* Revenue up 8 percent to EUR4.41 billion, mainly driven by pricing actions and by favorable currency effects * Volumes declined 2 percent, primarily due to the economic slowdown in Europe * EBITDA margin 13.5 percent (2011: 13.4 percent) * Net income from continuing operations EUR197 million (2011: EUR251 million), due to higher incidental charges * Adjusted EPS EUR1.12 (2011: EUR1.09) * Performance improvement program on track * The economic environment remains the principal sensitivity in 2012 Q2 2012 in EUR million Q2 2011 Q2 2012 D% Revenue 4,097 4,406 8 EBITDA 551 593 8 EBITDA margin (in %) 13.4 13.5 Net income continuing operations 251 197 H1 2012 in EUR million H1 2011 H1 2012 D% Revenue 7,859 8,378 7 EBITDA 988 1,016 3 EBITDA margin (in %) 12.6 12.1 Net income continuing operations 383 267
Akzo Nobel N.V. (AkzoNobel) today reported an 8 percent increase in second quarter revenue compared with the same period in 2011, mainly driven by pricing actions to offset higher raw material costs and currency effects. The EBITDA for Q2 was 8 percent higher at EUR593 million. The company also announced that its global performance improvement program is making good progress.
Decorative Paints achieved a revenue increase of 6 percent in the second quarter, mainly due to favourable price/mix effects and positive currency effects. EBITDA was down 8 percent, reflecting weaker European market conditions. Restructuring continues in mature markets, particularly in Europe.
In Performance Coatings, revenue increased 12 percent, supported by margin management, acquisitions and currency effects. EBITDA was up 25 percent compared with the previous year, further supported by improvements in operational efficiency. Volume declined, although there was significant variability between individual activities.
Specialty Chemicals revenue was up 6 percent, supported by margin management, the Boxing Oleochemicals acquisition and currency effects. EBITDA was 16 percent higher, reflecting improved margins and continued cost restructuring. Volumes were 2 percent below the previous year, reflecting a slowdown in most businesses in the quarter.
Raw materials
AkzoNobel continued to see inflation in the overall raw materials portfolio, although less than last year. The main driver of input cost inflation is TiO(2). In the second quarter, the company has seen an increase in supply from China and a reduction in global demand. However, in total, the company continues to expect an increased average cost for the year.
Performance improvement program
The performance improvement program announced in October 2011 is making good progress. Conceptually, it consists of three main building blocks, operational professionalization, functional standardization and business unit specific adaptations. Operational professionalization addresses issues such as product complexity reduction, procurement, manufacturing and distribution excellence, and margin management. Business unit adaptations and operational professionalization are expected to contribute around 90 percent of the expected 2012 benefits of EUR200 million, while functional standardization will primarily be an important enabler. The combined cost of the program in the first half year equals EUR90 million, booked under incidentals. The benefits of the program included in the first half year results, both in contribution margin and in cost savings, equal EUR65 million. Since the announcement of the program, around 1,000 people have left the company, of which around 800 left in 2012. The program is on track, with the main benefits for 2012 occurring in the second half of the year.
CEO Ton Büchner
"The overall performance in our Q2 results is solid given the increasingly difficult economic environment. In my first few months as CEO, I have spent a great deal of time with our customers, employees and shareholders, and have also visited many of our factories around the world. My initial observations are that we have solid businesses and many strong market positions. The opportunity remains to increase return on capital, cash generation and margins, which is why the immediate priority for me and the leadership team is performance improvement."
Outlook
The economic environment remains our principal sensitivity. The concerns are focussed on the risk of recession in Europe, delayed recovery of the US property market and the potential of a slowdown in Asia. AkzoNobel will be providing a strategic update upon the publication of the Q3 results.
Business area highlights
Decorative Paints Q2 2011 Q2 2012 D% H1 2011 H1 2012 D% 1,461 1,551 6 Revenue 2,657 2,793 5 191 175 (8) EBITDA 281 251 (11) 13.1 11.3 EBITDA margin (in %) 10.6 9.0 Performance Coatings Q2 2011 Q2 2012 D% H1 2011 H1 2012 D% 1,312 1,472 12 Revenue 2,549 2,841 11 170 213 25 EBITDA 313 377 20 13.0 14.5 EBITDA margin (in %) 12.3 13.3 Specialty Chemicals Q2 2011 Q2 2012 D% H1 2011 H1 2012 D% 1,350 1,431 6 Revenue 2,701 2,830 5 220 255 16 EBITDA 461 490 6 16.3 17.8 EBITDA margin (in %) 17.1 17.3
The Q2 video interview with CEO Ton Büchner will be online from 07.30 CET at www.youtube.com/AkzoNobel.
The 2012 Q2 report can be downloaded via the AkzoNobel Report iPad app http://bit.ly/obljrf or read online at www.akzonobel.com/quarterlyresults.
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AkzoNobel is the largest global paint 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 55,000 people around the world are committed to excellence and delivering Tomorrow's Answers Today?.
Pdf file AkzoNobel Q2 2012 press release: http://hugin.info/130660/R/1627775/521033.pdf
AkzoNobel Q2 2012 Report: http://hugin.info/130660/R/1627775/521037.pdf
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Source: Akzo Nobel NV via Thomson Reuters ONE
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