Akzo Nobel publishes Q4 and full-year 2016 results

Akzo Nobel’s net income fell 34% year on year to EUR133 million in the fourth quarter 2016, as restructuring costs and weaker demand from the oil and gas and marine industries.

Full-year

• Revenue down 4% due to unfavorable currency and price/mix effects
• EBIT up 3% at EUR1,502 million (2015: EUR 1,462 million), positively impacted by volume growth, continuous improvement and lower costs
• Record profitability: Return on sales increased to 10.6% (2015: 9.8%) and return on investment improved to 15.0% (2015: 14.0%)
• Adjusted earnings per share up 3% at EUR4.15 (2015: EUR4.02)
• Total dividend proposed for 2016 up 6.5% to EUR1.65 per share (2015: EUR1.55)
• Net cash inflow from operating activities up 14% at EUR1,297 million (2015: EUR1,136 million)
• Acquisition of BASF's Industrial Coatings business completed

Outlook

In 2017 Akzo Nobel anticipates positive developments for EMEA, North America and Asia, improving during the year, while Latin America is expected to stabilise. Some economic and political uncertainty is expected to remain. Market trends experienced in the second part of 2016, including for the marine and oil & gas industries, are expected to continue in the first half 2017.

Akzo Nobel has structurally improved its ability to respond to developments in its markets and is taking appropriate measures to deal with higher raw material prices in an inflationary environment. This stronger operational and financial foundation means Akzo Nobel is more agile and better able to seize growth opportunities, including acquisitions. Akzo Nobel maintains its financial guidance for 2016-2018.

CEO Ton Büchner:

“We achieved record levels of profitability in 2016 and are making further steps in delivering on our strategy of continuous improvement and growth. Our financial discipline also improved cash generation and our current share buyback program reinforces our confidence in this moving forward. We have structurally improved our ability to respond to developments in our markets and are better able to seize growth opportunities, including acquisitions. We completed the purchase of the BASF Industrial Coatings business in December 2016. We continued to invest to support growth, with new plants and research facilities in the US, UK, China and India.

Performance Coatings

Full-year volume was flat as growth in some segments was offset by adverse conditions in the marine and oil & gas industries. Demand trends differed per segment and region. Revenue was down 5%, driven by adverse currencies and price/mix effects. Akzo Nobel’s Vehicle Refinishes business launched Colorvation digital technology, a unique system to increase speed and accuracy in color matching for body shops, maximizing productivity and profitability.

Decorative Paints

Full-year volumes were up 3% overall with positive developments in Asia and EMEA, while volumes in Latin America were down. Positive volumes were more than offset by unfavorable currency effects and adverse price/mix. Revenue was down 4%. The company won a key award for its wet color tester in the Netherlands; it is now being rolled out into other markets, part of ongoing efforts to help consumers make more confident color choices.

Specialty Chemicals

Full-year volumes were up 1%, with positive developments, mainly driven by Asia and Europe. Revenue was down 4% with positive volume developments more than offset by price deflation in several markets. Continuing the focus on growth markets, Akzo Nobel inaugurated two new plants in Ningbo, China, and announced a further facility in Tianjin. The company also announced a joint venture with Atul to set up a monochloroacetic acid plant in India.