AkzoNobel Q2 results 2013

AkzoNobel Q2 results 2013 
AMSTERDAM, THE NETHERLANDS -- (Marketwired) -- 07/18/13 --  
* Revenue down 4 percent, mainly due to divestments 
* Operating income at EUR322 million (2012: EUR388 million) driven
by adverse price/mix developments 
* Net income attributable to shareholders EUR429 million (2012:
EUR219 million) due to recognition of a deferred tax asset and the
divestment of Decorative Paints in North America 
* Adjusted EPS EUR1.37 (2012: EUR1.06) 
* Performance improvement program on track to be completed in 2013,
delivering EUR500 million EBITDA benefit a year early 
* Operational focus of strategy update announced in February is the
right approach for continuing challenging market conditions; 2015
targets confirmed 
* Restructuring activities being stepped up, full-year charges
expected to be in the order of EUR325 million (initial estimate:
EUR205 million), with the benefits of these additional EUR120 million
costs realized in 2014 and beyond 
* Expected higher restructuring charges and continued weak markets
mean that full-year operating income is unlikely to exceed the EUR908
million of

 Q2 2013 in EUR million
                                            Q2 2012   Q2 2013    D %
  Revenue                                     4,044     3,865    (4)
  Operating income                              388       322   (17)
  Return on Sales (ROS) %                       9.6       8.3
  EBITDA                                        554       474   (14)
  Net income attributable to shareholders       219       429     96
H1 2013 in EUR million
                                            H1 2012   H1 2013     D%
  Revenue                                     7,751     7,330    (5)
  Operating income                              624       539   (14)
  Return on Sales (ROS) %                       8.1       7.4
  EBITDA                                        964       849   (12)
  Net income attributable to shareholders       303       518     71

Akzo Nobel N.V. (AkzoNobel) today reported a 4 percent decrease in
revenues in the second quarter compared with the same period last
year. This was due to divestments and adverse currencies against a
backdrop of continued challenging market conditions. Operating income
for Q2 was 17 percent lower at EUR322 million. Net income
attributable to shareholders for the quarter rose to EUR429 million,
buoyed by recognition of a deferred tax asset and profit on the
divestment of Decorative Paints North America. The acceleration of
AkzoNobel's performance improvement program is on track to achieve
the full EBITDA benefit of EUR500 million by the end of this year,
whilst additional charges are expected in the second half of the year
as restructuring activities are stepped up. 
At Decorative Paints second quarter revenue declined 1 percent,
mainly due to negative price/mix and unfavorable currency effects.
The slowdown in global markets continues to affect the top line. In
general volumes stabilized, with some markets, in particular China,
making a positive contribution in the quarter. Operating income for
the second quarter totaled EUR102 million, 9 percent lower than the
previous year, mainly as a result of restructuring costs in mature
Revenue in Performance Coatings declined 1 percent on largely stable
overall volumes compared with the previous year as a result of
adverse currency effects. Operating income was down 5 percent at
EUR163 million due to investments in growth and business excellence
initiatives, partially mitigated by margin management and structural
cost benefits. 
Revenue in Specialty Chemicals was 12 percent lower as a result of
the divestment of Chemicals Pakistan and lower overall volumes.
Operating income was down 21 percent at EUR121 million, mainly due to
the lower volumes and the conclusion of value chain issues from the
previous quarter. During the quarter, the Functional Chemicals
Business Unit initiated a large restructuring program as part of the
performance improvement program, the implementation of which will
start as of Q3. 
CEO Ton Buechner 
"While I am pleased to report that our Decorative Paints and
Performance Coatings businesses have reported an improved or stable
return on sales for the first half of the year, our end markets
remain challenging and this was particularly visible at the end of
this second quarter. Conditions remain tough and, as we have
previously indicated, we do not expect an early improvement in the
external trends our businesses are facing. With this pressure on our
top line, we are stepping up our restructuring activities to secure
the delivery of our 2015 targets which drive cash generation and
quality of earnings. As a consequence, full year restructuring costs
are expected to be higher, with the benefits of these additional
restructuring costs visible in 2014. These expected higher
restructuring charges and continued weak markets mean that our full
year operating income is unlikely to exceed last year." 
Performance improvement program 
The performance improvement program announced in October 2011 is
making good progress with positive impact on both variable and fixed
costs. The initiatives have cumulatively resulted in EUR381 million
savings and AkzoNobel is on track to deliver the full EUR500 million
in EBITDA at the end of this year, a year early. The program is
structured around business unit adaptations and operational
excellence, which contribute the majority of the benefits, while
functional excellence is an important enabler. Various actions taken
in operational excellence address product complexity reduction,
sourcing optimization, manufacturing and distribution excellence, and
margin management across the entire organization. 
Since the announcement of the program, the number of employees has
been reduced by over 2,500 FTE, of which around 800 in 2013. In the
first half of 2013, EUR69 million was spent on restructuring
activities. Costs for the full year 2013 are expected to be in the
order of EUR325 million, with the additional benefits becoming
visible in 2014. Examples of additional restructuring activities
include the upcoming initiatives in European Decorative Paints and
Functional Chemicals. 
AkzoNobel will continue to implement new opportunities to optimize
performance as it moves to a culture of continuous improvement and
embedded operational excellence. 
Raw materials 
In the second quarter, AkzoNobel saw lower input prices as a result
of lower
 TiO2 costs and the lower oil price, which has begun to
impact some raw materials. Overall, raw materials costs for the year
are expected to be down marginally on a like for like basis compared
with 2012. 
The economic environment remains challenging and AkzoNobel does not
expect an early improvement in the trends faced in its end-user market
segments. AkzoNobel expects to increase restructuring charges in the
second half of 2013 by EUR120 million to around EUR325 million to
secure the delivery of its 2015 targets. This means that full year
operating income is unlikely to exceed the EUR908 million of 2012.
The acceleration of the performance improvement program and the
strategic priorities announced in February are the right focus to
have in these markets. 
Business area highlights 

                           Decorative Paints
  Q2 2012   Q2 2013   D%                        H1 2012   H1 2013    D%
    1,187     1,179   (1)      Revenue            2,161     2,104   (3)
      112       102   (9)      Operating Income     137  
     145     6
      9.4       8.7            ROS %                6.3       6.9
      155       141   (9)      EBITDA               223       229     3
                           Performance Coatings
  Q2 2012   Q2 2013   D%                        H1 2012   H1 2013     D%
    1,472     1,458   (1)      Revenue            2,841     2,789    (2)
      171       163   (5)      Operating Income     298       292    (2)
     11.6      11.2            ROS %               10.5      10.5
      204       197   (3)      EBITDA               363       360    (1)
                           Specialty Chemicals
  Q2 2012   Q2 2013   D%                        H1 2012   H1 2013     D%
    1,431     1,253   (12)     Revenue            2,830     2,497   (12)
      154       121   (21)     Operating Income     294       220   (25)
     10.8       9.7            ROS %               10.4       8.8
      235       198   (16)     EBITDA               470       372   (21)

The 2013 Q2 report can be downloaded via the AkzoNobel Report iPad app
http://bit.ly/obljrf or read online at
- - - 
AkzoNobel is a leading global paints and coatings company and a major
producer 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. With
operations in more than 80 countries, our 50,000 people around the
world are committed to excellence and delivering Tomorrow's Answers
Press release Q2 2013 results:
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Sheryl Stokes
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