AkzoNobel Q3 2015 results

22 October 2015

Q3
· Revenue up 2 percent at €3.8 billion (2014: €3.7 billion), due to 4 percent favorable currency effects, offset by divestments and slightly lower volumes
· Operating income up 30 percent at €436 million (2014: €335 million), reflecting the positive effects of process optimization, lower costs, reduced restructuring expenses and favorable currency developments
· ROS improved to 11.6 percent (2014: 9.1 percent); ROI improved to 12.5 percent (2014:10.5 percent)
· Net income attributable to shareholders up 39 percent at €285 million (2014: €205 million)
· Adjusted EPS increased 35 percent to €1.24 (2014: €0.92)
· Net cash inflow from operating activities €583 million (2014: €489 million)
· Interim dividend up 6% to €0.35 per share (2014: €0.33)
       

Outlook
· Market outlook is unchanged: positive trends in North America, no improvement for Europe overall as well as a challenging environment in some countries, including Russia, Brazil and China. Based on current rates, the positive impact of foreign currency is expected to moderate in the 4^th quarter  
· On track to deliver 2015 targets

Q3 2015 highlights

• Decorative Paints: revenue was flat. Favorable currency effects were offset by adverse price/mix. Volumes were up in Asia, while volumes were down for Latin America and Europe, which includes amongst others Russia and Turkey. Operating income improved by 7 percent due to the new operating model, lower costs and currency developments
• Performance Coatings: revenue was up 5 percent, benefitting from favorable currencies and continued strong demand for premium products. Volumes declined in the quarter due to ongoing capital spending declines in the global oil and gas industry and further weakening in some markets, most notably Brazil and China. Operating income increased 56 percent driven by cost reductions from performance improvement initiatives, lower costs, favorable product mix, lower restructuring charges and favorable currency developments
• Specialty Chemicals: revenue flat due to favorable currency effects offsetting the impact of the divested Paper Chemicals business and adverse price/mix in several segments, mostly due to lower oil prices. Volumes overall were flat. Growth in some segments compensated for lower demand in oil drilling segments, which mainly impacted Surface Chemistry and Functional Chemicals. North America and Europe continued to show a positive trend in some selected segments, while growth in China and Russia was subdued. Although the recent incident at the port of Tianjin, China, did not affect us directly, it did result in severe logistical constraints. Operating income was up 4 percent supported by the benefits from further increased production at the new Frankfurt plant, lower costs and operational efficiencies throughout the business
• Restructuring charges were €15 million in Q3 2015, compared to €55 million in Q3 2014
• Operating income in other activities higher than the previous year mainly due to lower corporate costs and insurance claims
• Raw material prices lower, although in certain regions foreign currency effects adversely impacted raw material costs in local currencies
• Operating activities in Q3 resulted in a cash inflow of €583 million (€489 million) and net debt decreased to €1,727 million from €2,138 at Q2 2015
• An interim dividend of €0.35 per share (2014: €0.33) will be paid out, with the option to elect stock dividend.

Restructuring charges by quarter

Q3 revenue development in % versus Q3 2014