UpdateDutch AkzoNobel swings to €68m loss in Q4

16 February 2012 11:27  [Source: ICIS news]

(adds segment detail in paragraphs 8-11, analyst input in last two paragraphs)

AkzoNobel headquartersLONDON (ICIS)--AkzoNobel swung to a net loss of €68m ($88m) in the fourth quarter of last year, compared with a profit of €162m in the same period a year earlier, partly because of a steep fall in earnings at its decorative paints segment, the Dutch chemicals producer said on Thursday.

The company’s overall revenues rose by 5% year on year to €3.79bn in the fourth quarter of 2011, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 20% to €301m, the company said.

The decorative paints segment posted an 83% year-on-year fall in EBITDA to €11m in the fourth quarter, despite a 6% rise in revenue to €1.2bn, it said.

For the full year of 2011, the company posted a 37% year-on-year fall in its net profit to €477m, while revenue rose by 7% to €15.7bn, the company said.

EBITDA fell by 9% year on year to €1.8bn, it added.

"2011 was a challenging year against the background of weaker global economic conditions and unprecedented raw material price inflation,” said AkzoNobel CEO Hans Wijers.

“The absolute impact of increased raw material prices for the year was approximately €1bn. Despite this significant headwind, our reported pricing actions have now offset most of this, and for the year ahead we expect to see the full-year benefit of these increases,” he added.

The company’s performance coatings segment reported a 7% rise in revenue to €1.3bn for the fourth quarter compared with the same period in 2010, and an 8% rise to €5.2bn for the whole of 2011 compared with 2010, it said.

However, EBITDA for the segment fell by 4% to €141m in the fourth quarter, compared with the same period in 2010. The segment's EBITDA declined by 6% year on year in 2011, to €611m, AkzoNobel added.  

Its specialty chemicals business posted a 2% increase in revenue to €1.3bn in the fourth quarter of 2011, compared with the previous year, and an 8% rise year on year to €5.3bn in 2011, the company said.

The segment reported a 6% fall in EBITDA to €207m in the fourth quarter, compared with the same period in 2010. For 2011, EBITDA for specialty chemicals fell by 4% year on year to €906m.

In its outlook, the company said it plans to grow its annual revenues to €20bn in the medium term and increase EBITDA each year while maintaining a 13–15% margin.

“The major uncertainty remains the economic environment. The concerns are focused on the risk of recession in Europe, delayed recovery of the US property market and the potential for a slowdown in China,” the company said.

“Each of these can have a significant impact on customers in these regions that would, in turn, impact AkzoNobel's sales volumes. These, together with certain raw materials, remain the key sensitivities in 2012,” it added.

Global analysts Bernstein Research said it maintains its "outperform" rating for AkzoNobel, with a target share price of €50.

“We expect pricing power from all three segments with the potential for other positive developments, i.e. raw materials costs falling, restructuring, a lower pension liability, and a gradual housing recovery,” said Bernstein.

($1 = €0.77)

(Additional reporting by Nurluqman Suratman)


By: Leigh Stringer
+44 208 652 3214



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