UpdateAkzo Nobel books marginal rise in Q1 EBIT

07 May 2008 11:37  [Source: ICIS news]

(updates, adds detail throughout)

 

By Mark Watts

 

LONDON (ICIS news)--Akzo Nobel posted a 1% drop in its first-quarter earnings before interest and tax (EBIT) at €257m ($399m) from €254m due to unfavourable foreign exchange rates, the Netherlands-based coating and chemicals group said on Wednesday.

 

"The testing environment continued in the first quarter, as expected," said chief financial officer Keith Nichols.

 

"However, I remain confident for the remainder of the year that we will deliver on our promises of outgrowing our markets, and continuing with the successful integration of ICI."

 

The company's revenue for the quarter was at €3.51bn, up from the year-ago quarter's €3.49bn, it added.

 

Akzo Nobel’s EBIT margin remained at 7.3% despite the “strong currency headwinds” and high raw material and energy prices.

 

The decorative paints segment reported a 16% gain in EBIT to €52m driven by strong growth in Asia and Latin America. The US trading environment continued to be soft however, and the retail business faced weaker conditions in mature markets.

 

In performance coatings, EBIT was down 6% on the same period last year at €103m. Currency rates had a 6% negative impact on the segment, while the industrial activities business was hit by soft conditions in the US.

 

Specialty chemicals booked a 4% rise in EBIT at €143m with high raw material and energy prices compensated by price increases of 7% and surfactants, polymer chemicals and Chemicals Pakistan business operating at an improved level.

 

During the first-quarter webcast, Nichols said he expected Akzo Nobel to sell its Specialty Starch business by the end of 2008.

 

“This is a great business with strong margins, there will be no fire-sale… we have good levels of interests,” he said.

 

He said the company was an at advanced stage in the divestment of several decorative coatings businesses in the UK, Ireland, Belgium and Canada

 

It was ordered to sell these businesses - which have combined revenues of  €300m ($436m) in 2006 - by competition authorities during the takeover of coatings rival ICI.

 

Last month Akzo Nobel said it would discontinue the ICI brand and increased its projected synergies for the acquisition to €340m a year.

 

($1 = €0.64)

 

Isha Jha contributed to this article

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Author: Mark Watts
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