27 October 2009 14:38 [Source: ICIS news]
(Releads, adds background and includes share price information)
LONDON (ICIS news)--AkzoNobel’s share price fell 6.7% after the Dutch coatings, paints and specialty chemical company said on Tuesday that recovery remained “fragile” and would take time.
“The economic recovery remains fragile and it continues to be difficult to predict customer demand [for all businesses],” the company said in a statement following the release of its third-quarter results.
AkzoNobel's share price was at €41.92 on the Euronext at 14:09 hours local time – earlier in the day it had reached a low of €41.49.
The share price fell despite the company’s results coming in above analysts' consensus. The firm's third-quarter net profit increased 30% year on year to €197m ($294m) due to margin management and cost restructuring.
However, revenue for the three-month period ending 30 September fell 10% year on year to €3.6bn as a result of weak demand, the company said in a statement.
“We have seen some signs of an improvement in emerging markets, but overall we don’t foresee a quick recovery,” said AkzoNobel CEO Hans Wijers.
“We remain committed to implementing our restructuring and integration programmes and we are on track to deliver on our previously stated EBITDA [earnings before interest, tax, depreciation and amortisation] margin target of 14% by the end of 2011,” he added.
CFO Keith Nichols said at a press conference: “It’s still difficult to forecast with accuracy. There’s still fragility in our market and our revenue is down.
“We still face some operating challenges to protect our cashflow,” he added.
Nichols said the company had to contain costs and was looking at further job cuts and possible plant closures.
The company had made savings of €540m this year, including through restructuring and the realisation of ICI synergies, he added.
While volumes in all of AkzoNobel’s businesses declined, the company's decorative paints and performance coatings businesses benefited from improved margins.
Nichols said a drop in caustic soda prices had hit the speciality chemicals business hard.
JP Morgan Cazenove analyst Martin Evans said that evidence of a return of underlying consumer demand was needed before further share-price recovery was likely.
($1 = €0.67)
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