- CEO doesn't see significant improvement in Europe in 2016
- Markets in China, Russia and Brazil to remain difficult
Akzo Nobel NV said European markets are unlikely to see any significant improvement in 2016 after the region’s biggest paintmaker reported fourth-quarter profit that missed analysts’ estimates.
“We again do not expect the markets to give us any winds in our sails of any significance in 2016,” Chief Executive Officer Ton Buechner said Wednesday on a call with journalists. “Any improvements would have to come from ourselves.”
Akzo has emerged from a prolonged cost-cutting program to focus on growth at a time when demand in European markets is subdued. The region accounts for almost half of its sales. While Buechner sees sustained growth in the U.K. and Dutch paint markets, Russia and Turkey remain challenging and there’s no sign of recovery in the French building industry as consumer confidence remains low. Brazil and China also remain difficult.
Since becoming CEO four years ago, Buechner has been cutting costs to bring profitability in line with competitors such as PPG Industries Inc., and Akzo Nobel reported its best-ever return on sales. Over that period, the shares still trailed behind peers, which have been more aggressive on acquisitions and are increasingly challenging Akzo on its home turf in Europe.
Operating profit rose 60 percent to 268 million euros ($302 million), the Amsterdam-based maker of Dulux paint said in a statement. Analysts surveyed by Bloomberg had estimated 288 million euros, on average.
Shares of Akzo Nobel dropped 2.7 percent to 51.97 euros as of 10:15 a.m. in the Dutch capital.
Revenue grew 1 percent to 3.56 billion euros. Analysts predicted 3.52 billion euros.
The results were buoyed by tailwinds from foreign exchange rates and raw material prices, as well as the efficiency measures taken in recent years, Nathalie Debruyne, an analyst for Bank Degroof Petercam, said by phone.
The increase in dividends to 1.55 euros per share, the first bump in shareholder payouts for four years and the highest return since 2008 is a positive, given it’s a sign of the company’s confidence in cash flow over the coming year, she said.
(An earlier version of the story fixed the day of reporting profit to Wednesday.)