Nobel. High growth, record earnings and a strengthened balance sheet made 2000 an excellent year for the company. Strong sales and earnings gains were spurred by Pharma and Chemicals. Pharma continued its upward trend throughout the year. Coatings and Chemicals were affected by a general slowdown later in the year. Net income surged 25%, per share EUR 3.31 (1999: EUR 2.66).Reaping benefits of improved portfolioThe first year of the new Akzo Nobel has been an excellent one for the company.three groups Pharma, Coatings and Chemicals contributed to the double digit growth of the ongoing business. Pharma achieved 30% growth in operating income, despite continued heavy spending for marketing and R&D. 47% of Akzo Nobel’s operating income comes from Pharma. Coatings made a strong start but had to live with weakening market conditions in the second half of the year. Chemicals showed a solid performance but saw the positive trend reversed in the fourth quarter.Net income up 25%Net income, excluding extraordinary and nonrecurring items, increased 25% to EUR 946 million (1999: EUR 759 mln). Major growth in earnings was achieved by Pharma (operating income +30%), followed by Chemicals (+14%) and the ongoing operations of Coatings(+ 13%).Sales up 15% – internal growth and currency translationSales were EUR 14.0 billion, up 15% from the previous year. Higher volumes, particularly at Pharma and Chemicals, accounted for a 4% increase and average selling prices were 2% higher. The net contribution of acquisitions and divestments was 2%.Currency translations had a 7% positive effect, predominantly related to the U.S. dollar, the pound sterling, and the Swedish krona.Strong earnings growth at PharmaOperating income before nonrecurring items, demonstrated a healthy 16%, reflecting average growth of 30% for Pharma, 16% for Chemicals and 13% for the ongoing operations of Coatings. Pharma continued its upward trend throughout the year. Coatings and Chemicals made a strong start but had to live with softening market conditions later in the year. Coatings also had to absorb significant increases in raw material prices.Financing charges were on par with the previous year. Interest coverage improved from 5.0 to 6.1. Income taxes equaled 1999 at 33%.Earnings from nonconsolidated companies (before nonrecurring charges) were considerably higher at EUR 65 million (1999: EUR 52 mln). This increase is largely attributable to better results of Flexsys and Methanor. Acordis also made a positive contribution.Pharma – record growth; now 47% of Akzo Nobel’s operating income Star performer10% volume growth – outperforming the marketExcellent pipelineAcquisition Bayer Animal Biological, Chefaro divestedCees van Lede about Pharma:"Striving for continued double digit growth""Our Pharma-business is one of the fastest growing in Europe. Our challenge here is to maintain the critical mass needed in human healthcare and at the same time consolidate and preserve our newly acquired world class position in the animal healthcare market. We are striving for continued double digit growth through a combination of organic growth and bolt-on acquisitions. We will keep launching new products from our well-filled pipelines and also continue to invest in R&D and in the marketplace."Pharma grew at an accelerated pace. Sales of EUR 3.8 billion exceeded the 1999 figure by 34%. Almost half of the increase was due to acquisitions, while a healthy 10% volume growth was achieved. Positive currency translation effects added 7%. Average selling prices were slightly higher. North America accounted for some 30% of Pharma’s sales.As a result of this strong upward trend, Pharma achieved 30% growth in operating income to EUR 772 million, despite continued heavy spending for marketing and R&D to sustain further growth. Return on sales was 20.1%. Return on investment amounted to 34.6%.At EUR 2 billion, Organon set new sales records for contraceptives, Remeronâ (antidepressant), Puregonâ (infertility treatment), and Livialâ (hormone-replacement therapy), with double-digit growth in almost all countries, notably in the United States.With sales in excess of EUR 1 billion, Intervet turned in an excellent performance in a year dominated by the integration of the Hoechst Roussel Vet businesses acquired in 1999. Diosynth also demonstrated healthy growth with considerably higher sales and results.The strong position of Intervet in the global animal healthcare market was further enhanced by recent acquisitions, including Bayer’s Biologicals in the United States.Thiemann Arzneimittel–an Organon subsidiary–and Chefaro were divestedCoatings – Strong start; weakening market conditionsVolumes up 1%, prices 2% higher Pressure from increased raw material prices Economies softening in 2nd half 2000 Acquisition of Dexter Coatings and Mason Cees van Lede about Coatings:"We will further strengthen our world leader position""In Coatings we will use our skills and imagination to further strengthen our world leader position. The target is a return on investment of 30%. This will enable us to reap the benefits of a generation of acquisitions that have led to the No. 1 position worldwide for Coatings. We will consolidate and further expand this position though optimal planning of production and logistics, and through innovative new product development. We will continue our active acquisition policy."Sales of Coatings amounted to EUR 5.6 billion, up 10% on the comparable previous year. Volumes increased 1%, with 2% higher selling prices. Positive currency translation effects were 6%, while acquisitions added 1%.Coatings’ operating income of EUR 455 million exceeded the 1999 figure by 13%. Return on sales of 8.2% was slightly above last year’s 8.0%. Return on investment worked out at 20%. After a good start, Coatings began to feel the impact of higher raw material prices and a slowdown in the business climate later in the year. Nevertheless, earnings exceeded the previous year due to strong performances by the industrial coatings activities, Car Refinishes, and Marine & Protective Coatings. Decorative Coatings suffered from market pressure.Through the acquisition of Dexter Aerospace Coatings a leadership position in this attractive high-technology market was established. Bolt-on acquisitions enhanced positions in Car Refinishes and Decorative Coatings.Chemicals – solid performance; positive trend reversed in final quarter Volume growth 3%, prices up 2% Margins up further Increased raw material prices 2nd half 2000 – softening market conditions Strong cash flow Acquisition Hopton Technologies Cees van Lede about Chemicals:"Further strengthening our position""In Chemicals our primary efforts are geared to structurally improving the profitability of our operations. We will be alert to opportunities to further adjust our portfolio and strengthen our position in a most dynamic market. We have raised our target for the return over the business cycle to 2.5% over the cost of capital, which corresponds to a return on investment of about 17%. This will mean an even stronger emphasis on growth in the right markets and regions, cost control, and realignment of the portfolio."Chemicals turned in a good performance, particularly in the first nine months.for the year of EUR 4.7 billion exceeded the 1999 figure by 14%, of which 3% stemmed from volume growth and 2% from higher selling prices. The positive effect of currency translations was 7%, while acquisitions added 2%.Operating income rose 16% to EUR 456 million. ROS was 9.6% (1999: 9.4%). ROI improved from 14.3% to 15.4% in 2000.Base Chemicals, Surface Chemistry, and Catalysts were the principal contributors to this improvement. Pulp & Paper Chemicals did distinctly better, especially the North American Bleaching Chemicals activities, while Polymer Chemicals and Functional Chemicals also exceeded their 1999 levels. Results for Resins, Salt, and Plastics and Processing Additives lagged behind. Toward the end of the year several business units began to experience pressure from softening market conditions and increased raw material prices.Chemicals extended its portfolio with some acquisitions, of which Hopton Technologies was a welcome addition to our Paper Chemicals business in the United States.Strong operational cash flowCash flow from operations in 2000 amounted to EUR 1,358 million, somewhat lower than in 1999. Due to strong growth of activities, working capital increased by EUR 408 million (1999: decrease of EUR 140 million).Expenditures for property, plant and equipment were somewhat higher at all three groups, aggregating EUR 725 million, against EUR 690 million in 1999 (excluding Acordis). Expenditures were 115% of depreciation (1999: 119%).Acquisition expenditures particularly concerned Bayer Biologicals and Dexter Coatings.Proceeds from divestment predominantly related to the sale of Chefaro, Thiemann and the participation in Tosoh Akzo Corporation. Proceeds from sales of property, plant and equipment mainly concerned the sale of a property in Stockholm.In 2000, as in the previous year, normal operations were financed without additional capital market transactions. The Company continued to use the money market, including the Euro and U.S. commercial paper markets for short-term funding requirements. As backup for this, financing committed credit lines in place were in the amount of EUR 2 billion.Extraordinary and nonrecurring items – on balance positiveIn 2000, the Company recorded a net extraordinary charge of EUR 25 million and a net nonrecurring gain of EUR 45 million.The Company recognized net extraordinary gains on divestments of EUR 125 million, relating to Chefaro, Thiemann Arzneimittel, and a nonoperational asset in Stockholm. A net extraordinary loss of EUR 150 million was taken in view of antitrust cases and pending investigations for certain Akzo Nobel Chemicals businesses. Out of this total EUR 25 million was paid in 2000.Nonrecurring items included a net profit on the divestments of nonconsolidated companies (Tosoh Akzo Corporation and Acordis’ Twaron activities) and a pension premium refund in Sweden. This was partially offset by charges for restructurings and asset impairments, mainly at Chemicals, and the settlement for the Acordis divestment.Employees – future shareholdersThe number of employees rose from 68,000 at the end of 1999 to 68,400 at year-end 2000. Through organic growth the work force expanded by 900, notably at Pharma and Coatings, while reorganizations at all groups led to a reduction of 700. Acquisitions and divestments, on balance, caused an increase of 200.Early in 2001, the Akzo Nobel Employee Share Plan was announced to promote Akzo Nobel share ownership among employees. This plan will align the interests of the Company’s employees even better with those of the shareholders.Dividend up EUR 0.20 to EUR 1.20At the General Meeting of Shareholders of April 26, 2001, a dividend for 2000 will be proposed of EUR 1.20 per common share, up EUR 0.20 on 1999. In November 2000, an interim dividend of EUR 0.30 was declared and paid. This proposal would result in a dividend payment of EUR 343 million, a payout ratio of 36% relative to net income excluding extraordinary and nonrecurring items.Outlook – targeting net income of EUR 1 billionFor 2001, we expect a somewhat lower growth rate in Europe than in 2000. In the United States, economic activity has fallen significantly, but an improvement later in the year is assumed. The Euro has recovered at the end of 2000 and may appreciate further from its present level.Against this background we have set ourselves the goal of achieving a net income of EUR 1 billion, excluding extraordinary and nonrecurring items, contingent on economic circumstances not further developing to our disadvantage.Expenditures for property, plant and equipment are expected to increase from EUR 0.7 billion in 2000 to EUR 0.9 billion in 2001 with a strong focus on Pharma.We expect to generate a financial surplus, so that no additional funds will have to be raised for ongoing operations in 2001.Excluding acquisitions and divestments, we do not expect the number of employees to change significantly in 2001.Fourth quarter – Pharma continuing to drive growthMillions of eurosQ42000Q41999 D %income excluding extraordinary and nonrecurring items 220 184 20 Net sales3,5603,16313 Operating income: - Pharma22920015 - Coatings16568(4) - Chemicals102107(5) - Other2(13)3832377 2- Acordis (49) - Total38332817 Operating income before nonrecurring items % net sales10.8%8.9% 1 Coatings’ sales of continuing operations (excluding some divestments) grew 8%, whileincome was equal to prior year. On this basis, return on sales in the 4thof 1999 was 5.3%.2 "Other" relates to other activities and nonallocated items.Highlights fourth quarter 2000 Net income (excluding extraordinary and nonrecurring items)up 20%Sales increase 13%Operating income up 2%Continued strong growth for Pharma; Coatings and Chemicals slowing downOrganon: release of positive phase III data on pentasaccharidesIntervet acquires R&D facilities in Germany and United KingdomChefaro, Over-The-Counter business, divested for EUR 140 millionBolt-on acquisitions at Coatings and ChemicalsNet income up 20%The trend of the previous quarters was continued with net income (excluding extraordinary and nonrecurring items) up 20%Sales grew 13%, of which 5% from organic growth, 7% due to currency translation, and 1% net effect of acquisitions and divestments. Pharma’s organic growth was 10%, Coatings 3%, and Chemicals 4%.Operating income was up 2%, driven by Pharma, while Coatings and Chemicals were lower.Pharma clearly up – Coatings and Chemicals slowing down Pharma’s fourth quarter sales exceeded the EUR 1 billion mark. Operating income was up 15%, mainly due to continued strong growth at Organon and Intervet. Diosynth also turned in a good performance. Early in December Organon released positive phase III data on pentasaccharides, a new antithrombotic drug. Diosynth opened its new biotech downstream processing unit. Intervet acquired R&D facilities in Germany and the United Kingdom. At year-end, Chefaro was divested.Operating income of Coatings’ continuing operations was equal to last year. The business climate continued to soften, notably in the United States. Raw material prices rose, albeit at a slower pace. Lower results for the decorative businesses were offset by increases for the other activities.Chemicals operating income was below the prior year’s level, due to the deterioration of Resins, which was not completely offset by better results for most other business units. Increased raw material prices adversely affected margins.Akzo Nobel, based in the Netherlands, serves customers throughout the world with healthcare products, coatings and chemicals. Consolidated sales for 2000 totaled some EUR 14 billion (USD 13 billion, GBP 8.5 billion). The Company currently employs 68,400 people in 75 countries. Financial results for the first quarter of 2001 will be announced on Wednesday April 25, 2001.