23 April 2009 10:59 [Source: ICIS news]
(Adds detail in paragraphs 12-14)
SINGAPORE (ICIS news)--AkzoNobel has reported a first-quarter loss of €7m ($9.1m) as a result of “tough trading conditions” due to the severity of the global economic downturn, the Netherlands-based paint and chemicals major said on Thursday.
The loss for the three months reverses a net profit of €105m in the first quarter of 2008.
“Our first-quarter results across all areas of our business reflect the depth of the global economic slowdown,” said AkzoNobel CEO Hans Wijers.
“We still have limited forward visibility, but there were some early indications in March that conditions in a number of our markets may be stabilising,” he said.
Revenue for the period dropped 13% to €3.27bn, down from €3.77bn in the previous corresponding period.
On a segment basis, volumes tumbled 16% in the company’s decorative paints division as the global economic downturn continued to negatively impact the business, AkzoNobel said.
However, the company said that savings from the ICI acquisition continued ahead of plans.
Revenue decreased 14% in the performance coatings segment, while sales dropped 11% in the specialty chemicals arm.
“Forward visibility remains limited, which makes it difficult to predict with any certainty,” the company said.
The company said it remains focused on achieving its medium-term target of an earning before interest, tax, depreciation and amortisation (EBITDA) margin of 14% by the end of 2011 and to deliver the €340m in ICI synergies through continued cost management efforts.
The company’s management focus for 2009 would be to “continue to service customers, manage the cost base, generate cash and capture the synergies and benefits of the ICI acquisition”, said chief financial officer (CFO) Keith Nichols.
Nichols said there would be further production cuts and closures to come in addition to those already announced, but would not specify what areas.
He said cost-cutting measures would be "broad, affecting all businesses", and would "not be confined to particular geographies".
AkzoNobel announced several cost cutting measures towards the end of 2008, which Nichol said would save the company €200m. The company expects to cut about 3,500 jobs by 2011.
AkzoNobel posted a massive €1.5bn loss for the fourth quarter of 2008, which was largely due to a one-off €1.2bn impairment relating to the decorative paints and national starch businesses.
($1 = €0.77)
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