UpdateAkzoNobel posts Q4 net loss of €1.5bn on €1.2bn ICI charge

24 February 2009 09:43  [Source: ICIS news]

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LONDON (ICIS news)--AkzoNobel has recorded a net loss of €1.49bn ($1.9bn) in the fourth quarter of 2008, down from a gain of €56m in the same period in 2007, the Dutch specialty chemicals company said on Tuesday.

Sales dropped by 3% year on year to €3.56bn as price increases were offset by a decline in volumes and a negative currency impact.

AkzoNobel said it has incurred significant additional incidental costs in 2008 due to the integration of ICI and restructuring measures in response to the economic slowdown.

The company also said it recorded an impairment of intangibles acquired from ICI of €1.2bn after tax relating to the decorative paints and national starch businesses, resulting in a net loss of €1.1bn for 2008.

The company fell to a full-year net loss of €1.08bn from a gain of €595m in 2007.

“Our fourth-quarter results reflect the impact of the economic climate in many of our businesses,” CEO Hans Wijers of AkzoNobel said.

“The harsh trading conditions experienced towards the end of the fourth quarter have continued into 2009 and, as a result, we expect this year to be very challenging,” he said.

In its outlook, the company said it aimed to achieve an EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 14% by the end of 2011 by continuing to drive synergies from ICI and by rigorous cost management.

The company has announced several cost-cutting measures to protect margins, with particular focus on decorative paints in Europe.

It has cut 1,660 jobs over the last year, reduced third-party spending and initiated a 2009 salary freeze for the board, over 500 executives and most other employees where possible.

AkzoNobel said it would not complete its planned share buyback programme due to uncertainties in the global economy.

By business unit, decorative paints reported a 6% drop in fourth-quarter revenue as higher prices and synergy benefits were offset by decreasing volumes and negative currency effects.

In performance coatings, sales fell 4%. AkzoNobel said a 6% drop in volumes was partly counterbalanced by product mix and margin management.

Specialty chemicals revenues increased 3% in the fourth quarter despite weakening demand and volatile feedstock costs, the company said.

($1 = €0.79)

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By: Mark Watts
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