AkzoNobel’s second quarter results deliver on expectations with resilient volumes, profits up and a strong free cash flow; guidance increased

Highlights Q2 2023 (compared with Q2 2022)

• Revenue 4% down on unfavourable exchange rates, 3% up in constant currencies¹ 

• Pricing up 5%, volumes 1% lower

• Operating income up 36% at €279M (2022: €205M)

• Adjusted operating income² up 25% at €311M; ROS³ 11.3% (2022: €249M and 8.7%)

• Net cash from operating activities positive €305M (2022: negative €52M)

AkzoNobel CEO, Greg Poux-Guillaume (pictured), commented: “Our Q2 results are in line with expectations despite volatile markets and complete a solid first half of 2023. In Q2, we achieved year-on-year profit growth driven by resilient volumes, robust pricing and the first effects of raw material deflation. This helped us offset headwinds from continuing softness in some markets and from adverse currency impact and persistent inflation. Our results provide a solid foundation and allow us to increase our full-year guidance. We’re on the right path – in markets that will continue to be impacted by macro-economic uncertainties.”

Recent highlights

 Mural pays tribute to traditional artform

The Abasto neighborhood in Buenos Aires, Argentina received a makeover recently using products supplied by the Alba brand. Five vibrant wall paintings and a 600m long floor mural were created to bring colour to the local area. The designs pay tribute to a traditional pictorial artform known as “filete porteño” – which has received official UNESCO recognition.

Supply agreement with Porsche China

The company received approval to supply the full water-based Sikkens range of refinish products to Porsche China. Its products will play an important role in helping Porsche China to meet the country’s strict VOC regulation.

New product marks turning point for packaging industry
The packaging business continued to drive innovation with the launch of Accelshield 700, an internal coating for beverage can-tops that does not use BPA or bisphenol-based epoxies as part of its manufacturing process. This new product will help customers to meet the surge in demand for safer and more sustainable coatings, supporting our leading market position.

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 programmes are expected to partly mitigate higher than expected inflationary pressure on 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 €1.40 to €1.55bn 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.

*Outlook is based on organic volumes and constant currencies and assumes no significant market disruptions.