Akzo Nobel NV (NL) - Refocused Akzo Nobel reports strong first quarter results
Following the March 12 announcement regarding the intended sale of
Organon BioSciences (OBS), the results for the company’s
Pharma activities will, in line with IFRS, be shown under
Discontinued Operations until the closing of the transaction,
foreseen in the second half of 2007.
EUR
mln
Q1
2007 Q1 2006
% change
Revenues Coating/Chemicals
2,501 2,472
1
EBITDA*
Coatings/Chemicals
307
279
10
EBITDA margin*, in
% 12.3
11.3
EBIT
Coatings/Chemicals
219 185
18
Net
income* Coatings/Chemicals
133
113
18
Net income* Organon
BioSciences
111
102
9
Total net
income
246 249
(1)
*before incidentals
Highlights
Autonomous growth of Coatings/Chemicals 6%
EBITDA margin further improved to 12.3%
Operational results of Coatings/Chemicals 18% higher
Coatings—higher EBITDA margin on 8% revenue growth
Chemicals—strong EBITDA margin maintained on 4% autonomous
growth
EUR 11 billion cash deal for Organon BioSciences announced
Good quarter for Organon and Intervet
EUR 1.6 billion share buyback to commence May 3, 2007
ARNHEM, the Netherlands, April 24, 2007 – Akzo Nobel (Euronext Amsterdam: AKZ; Nasdaq: AKZOY) has reported a strong start to the year for the refocused company. The combined Coatings and Chemicals business posted autonomous growth of 6%, while operational results before incidentals were 18 percent higher than the corresponding period last year. The Pharma activities also performed well, with first quarter operating results jumping 8%.
At EUR 2.5 billion, revenues for Coatings and Chemicals were 1% above the Q1 figure for 2006, with autonomous growth of 6% being largely offset by a negative currency impact. The refocused company posted EBITDA of EUR 307 million, an increase of 10% compared with last year. The operating result was up 18%. Incidentals only had a minor impact during the quarter, in contrast to Q1 2006, when the company booked significant positive incidentals.
Excluding incidentals—but including the Pharma activities—total net income rose 13%, from EUR 215 million to EUR 244 million. Including incidentals, net income was virtually unchanged.
Commenting on the company’s first quarter results, CFO Rob Frohn said: “The operational performance during the first quarter was very positive. I’m pleased that strong autonomous growth and the effects of our margin improvement programs, both in Coatings and Chemicals, resulted in an operating income increase of 18 percent. In addition Intervet reported a record quarter.”
Coatings—higher EBITDA margin on 8% revenues growth
Coatings turned in a strong quarter, with revenues up 8% on 2006.
The European businesses improved, and emerging markets continued to
drive growth. Before incidentals, EBITDA rose 11% to EUR 153
million. Autonomous growth was 8%, with 5% due to higher volumes
and 3% higher prices. Acquisitions added 4%, while currencies had a
negative impact of 4%. Decorative Coatings delivered a promising
start to the year, with both volume growth and improved margins,
while the company’s Marine & Protective activities
enjoyed double digit revenues growth, led by Aerospace and
Protective Coatings. The Industrial activities delivered a healthy
performance, although the slowdown in the U.S. housing industry
affected some parts of the businesses. Car Refinishes continued to
report improved EBIT margins on both cost control and growth in
emerging markets.
Chemicals—strong EBITDA margin on 4% autonomous
growth
Chemicals revenues increased by 1% to EUR 917 million, with volume
growth of 1% and price increases of 3% being partially offset by a
negative currency impact of 2%. Before incidentals, EBITDA amounted
to EUR 164 million, in line with last year. The EBIT margin
improvement was a result of the margin management programs in all
units. Pulp & Paper Chemicals benefited from higher margins for
bleaching products in Europe and the Americas. Base Chemicals
delivered a strong operational performance, driven by strong demand
for chlor-alkali products. Functional Chemicals achieved increased
margins in Chelates, Sulfur Products and Cellulosic Specialties,
and the production issues in Ethylene Amines at our Swedish plant
were resolved. Despite headwinds from currencies and higher raw
material prices, the EBIT of Surfactants improved due to price
increases and improved operational efficiency. EBIT of Polymer
Chemicals was well ahead of 2006 due to cost savings and benefits
from the margin improvement program.
Discontinued operation—Organon BioSciences
First quarter revenues for Pharma amounted to EUR 920 million,
equal to the same period in 2006. The EBIT of OBS before
incidentals was up 4% to EUR 147 million. Organon’s
autonomous growth of 4% was more than offset by currency effects
and the loss of Avinza® sales. NuvaRing® is continuing to
do well. The EBIT was unchanged at EUR 84 million. Intervet
reported a record quarter, driven by autonomous growth of 12%. The
European region and products for companion animals were
particularly strong contributors. The Intervet EBIT margin improved
to 21.7%. The preparations of the transfer of Organon BioSciences
are on track.
Workforce
Akzo Nobel’s workforce in Coatings and Chemicals was 42,880
employees, up from 42,690 at year-end 2006. The number of employees
at Organon BioSciences was 19,140.
Strong financial position
The company’s strong financial position improved further due
to a decrease of EUR 0.1 billion net interest-bearing borrowings to
EUR 1.0 billion.
Trading conditions
Akzo Nobel is well positioned for profitable growth. Assuming no
important change in the major economies of the world, the company
believes that it is well placed to outgrow its markets and improve
the financial returns in Coatings and Chemicals.
The Report and Presentation are attached.
Posted: April 2007
