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AkzoNobel has reported volume growth in Decorative Paints and Specialty Chemicals with further overall profitability growth in the third quarter, despite challenging conditions in several countries and segments. EBIT increased one percent to €442M and return on sales improved to 12.3% (2015: 11.6%). Overall volumes were flat, and revenue was down 4% to €3.6bn, due to adverse currency and price/mix effects. Return on investment was 15.2% (2015: 13.0%).
CFO Maëlys Castella: "We achieved further growth in profitability in the third quarter, with returns up for all Business Areas and positive volume developments in Decorative Paints and Specialty Chemicals. We are delivering on our improvement programs and maintaining a strong cash discipline. We decided to increase the interim dividend by 6% to €0.37/share.
"Our focus remains on driving continuous improvement and organic growth. We broke ground on a powder coatings plant in Mumbai that will bring us closer to our customers in the north and west of India. We also introduced innovative products that bring major sustainability benefits to our customers, including our Berol DR-B1 direct release surfactant and Aquasilk waterborne wood coating. Denim Drift was launched as our Color of the Year for 2017."
Decorative Paints: Volumes increased 3% due to positive developments in Asia and EMEA, while volumes continued to be lower in Latin America. Revenue was down 3% mainly due to unfavorable currency effects. We launched our 2017 Color of the Year, Denim Drift, part of our ongoing efforts to inspire customers to make confident color choices and drive growth for our business.
Performance Coatings: Volumes were down by 2% affected by adverse conditions in the marine and oil and gas industries, partly offset by positive developments in other segments, including automotive and speciality coatings. Revenue was down 65 due to unfavourable currencies, lower volumes and adverse price/mix effects. The intended acquisition of BASF’s Industrial Coatings business is expected to be completed towards the end of 2016. We broke ground on a €9M powder coatings plant in Mumbai which will bring us closer to our customers in the north and west of India and will also provide several innovative lines new to the Indian market.
Specialty Chemicals: Volumes were up one percent with positive developments, especially in Industrial Chemicals, partly offset by lower demand in the oil-related segments. Revenue was down 3% mainly due to price deflation in several markets. We launched Berol DR-B1, an essential ingredient for outdoor cleaning products which successfully meets stringent US Environmental Protection Agency (EPA) standards, without compromising on performance.
Sustainability, Human Cities and Innovation: We achieved several milestones in the quarter, including: The launch of Aquasilk, a waterborne wood coating that helps Chinese customers meet strict local environmental standards; an addition to our award-winning Intersleek marine foul release coating range which incorporates a bio-renewable raw material; and the signing of a flagship Human Cities project to help renovate four historic sites in the Jing’an district of Shanghai.
The Q3 2016 report can be viewed and downloaded at www.akzonobel.com/quarterlyresults.
