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AkzoNobel Q3 2014 Media presentation
AkzoNobel reported its Q3 2014 results. Operating income increased 11% to €335 million due to improvement actions and lower restructuring charges. Revenue declined 2% due to currency effects and divestments offsetting 1% volume growth. Return on sales improved to 9.1% from 8% in Q3 2013. All business areas saw continued impact from fragile economic conditions with Decorative Paints revenue down 8% and Performance Coatings flat. Specialty Chemicals operating income rose 46% due to cost control despite 1% lower revenue. AkzoNobel is on track to meet its 2015 targets despite economic challenges.
AkzoNobel Q3 2014 Media presentation
- 1. Media Update Q32014 results Ton Büchner & Maëlys Castella October 21, 2014
- 2. Agenda Media UpdateQ3 2014 results 1.Q3 2014 highlights 2.Visible results in Q3 3.Conclusion 4.Questions 2
- 3. Q3 2014 Operationaland financial review 3 Media Update Q3 2014 results
- 4. Q3 2014 highlights 4 Media Update Q3 2014 results •Operating income of €335 million reflects benefits from improvement actions and lower restructuring charges •Q3 volumes up 1 percent, more than offset by currency effects and divestments, resulting in revenues down 2 percent •Return on sales (ROS) 9.1 percent (2013: 8.0 percent). Excluding restructuring costs of €55 million (2013: €75 million), ROS is 10.6 percent (2013: 10.0 percent) •Net income attributable to shareholders was €205 million (2013: €155 million), due to higher operating income and lower financing expenses •Adjusted EPS increased 24 percent to €0.92 (2013: €0.74) •Interim dividend of €0.33 declared •Net cash inflow from operating activities €489 million (2013: €552 million) •On track to deliver 2015 targets despite the continued fragile economic environment
- 5. Return on Salesimprovement continued in Q3 2014 € million Q3 2014 Δ% Revenue 3,686 -2 Operating income 335 11 Ratio, % Q3 2014 Q3 2013 Return on sales 9.1 8.0 Return on sales (excluding restructuring costs) 10.6 10.0 Moving average return on investment 10.5 8.6 Increase Decrease -1% -1% +1% -2% Volume Price/Mix Acquisitions/ Divestments Exchange rates Total -1% Revenue development Q3 2014 vs. Q3 2013 5 Media Update Q3 2014 results
- 6. Continued fragile economicenvironment impacting all Business Areas -6 -2 2 6 Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel Quarterly volume development in % year-on-year -4 -1 2 5 Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel Quarterly price/mix development in % year-on-year 0% +2% +1% 0% -3% -1% +1% -1% 2013 2014 6 Media Update Q3 2014 results
- 7. Foreign exchange rateshave become less of a headwind in Q3 -8 -4 0 4 Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel Quarterly foreign exchange rate development in % year-on-year -1% -1% -1% -1% 2013 2014 7 •Adverse currency effects, impacting 1H 2014, were visible in all Business Areas and any lost income related to this will not come back in our results •Negative currency effects levelling off in Q3, with less impact on this quarter’s results Media Update Q3 2014 results
- 8. ~44% of revenues New Build Projects Maintenance, Renovation & Repair Building Products & Components ~16% of revenues Automotive OEM, Parts and Assembly Automotive Repair Marine and Air Transport ~16% of revenues Consumer Durables Consumer Packaged Goods ~24% of revenues Natural Resource and Energy Industries Process Industries 8 Media Update Q3 2014 results
- 9. 9 = •Volumeswere flat compared with previous year •Revenues down 8 percent due to divestments and adverse price/mix •Price/mix largely driven by the sale of the German stores •Operating income was up 6 percent, mainly due to lower restructuring expenses and effects from restructuring programs contributing to results Decorative Paints Q3 2014 highlights € million Q3 2014 Δ% Revenue 1,050 -8 Operating income 113 6 Ratio, % Q3 2014 Q3 2013 Return on sales 10.8 9.4 Return on sales (excluding restructuring costs) 10.8 10.1 Increase Decrease Revenue development Q3 2014 vs. Q3 2013 -4% -1% -8% 0% -3% Volume Price/Mix Acquisitions/ Divestments Exchange rates Total -4% Media Update Q3 2014 results
- 10. 10 Performance CoatingsQ3 2014 highlights € million Q3 2014 Δ% Revenue 1,420 0 Operating income 135 -16 Ratio, % Q3 2014 Q3 2013 Return on sales 9.5 11.3 Return on sales (excluding restructuring costs) 12.4 11.9 Increase Decrease -1% +2% 0% 0% Volume Price/Mix Acquisitions/ Divestments Exchange rates Total Revenue development Q3 2014 vs. Q3 2013 •Volumes were up 2 percent compared with previous year, driven by Marine and Protective Coatings and Powder Coatings •Revenues were flat, with positive volumes offset by negative price/mix and adverse currency effects •Operating income down 16 percent, return on sales at 9.5 percent (2013:11.3 percent), due to higher restructuring charges -1% Media Update Q3 2014 results
- 11. 11 •Volumes wereflat compared with the previous year •Revenues down 1 percent, due to adverse currency effects and divestments •Operating income up 46 percent at €156 million, due to lower restructuring costs, cost control and improved mix •Continuous improvement measures continue in all businesses Specialty Chemicals Q3 2014 highlights € million Q3 2014 Δ% Revenue 1,239 -1 Operating income 156 46 Ratio, % Q3 2014 Q3 2013 Return on sales 12.6 8.5 Return on sales (excluding restructuring costs) 13.1 12.2 Increase Decrease 0% -1% -1% -1% +1% Volume Price/Mix Acquisitions/ Divestments Exchange rates Total Revenue development Q3 2014 vs. Q3 2013 Media Update Q3 2014 results
- 12. Summary – Q32014 results € million Q3 2014 Q3 2013 EBITDA 487 456 Amortization and depreciation (152) (153) Incidentals - - Operating income 335 303 Net financing expenses (38) (56) Minorities and associates (10) (10) Income tax (84) (83) Discontinued operations 2 1 Net income attributable to shareholders 205 155 Ratio Q3 2014 Q3 2013 Adjusted earnings per share (in €) 0.92 0.74 12 Media Update Q3 2014 results
- 13. Visible results inQ3 13 Media Update Q3 2014 results
- 14. 14 Media UpdateQ3 2014 results Progress in Q3
- 15. Human Cities: Commitmentto the Clinton Global Initiative 15 Media Update Q3 2014 results We made a commitment to the Clinton Global Initiative by establishing a partnership with The Rockefeller Foundation through its 100 Resilient Cities program. We will contribute by: •Compiling an urban resilience guide for cities •Taking on special projects in four cities named on the 100 Resilient Cities list •Making our expertise in paints, coatings and chemicals available to the program’s advisory committees
- 16. Conclusion 16 MediaUpdate Q3 2014 results
- 17. Conclusion 17 MediaUpdate Q3 2014 results •Fifth consecutive quarter of improvement in return on sales at group level and underlying return on sales improvement visible in all Business Areas •Continuous improvement programs are ongoing in all businesses, with expectation of at least €250 million restructuring costs in 2014 •Number one ranking in our industry on the influential Dow Jones Sustainability Index (DJSI) for the third consecutive year •Continued investment in sustainability and innovation will help to further enhance our operational efficiency and stimulate organic growth and will also boost our market leading positions •We are on track to deliver the 2015 targets despite a continued fragile economic environment
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- 19. Safe Harbor Statement This presentation contains statements which address such key issues as AkzoNobel’s growth strategy, future financial results, market positions, product development, products in the pipeline, and product approvals. Such statements should be carefully considered, and it should be understood that many factors could cause forecasted and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies. For a more comprehensive discussion of the risk factors affecting our business please see our latest Annual Report, a copy of which can be found on the company’s corporate website www.akzonobel.com. 19 Media Update Q3 2014 results
- 20. Appendices Media UpdateQ2 2014 results 20
- 21. Key Features •Waterborneinterior woodstain available as clear varnish and opaque finishes that are compatible with current color solutions •Anti-bacterial properties •Improves indoor air quality by absorbing and destroying atmospheric formaldehyde 21 Customer Benefits •Family friendly: –low odor whilst painting –affordable anti-bacterial, easily cleanable surfaces throughout the home •Very easy to apply •Good hardness and scratch resistance Growth Potential •Launched in China in May 2014 •Drive cross-selling in retail channel through Dulux branded stores •Positioned as an eco-premium solution offering family-friendly, well-being advantages Innovation Pipeline Q3 2014 Decorative Paints – Dulux Forest Breath High performance waterborne interior woodcare for the China market Media Update Q3 2014 results
- 22. 22 Reinventing thepaper cup with EvCote paper coatings Key features: •Cups produced with EvCote are both recyclable and compostable •Produced from recycled PET and bio-renewable oils •Quantifiable sustainability through the reuse of paper fiber, recycling of waste materials, and reduced environmental impact Customer benefits: •Enabling the industry to separate itself from the petro-chemical value chain •Low barriers to adoption and no capital expenses required EvCote paper coatings offers the market a disruptive alternative to 40-year old poly- coated cup technology Media Update Q3 2014 results
- 23. 23 Innovation PipelineQ3 2014 Functional Chemicals – ELOTEX® CAST Key Features •A new specialty additive for dispersing and stabilizing calcium sulfate in mortar mixes, enabling the use of all gypsum types for flooring applications •Provides good workability and excellent levelling properties, resulting in high strength and smooth surface floors •Product is delivered in powder form which simplifies handling and product formulation •Sustainable contribution in an eco-premium product Customer Benefits •Possibility to use any kind of available gypsum for leveling compounds and screeds •Savings on time and costs for raw material and logistics Growth Potential •Elotex® CAST 700 and CAST 710 launched in Q1/2013 and Q2/2014, respectively •Global potential in all regions with access to natural or synthetic gypsum (esp. RU, CN, BR, US, TR) •Opportunity for building product formulators to differentiate from competition and open new markets CALCIUM SULFATE TECHNOLOGY - a unique and innovative technology for gypsum floorings Media Update Q3 2014 results