Akzo Nobel Q3 profits drop 23%, scraps Starch sale

29 October 2008 09:15  [Source: ICIS news]

LONDON (ICIS news)--Akzo Nobel’s third-quarter net profit dropped 23% year on year to €157m ($199m) from €203m due to one-off charges, the company said on Wednesday, adding it would not sell its National Starch unit this year.

Net profits had been hit by charges including post-retirement healthcare benefits, the final results of the requested divestments by the European Commission as well as lower results at the captive insurance companiesThe Dutch specialty chemicals company said.

Operating profits dropped 9% to €367m from €402m, while reported revenue was up 3% at €3.82bn from €3.72bn during the same period last year.

"All three business areas achieved underlying growth. This is solid proof of the strong positions AkzoNobel holds in diverse, highly attractive predominantly low-cyclical, sectors with good growth potential,” said chief financial officer Keith Nichols.

He added that global economic conditions were deteriorating and that the potential severity of the economic cycle was unclear.

The company would remain focused on working towards its medium-term target of an EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 14% by the end of 2011, on delivering the €340m ICI synergies faster, Nichols said.

Akzo Nobel would also focus on rigorous cost management to deliver at least an additional €100m in net cost savings.

The company said that due to the current economic climate, the intended sale of National Starch, the former ICI specialty starch business, was not expected to take place this year, and the business would be reclassified as a continuing business.

The company repeated its expectations for the full year of EBITDA before incidentals, in constant currencies, to be close to the 2007 pro forma level of €1.87bn.

($1 = €0.79)

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By: Hilde Ovrebekk
+44 20 8652 3214

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