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Akzo Nobel N.V. (AkzoNobel) reported first-quarter net income of 81 million euros (approximately $108 million), a decline of 7% from the first quarter of 2009. Increased sales for the company’s coatings businesses contributed to revenue growth of 6%, to 3.065 billion euros (appr. $4 billion).
Excluding one-time items, earnings before interest, taxes, depreciation, and amortization (EBITDA) was 258 million euros ($343.5 million), compared to 150 million euros for the first quarter of 2009.
CEO Hans Wijers said the results indicate “a good start to 2010, particularly in higher-growth markets, where our performance was strong.” He added that “while revenue growth across all AkzoNobel’s businesses has been solid, our Q1 performance compares with a particularly weak first quarter in 2009."
Coatings-business results
First-quarter revenue for the company’s Decorative Paints business was 1.056 billion euros (appr. $1.4 million), a gain of 7% from the first quarter of 2009. EBITDA for the business rose 71%, to 82 million euros ($109 million).
For the Performance Coatings business, first-quarter revenue was 1.048 billion euros (appr. $1.4 billion), up 6% from the prior-year period. The unit’s EBITDA rose 36%, to 143 million euros ($190 million).
Contributing to the Decorative Paints revenue increase was a 5% gain in volume, with revenue growth reported to be strong in higher-growth markets. Revenue rose 30% in Asia while holding steady in “mature” markets compared to 2009, the company said. Earnings in mature markets benefited from “synergies” and restructuring actions, and “closure and integration of multiple sites across Europe is running according to plan,” the company said.
Revenue growth for Performance Coatings was driven by an 8% increase in volumes, although marine maintenance activity was reported to be lower. The unit staged a recovery from a “difficult Q1 last year,” but most businesses “are still below pre-recession levels,” the company said, adding that volume recovery was evident in all activities, with the exception of the late-cycle marine and protective-coatings businesses.
‘Cautiously optimistic’ outlook
Wijers said the company will continue to feel pressure from further raw-material cost increases during the year, and he said the company remains cautious about the strength of the recovery. He said the company “will continue to focus on customers, cost reduction and cash generation, but we will also prioritize investments and initiatives to ensure that the company is able to capture growth."
The company said it remains on track to achieve its medium-term target of an EBITDA margin of 14% by the end of 2011. “The focus on customers, cost reduction, and cash generation continues, while investments to capture growth remain a priority, particularly in higher-growth markets,” the company said. “Although volumes remain below pre-recessionary levels in most businesses, increases in volume, first evident in Q2 2009, have continued more broadly and are a reason for cautious optimism.”
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