UBS downgrades Dutch AkzoNobel’s expected 2013 EBIT by 25%

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.

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

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly