AkzoNobel reports strong start to the year

April 21, 2011

Report for the first quarter
 
  • Stronger volumes and pricing drive revenue growth of 16 percent to €3.8 billion

  •  EBITDA* increased 10 percent to €437 million

  • Raw material cost increases being mitigated

  • Total net income increased to €128 million from €81 million in Q1 2010

  • Adjusted EPS** rose 38 percent to €0.72 per share

  • Outlook reiterated: aiming for more than 5 percent revenue and EBITDA growth in 2011 – in line with strategic ambitions

Financial highlights
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Akzo Nobel N.V. (“AkzoNobel”) today reported a 16 percent gain in Q1 revenue compared with the same period in 2010. Group revenue of €3,762 million (Q1 2010: €3,246 million) reflects a 7 percent increase in volumes and a 4 percent positive price effect.

Double-digit revenue growth was achieved in all three Business Areas, driven by the company’s continued strength in high growth markets and demand recovery in mature economies.

Raw material price inflation has been significant. Pricing and cost reduction actions are on-going to mitigate the impact of this and AkzoNobel remains confident that it will be able to compensate for these increases.

During the quarter, EBITDA improved by 10 percent to €437 million, although overall EBITDA margins declined slightly compared with Q1 2010, reflecting the lag effect of pricing and margin management actions to compensate raw material price increases. Sequentially, from Q4 2010, the EBITDA margin increased from 10.4 percent to 11.6 percent as mitigating actions took effect. The company has a seasonal pattern in that revenue and profitability are lowest in the fourth and first quarters of the year.

CEO Hans Wijers:

“These results demonstrate further progress in working towards our medium-term strategic goals and in managing the current inflationary headwinds. I am particularly pleased with the strong volume and pricing behind our 16 percent revenue growth, which gives me confidence that we have been able to maintain or improve market share across the portfolio. 

“There continue to be considerable differences in the strength of demand across our geographies and end markets, but we have continued to grow revenue in both high growth and mature markets. Our revenue growth in high growth markets continued to be impressive. 

“Raw material prices have continued to rise, as we indicated last quarter. Pricing and cost reduction actions are on-going to mitigate the impact of these higher prices and we remain confident that we will be able to compensate for these increases.

“Specialty Chemicals continues to experience strong demand and both revenue and EBITDA grew strongly. Performance Coatings achieved considerable growth in high growth markets and benefitted from the acquisitions made last year. The successful roll-out of our Decorative Paints products to 3,500 Walmart stores in the US, together with continued strong growth in Asia and Latin America, underpinned the Decorative Paints performance.”

Outlook 2011 reiterated
AkzoNobel expects to make further progress on its medium-term strategic ambitions. The company is aiming for more than 5 percent revenue and EBITDA growth in 2011.

Highlights
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Several significant investments were announced in the first quarter of 2011. Two were made by our Pulp and Paper Chemicals business – one to supply the world’s largest pulp mill in Brazil and the other to expand our Expancel business in Sweden - while a new Bermocoll production facility in China will also contribute to the company’s growth ambitions.

AkzoNobel continued to make progress on its strategic sustainability agenda in the first quarter of 2011. In the area of operational eco-efficiency, the company is on track to realizing the overall ambition of reducing its footprint by 30 percent by 2015. The company also made improvements in working towards the stated ambition to reduce its carbon footprint by 25 percent per ton of product by 2020.

The Report for the first quarter of 2011 can be read on www.akzonobel.com/quarterlyresults.