04 July 2012 12:18 [Source: ICIS news]
LONDON (ICIS)--AkzoNobel is expected to deliver strong earnings growth in the second quarter and for the full year of 2012, largely on pricing strength, global analyst Bernstein Research said on Wednesday.
Bernstein said strong pricing power, particularly in the paints and coatings industry, remains the key earnings driver for the Netherlands-based paints and coatings producer.
“Paints and coatings further increased pricing, (+0.6% month on month, +9% year on year) in May in the ?xml:namespace>
The analyst added that EU prices stabilised in April – flat month on month and up 5% year on year.
“If we assume industry prices were to remain flat sequentially, AkzoNobel's paints and coatings businesses would have already achieved over a 5.5% price increase for 2012,” said Bernstein.
“We forecast a significant (+9%) year on year improvement in group earnings, before interest, tax, depreciation and amortisation (EBITDA),” it added.
However, despite strong pricing power in the paints and coatings industry volumes continue to be weak, especially in
"In contrast, European production volumes in April have nearly stabilized sequentially (-0.4% month on month) but have declined -7% year on year," it added.Bernstein maintains an “outperform” rating for AkzoNobel with a target share price of €53 (€67).
At 10:43 GMT, AkzoNobel’s shares were trading at €38.06 on the Euronext Amsterdam, up 0.29% on the previous close.
On Monday, JP Morgan Cazenove downgraded AkzoNobel to its “underweight” rating, from “neutral”, on weakening sales volumes.
($1 = €0.79)
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