Akzo Nobel NV (AKZA), Europe’s largest paintmaker, exceeded its savings target last year and Chief Executive Officer Ton Buechner pledged this year’s goals remain intact as he strives to bring profitability in line with peers such as PPG Industries Inc. (PPG)
Cutting costs in administration, relocating plants and other measures helped give a 545 million euros ($737 million) boost to last year’s earnings, the Amsterdam-based company said today. Akzo had targeted 500 million euros, and Buechner said the extra progress won’t be “rolled over” into this year’s program.
Buechner has replaced top-level management and is spearheading the drive to create a cohesive company whose interests span household paint, pulp-bleaching chemicals and cosmetic ingredients. The 250 million euros in savings measures planned for this year are needed to make 2015 targets for margins and Akzo’s lagging return on sales, Buechner said.
“It looks like the company is slowly improving,” on an underlying earnings basis, Tom Muller, analyst at Theodoor Gilissen Bankiers, said.
Earnings before interest, taxes, depreciation and amortization of 208 million euros in the fourth quarter, met analsyts’ predictions.
Akzo shares climbed 3.1 percent to 54.57 euros as of 9:09 a.m. in the Dutch capital.
Buechner said he remains confident on reaching goals for next year. Last year’s restructuring led to an improvement in Akzo’s return on sales to 6.6 percent from 5.9 percent in 2012. The company is aiming for a 9 percent return.
Efficiency is the cornerstone for Buechner’s vision for the maker of Dulux paint after the $17 billion acquisition of Imperial Chemical Industries in 2008, and a global growth program under his predecessor, created a sprawling company with an inflated cost base. It’s also targeting a return on investment of 14 percent and a net debt to Ebitda ratio of below 2 percent by 2015.
Akzo also announced several changes to its supervisory board, and a return to eight seats from a current nine. Chairman Karel Vuursteen will leave after the annual general meeting after serving three full terms. Antony Burgmans, already member of the advisory board, is proposed as his successor. Peter Ellwood will leave the supervisory board after six years, to be replaced by Byron Grote.
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