AkzoNobel announces new strategy and financial targets

AkzoNobel announces new strategy and financial targets 
AMSTERDAM, NETHERLANDS -- (Marketwire) -- 02/20/13 --  
Leading market positions delivering leading performance 
Highlights  * AkzoNobel's vision is to deliver the full potential of
its leading market 
positions in mature and high-growth markets 
* Strategy centers around customer focus, operational excellence
and     sustainability 
* New financial targets to be achieved by the end of 2015 
* Acceleration of performance improvement program: full EUR500m
EBITDA benefit 
to be delivered one year early, in 2013 
* Focus on four end-user segments: Buildings and Infrastructure,   
 Transportation, Industrial and Consumer Goods - increasing insight
into     leading indicators, making the company more responsive to
market conditions 
* Smaller executive leadership team; remuneration aligned with
AkzoNobel today announced a new strategy that will build on its
leading market
positions in mature and high-growth markets to achieve
new financial targets.
The strategy focuses on end-user segments,
operational excellence and sustainability and is summarized by the
company's new vision: Leading market
positions delivering leading
Commenting on AkzoNobel's new strategy and financial targets ahead of
a presentation to the investment community in London today, CEO Ton
explained: "AkzoNobel has leading market positions and
brands in paints, coatings and specialty chemicals. With our global
scale and sustainability leadership, we will focus our strategy on
customer service and operational excellence, creating value for all
our stakeholders." 
Delivering its full potential 
To deliver its full potential, AkzoNobel has identified the following
focus areas: care for the customer, reduction of product
and process complexity,
cash and return on investment, embedded
safety and sustainability, and diverse
and inclusive talent
AkzoNobel has company-wide core processes, which will support and
drive the strategic focus areas. These processes include: a more
rigorous operational control cycle to drive and monitor delivery of
its targets, behaviour based and
process safety, talent management,
innovation and procurement. 
AkzoNobel has four key end-user segments 
that it sells into:
Buildings and Infrastructure, Transportation, Industrial and Consumer
Goods. Better analysis
and understanding of the leading indicators of
these segments will make AkzoNobel more responsive to market
AkzoNobel's focus on end-user segments will also allow for further
growth in
both mature and high-growth markets. The company will build
on its leadership in high-growth markets, which already account for
44 percent of revenue - a percentage that is expected to grow further
in the years ahead. 
Sustainability is business; business is sustainability AkzoNobel's
drive for operational excellence and performance improvement is
supported by its sustainability and innovation strategy focussed at:
more value from fewer resources'. AkzoNobel has defined the
following sustainability ambitions: 
* In 2020, AkzoNobel's downstream eco-premium products will account
for 20 
percent of revenue 
* Carbon emissions will be reduced by 25 to 30 percent per ton of
product by 
2020 (base 2012) 
Acceleration of the performance improvement program 
Since the announcement of the performance improvement program in
October 2011,
AkzoNobel has delivered structural EBITDA gains of
EUR250 million, while one-off
costs amounted to EUR292 million*.
AkzoNobel will accelerate the program and
expects to achieve the full
EBITDA benefit of EUR500 million, a year early, in
2013, with
associated costs estimated at EUR205 million. 
* Gains and costs are excluding North America Decorative Paints. 
New financial targets 
AkzoNobel's new financial targets are designed to drive operational
cash generation and accountability and demonstrate a
clear focus on creating
value for shareholders. 
* Return on sales, defined as operating income divided by revenue,
targeted at     9 percent by the end of 2015. 
* Return on investment target of 14 percent by the end of 2015.
This reflects 
AkzoNobel's focus on delivering value through
achieving returns in excess of     its cost of capital. 
* Net debt / EBITDA less than 2.0 times by the end of 2015. This
will give a     fuller measure of cash generation and not just one
Based on the market environment and the leading indicators in its
end-user segments - Buildings and Infrastructure, Transportation,
Industrial and Consumer
Goods - AkzoNobel is assuming sales growth
(CAGR) of around 4 percent per annum
between 2012 and 2015. 
Financial implications and pensions 
In order to increase accountability, incidental items such as
restructuring charges will now be included in EBITDA unless genuinely
one-off and not related
to normal or ongoing business. Pro-forma data
will be made publicly available on the company website reflecting
these and other restatements. 
AkzoNobel's pension top-ups relate mainly to pension liabilities in
the UK. The
actuarial funding deficit of the two main UK plans (ICI
and CPS) is estimated at EUR1.5 billion to EUR2 billion. The recent
CPS triennial actuarial funding review
has resulted in a reduction of
top-up payments of EUR40 million per annum, representing cumulative
savings of EUR240 million over the remaining six years of the agreed
funding recovery plan. Combined with the earlier ICI funding
this represents total savings of EUR485 million over the next
6 years. 
Executive leadership alignment 
Going forward AkzoNobel will have a smaller Executive Committee.
Remuneration of the top executives will be aligned with the new
targets, with the new short-term
incentive bonus targets to include
operating income, return on investment and
operating cash flow. 
- - - 
AkzoNobel is a leading global paints and coatings company and a major
of specialty chemicals. We supply industries and consumers
worldwide with innovative products and are passionate about
developing sustainable answers for
our customers. Our portfolio
includes well-known brands such as Dulux, Sikkens,
International and
Eka. Headquartered in Amsterdam, the Netherlands, we are consistently
ranked as one of the leaders in the area of sustainability.
operations in more than 80 countries, our 55,000 people around
the world are
committed to excellence and delivering Tomorrow's
Answers Today(TM). 
Pdf file AkzoNobel press release:
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants
that: (i) the releases contained herein are protected by copyright and 
other applicable laws; and (ii) they are solely responsible for
the content, accuracy and      originality of the information
contained therein. 
Source: Akzo Nobel NV via Thomson Reuters ONE 
Not for publication - for more information 
Corporate Media Relations
tel. +31 20 502 78 33
Contact: Marcel van de Hoef 
Corporate Investor Relations
tel. +31 20 502 7854
Contacts: Jonathan Atack and Sheryl Stokes
Press spacebar to pause and continue. Press esc to stop.