22 July 2013 10:42 [Source: ICIS news]
LONDON (ICIS)--UBS has downgraded AkzoNobel’s expected earnings before interest and tax (EBIT) by 25% for 2013 on the back of a muted outlook for the Amsterdam-headquartered paints and coatings specialist, the investment bank said on Monday.
UBS also downgraded AkzoNobel’s expected EBIT for 2014/2015 by 11% and 12% respectively.
“Our [2013 expected] EBIT of €883m [$1.16bn] is broadly in line with company guidance for EBIT “unlikely to exceed 2012 levels” and still assumes a [consensus] 8% [year on year] 'clean' pick-up in the second half-year,” UBS said.
“Industrial [coatings] volumes and [decorative paints] mix have remained challenging. [Management] does not call this pattern off for the time being,” it added.
The investment bank also reiterated its “Sell” rating for AkzoNobel’s stock and lowered the group’s twelve-month price target to €37 from a previous €41.
UBS said: “We believe it is too early to buy the stock as company results showed extreme sensitivity to price/mix movement and do not expect a stabilisation in the quarters to come.
“During the conference call the CEO acknowledged that trading deteriorated at the end of [the second quarter].”
On 18 July, AkzoNobel announced that the sale of its North American decorative paints business helped to drive a strong rise in net income for the second quarter of 2013, but that sales and operating income were down, and the outlook for 2013 remains muted.
The company posted a 96% year-on-year increase in net income for the second quarter of 2013 to €429m, driven by the $1.05bn sale of the North American unit to US-based PPG.
However, at the same time CEO Ton Buchner noted that market conditions remained challenging, and the company’s total operating income for 2013 is unlikely to exceed the €908m generated in 2012.
At 09:24 GMT, AkzoNobel’s shares were trading at €44.15 on the Amsterdam stock exchange, down by 0.26% from the previous close.
Additional reporting by Tom Brown.
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