UpdateAkzoNobel expects no early improvement in Europe economy

18 April 2013 10:47  [Source: ICIS news]

(adds segment financials)

LONDON (ICIS)--AkzoNobel is not expecting the challenging economic conditions its businesses are facing to improve any time soon, as Europe continues to suffer from weak sales volumes, the Netherlands-headquartered chemicals major said on Thursday.

Company CFO Keith Nichols said: "The economic environment remains challenging and we do not expect an early improvement in the trends that we see in our businesses.”

“The acceleration of our performance improvement programme and the strategic priorities announced in February are the right focus to have in these markets," he added.

AkzoNobel on Thursday posted a 6% year-on-year increase in its first quarter net profit to €89m ($116m), despite weak demand in Europe.

Revenue fell by 7% year on year to €3.47bn, while operating income fell by 8% to €217m because of weaker end-markets and production issues in the specialty chemicals value chain.

The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) was down by 9% year on year at €375m in the first quarter, AkzoNobel said.

First-quarter revenue in the group’s Decorative Paints business declined by 5% to €925m, mainly due to lower volumes in Europe, price/mix effects and currencies.

However, operating income rose by 72% to €43m, reflecting lower restructuring charges and lower costs in mature markets, it said.

AkzoNobel’s revenue in its Performance Coatings unit fell by 3% year on year to €1.33bn as a slowdown in Europe impacted all businesses. However, the segment’s operating income rose by 2% to €129m because of a combination of margin management activities and ongoing cost control, the company added.

In the Specialty Chemicals business, revenue in the first quarter dropped by 11% year on year to  €1.24bn on divestments and lower volumes, mainly in construction-related products and the pulp bleaching and plastics industries, AkzoNobel said. The segment’s operating income fell by 29% to €99m.

($1 = €0.77)

By: Franco Capaldo
+44 (0)20 8652 3214

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