media release

We have the ambition to beat record year 2000

Arnhem, the Netherlands, January 11, 2001 – “Looking ahead to 2001, we are sticking to our basic themes of coherence and value. We have created expectations both internally and externally. We now have to live up to them” said Cees J.A. van Lede, CEO of Akzo Nobel in his New Year’s Address to the 68,000 employees of his company.

“After the divestment of Fibers, we had an excellent year 2000. We outperformed the indexes and ended up with a stronger balance sheet. Of course this is partly due to the favorable economic circumstances and positive currency effects. But in spite of more difficult circumstances, our ambition is to beat the record year 2000.”

“Beyond any doubt, the year 2000 started very favorably for our company”, Mr. Van Lede said. “It was a year of high growth, most of it organic, with sound results. As stated previously, our profits increased more than 20%.” Consolidated sales for 2000 will total some EUR 14 billion. These achievements have not gone unnoticed by the financial markets. Last week the influential Forbes Global magazine classified Akzo Nobel as one of the best 400 companies in the world and ranked it as the worldwide number one company in chemicals.

Coherence

“Last year the structure of the company improved”, added Mr. Van Lede. “We were able to enhance the coherence of our business by strategic acquisitions and divestments.” Intervet, for example, now occupies a leading position in the worldwide veterinarian market; Car Refinishes, Aerospace Coatings and Pulp and Paper Chemicals (trading name: Eka Chemicals) also strengthened their positions with strategic acquisitions. The geographical coherence of Akzo Nobel improved by growing the business in the right places, especially in Asia and in the United States. In Asia Akzo Nobel benefited from a remarkably quick recovery from the crisis which erupted during late ’98. Organon (Pharma) continued its impressive growth in the United States, virtually doubling sales within three years. Sales in the USA now represent over 25% of the total sales of Akzo Nobel.”

The basic themes of coherence and value are still valid in the year 2001. “Our diversity is an asset”, Mr. Van Lede said. “We are not in the business of defending what we have, but in adapting to changing market conditions. We focus on developing new activities and, where appropriate, we will adjust our organization to the requirements of today’s and tomorrow’s customers. The real added value of Akzo Nobel as a focussed hybrid lies in the optimal use of our collective know-how.”

Priorities

Adherence to the business priorities is a major theme for 2001. “We want to grow Pharma fastest, followed by Coatings and Chemicals. Barring acquisitions we could generate over 50% of our operating income from our Pharma activities by the year 2004.” Other priorities for this year are the company-wide introduction of EVA - a financial tool to focus on value creation -, the application of best practices in the fields of human resources and competition compliance, the use of Internet, the introduction of general business principles in the spirit of the recently adopted code of the OECD, and a project for risk management and control. To further involve the employees with the performance of the company, an employee share plan is being introduced in the Netherlands, the United Kingdom, the United States and Sweden. Other countries will follow soon. All employees will receive a certificate, granting them the right to receive shares after three years. For the first roll out, employees will receive rights to six shares.

“With a stronger and more coherent portfolio we strive for further value creation in 2001,” Mr. Van Lede concluded. “We will simply practice what we preach. It has been our collective effort, helped by a supportive business environment, which turned 2000 into a record year for our company. Despite less favorable external conditions in 2001, we are convinced that we can further strengthen Akzo Nobel, beat last year and have fun in what we do.”

Akzo Nobel, based in the Netherlands, serves customers throughout the world with healthcare products, coatings and chemicals. Consolidated sales for 2000 will total some EUR 14 billion (USD 13 billion, GBP 8.5 billion). The Company currently employs 68,000 people in 75 countries. Financial results for the year 2000 will be announced on February 23, 2001.

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