AkzoNobel publishes Q1 2016 results

AkzoNobel has reported its Q1 2016 results with positive volume developments in all three Business Areas despite a challenging market environment.

Operating income increased 17% to €357M and EBIT increased 9% to €334M, reflecting continuous improvement initiatives and lower costs, partly offset by adverse currency effects. Revenue was down four percent yr-on-yr as positive volume development was more than offset by adverse currency effects, price/mix and divestments. Profitability improved, with return on sales at 9.7% compared with 8.5% last year.

CFO Maëlys Castella commented: "During the first quarter we grew volumes in all Business Areas and continued to improve profitability despite a challenging market environment and negative currency effects. Net income improved by 50% and we continue to further strengthen our businesses by delivering on our strategy of continuous improvement, organic growth and innovation. During the period we agreed an offer for the acquisition of BASF’s Industrial Coatings division, which fits well with our existing business, adding to our offering of essential solutions for our customers.”

Decorative Paints: Operating income increased 4%, mainly due to higher volumes and lower costs, partly offset by unfavourable currency developments. Volumes increased 6% due to positive developments in Asia and Europe, offset by Latin America. Revenue was down 3%, mainly due to unfavourable currency effects and adverse price/mix.

Performance Coatings: Operating income increased 9%, due to higher volumes, management delayering, continuous improvement initiatives and lower costs. Volumes were up 2% mainly driven by Marine and Protective Coatings. Revenue was down 3%, with positive volume development being more than offset by adverse currencies and unfavourable price/mix. The intended acquisition of BASF’s Industrial Coatings business was announced, which will strengthen our position.

Specialty Chemicals: Operating income increased 1%, due to operational efficiencies and lower costs offsetting the effects of price deflation and adverse currencies. Volumes were up 1%, with positive developments – mainly in Industrial Chemicals – being partly offset by lower demand in oil related segments. Revenue was down 7% due to the divestment of the Paper Chemicals business, price deflation and adverse currency effects.

Outlook: The market environment remains uncertain with challenging conditions in several countries and segments. Deflationary pressures and currency headwinds are expected to continue.