AkzoNobel publishes results for Q4 and full-year 2022

Highlights Q4 2022 (compared with Q4 2021)

• Revenue up 8% and 9% higher in constant currencies; pricing up 11%, volumes 9% lower
• Operating income at €103M (2021: €205M), resulting from lower volumes, higher raw material and freight costs and inflation on operating expenses; OPI margin 4.0% (2021: 8.5%)
• Adjusted operating income at €126M (2021: €209M), excludes €23M negative impact from Identified items (2021: €4M negative impact); ROS3 at 4.8% (2021: 8.7%)
• Acquisition of wheel liquid coatings business of Lankwitzer Lackfabrik completed in December
• Share buyback of €500M finalised in December

Highlights full-year 2022 (compared with full-year 2021)

• Revenue up 13% and 11% higher in constant currencies, pricing up 14%, volumes 7% lower
• Operating income at €708M (2021: €1,118M), resulting from lower volumes, higher raw material and freight costs, inflation on operating expenses and €46M negative impact from hyperinflation accounting. OPI margin 6.5% (2021: 11.7%)
• Adjusted operating income at €789M (2021: €1,092M), excludes €81M negative impact from Identified items (2021: €26M positive impact); ROS at 7.3% (2021: 11.4%)
• Adjusted EBITDA at €1,157M (2021: €1,436M)
• • Final dividend proposed of €1.54 per share (2021: €1.54 per share)

AkzoNobel CEO, Greg Poux-Guillaume, commented:

"Looking back on 2022, it was a year of persistent worldwide uncertainty as global events caused significant cost inflation, disrupted supply chains and prompted declining consumer confidence. Our Q4 results continued to be impacted by softer demand, as well as the lingering effects of COVID-19 in some of our most important markets.

"Moving forward, with our margin management and cost reduction programmes firmly in place, we plan to mitigate the ongoing pressure from cost inflation and aim to deliver €1.2 to €1.5bn adjusted EBITDA for 2023, based on current market conditions. Since I joined, I’ve personally witnessed the dedication of our teams around the world, and I’m confident that together we’ll continue to improve the performance of AkzoNobel.”

Recent highlights

Protecting the protectors We completed a repainting project in Vietnam as part of our Lighthouse Protection Campaign. Cu Lao Xanh – built in 1890 – was coated with more than 11,000 litres of Dulux Weathershield to help protect it against the elements. A great example of how our People. Planet. Paint. approach helps to preserve local history and heritage.

Partner power driving collective reduction of carbon emissions Value chain partners have teamed up with AkzoNobel in the fields of circular solutions, process efficiency and solvent reduction in a determined effort to collectively reduce carbon emissions in the paints and coatings value chain, including Scope 3 emissions. Five teams have been established as part of our first ever Paint the Future Collaborative Sustainability Challenge. They will now work together in their respective groups to develop possible solutions for limiting climate change.

Partnership with electric vehicle maker BYD announced We’ve become the global refinish partner for BYD Auto Sales Company Ltd. – currently the world’s leading seller of electric vehicles. AkzoNobel has been a recommended supplier of vehicle refinish products and services to BYD in China since 2017. The new deal means that agreement will continue, while extending the partnership to serve BYD’s bodyshops and approved repairer networks worldwide.

2023 Outlook*

AkzoNobel expects the ongoing macro-economic uncertainties to continue and weigh on organic volume growth. The company will focus on margin management, cost reduction, working capital normalisation and de-leveraging.

Cost reduction programs are expected to mitigate the ongoing pressure from inflation in operating expenses for 2023. AkzoNobel expects declining raw material costs to have a favorable impact on profitability.

Based on current market conditions, AkzoNobel targets to deliver €1.2 to €1.5bn adjusted EBITDA.

The company aims to lower its leverage ratio to less than 3.4 times net debt/EBITDA, including the impact of the Kansai Paint Africa acquisition, by the end of 2023 and return to around 2 times post-2023.

*Targets are based on organic volumes and constant currencies, and assume no significant market disruptions

The report for the fourth quarter and full-year can be viewed and downloaded: https://akzo.no/Q4-2022-result…