UpdateAkzoNobel concerned over economy and material costs in 2012

19 April 2012 12:35  [Source: ICIS news]

(updates throughout with outlook and segment details)

AkzoNobel headquartersLONDON (ICIS)--AkzoNobel is concerned that the economic environment and high raw material costs in 2012 could severely impact its sales volumes, the Dutch chemicals producer said on Thursday.

“Our 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,” said AkzoNobel.

“Each of these can have a significant impact on our customers in these regions that would in turn impact our sales volumes. These, together with certain raw materials, remain our principal sensitivities in 2012,” the company said.

However, the company added that it maintains its revenue target, announced in September 2010, of €20bn ($26bn) by 2015/2016.

Earlier on Thursday, AkzoNobel reported a 44.5% year-on-year decline in its first-quarter 2012 net profit to €71m, amid high raw material costs.

The company’s revenue rose by 6% year on year to €3.97bn in the January–March period, mainly driven by pricing actions to offset higher raw material costs, it said in a statement.

Its earnings before interest, tax, depreciation and amortisation (EBITDA) slipped by 3% year on year to €423m, due to weaker end-markets and cost inflation, the company said.

"We are continuing to focus on performance improvement,” said AkzoNobel CEO Hans Wijers.

“Our global margin management efforts are also proving successful as we continue to mitigate the adverse effects of higher raw material costs. However, our volumes were down slightly, reflecting the volatile nature of the economic conditions,” Wijers added.

The company’s performance coatings segment reported an 11% year-on-year rise in revenue to €1.4bn for the first quarter of 2012.

First-quarter 2012 EBITDA in the segment rose by 15% year on year to €164m, the company said.

Revenue for the specialty chemicals segment in the first quarter of 2012 increased by 4% year on year to €1.4bn, AkzoNobel said.

“Revenue increased 4%, mainly due to the Boxing Oleochemicals acquisition and a positive price/mix effect,” it added.

However, the segment's EBITDA dropped by 2% year on year to €235m in the first quarter, the company said.

The company’s decorative paints segment reported a 4% year-on-year rise in revenue to €1.2bn in the first quarter of 2012, it said.

However, EBITDA for the segment fell to €76m in the first quarter, down by 16% compared with the same period the previous year.

AkzoNobel's share price was trading at €43.56 on the London Stock Exchange at 10:33 GMT, up by 0.42% from the previous close.

($1 = €0.76)

Additional reporting by Nurluqman Suratman

By: Leigh Stringer
+44 208 652 3214

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