Citigroup cuts Akzo Nobel forecasts on high costs

04 June 2008 12:06  [Source: ICIS news]

LONDON (ICIS news)--Citigroup has cut its earnings forecasts for Akzo Nobel after US coatings rival Sherwin Williams issued a profits warning, the bank said on Wednesday in a note to investors.

 

Sherwin Williams on Tuesday announced an expected 20% fall in adjusted earnings per share (EPS) against previous forecasts of a slight increase, due to raw material cost inflation and continuing weak US demand.

 

Citigroup said Akzo Nobel would be less affected due to limited exposure to the US decorative paints market and more time for costs to be passed through to Europe.

 

The bank, however, lowered its EPS forecasts for the Dutch group by 4% for 2008 and 3% for 2009, which also reflected a probable weakening in the UK coatings market.

 

“Akzo’s solid start to the year and low exposure to the US should mean the business still has momentum overall and perhaps a stronger environment in which to pass through higher costs,” said analyst Andrew Benson.

 

Citigroup said it was now forecasting a 7% decline in operating profits for the group’s decorative paints business for 2008.

By: Mark Watts
+44 20 8652 3214

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