Decorative Paints

  • Continued good momentum for Decorative Paints in seasonally low quarter
  • ROS higher with 6% positive price/mix driven by pricing initiatives
  • Acquisitions contributed 2% to revenue growth

Q1 2019:

  • Revenue was flat; 2% higher in constant currencies; price/mix was 6% positive, driven by pricing initiatives, while acquisitions contributed 2%
  • Adjusted operating income increased to €60 million (2018: €56 million) with pricing initiatives and cost savings compensating for higher raw material costs and lower volumes
  • Volumes were 6% lower due to our value over volume strategy and lower volumes in China (excluding China, volumes, were 2% lower)
  • ROS up at 7.1% (2018: 6.6%); ROI up at 12.0% (2018: 11.7%)
AkzoNobel sparks creativity with unique Dulux concept store in Shanghai (photo)

Unique Dulux concept store debuts in Shanghai
A new Dulux concept store has opened in Shanghai, China, offering customers a fully interactive experience. Using digital technology and personalized services, it’s designed to help make painting less complicated and more fun. The first of its kind in China, the store showcases Dulux’s color expertise and sustainable product features. Experts are also on hand to offer advice and real-time demonstrations of customized designs and colors.

Q1 2019:

Revenue was flat and 2% higher in constant currencies. Continued focus on pricing initiatives contributed to positive price/mix of 6%, while volumes were lower. Acquisitions contributed 2% to revenues.

Adjusted operating income increased to €60 million (2018: €56 million), despite negative impact of currencies. Continued pricing initiatives and cost savings offset higher raw material costs and lower volumes, resulting in ROS of 7.1% (2018: 6.6%).

Operating income increased to €54 million and was adversely impacted by €6 million identified items relating to the transformation. In 2018, operating income of €48 million was impacted by €8 million identified items.

Revenue

First quarter

 

 

 

 

in € millions

2018

2019

∆%

∆% CC 1

1

Change excluding currency impact

2

Including positive impact of hyperinflation accounting as per IAS 29 for Argentinian operations

Decorative Paints Europe, Middle East and Africa

491

506

3%

5%

Decorative Paints South America 2

105

99

(6%)

12%

Decorative Paints Asia

251

240

(4%)

(6%)

Other/intragroup eliminations

(1)

(1)

 

 

Total

846

844

–%

2%

Revenue development Q1 2019

Decorative Paints – Revenue development Q1 2019 (bar chart)
Key financial figures

First quarter

 

 

 

in € millions

2018

2019

∆%

1

Adjusted operating income and Operating income for Q1 2019 include the impact from adoption of IFRS 16 “Leases” (as per January 1, 2019). As a result, €1 million of interest expenses, which previously were included in Lease expenses within Operating income, are now recorded in Net financing expenses. The 2018 comparative figures have not been restated. Further details are provided on Notes to the condensed financial statements.

2

Average invested capital includes the impact from adoption of IFRS 16 “Leases” (as per January 1, 2019). Right-of-use assets (€173 million as per January 1, 2019) have been added to Invested capital whereas Lease liabilities remain excluded from Invested capital. The 2018 comparative figures have not been restated.

Adjusted operating income 1

56

60

7%

Operating income

48

54

13%

ROS%

6.6

7.1

 

 

 

 

 

Average invested capital 2

2,816

2,903

 

ROI%

11.7

12.0

 

Europe, Middle East and Africa

Revenue was up 3% and up 5% in constant currencies due to successful pricing initiatives, partly offset by lower volumes. The acquisition of Fabryo in Romania, Xylazel in Spain and Doves Decorating Supplies in the UK contributed 2% to revenues. Introduction of Extreme Stay Clean exterior woodstain and a next generation stain resistant wallpaint supported our market positions in Eastern Europe and Italy.

South America

Revenue was 6% lower, although up 12% in constant currencies, mainly driven by positive price/mix effects and a strengthened position in the premium segment. Pricing initiatives and cost control offset increased raw material costs. The adverse currency impact was driven by the Brazilian real and the Argentinian peso, which was partly offset by the application of IAS 29 for hyperinflation accounting for Argentina.

Asia

Revenue decreased 4%, and was 6% lower in constant currencies. This follows the implementation of our value over volume strategy and continued focus on pricing initiatives. Volumes were lower in China, also impacted by macro-economic developments resulting in lower consumer confidence. Volumes grew in India, Thailand, Malaysia and Vietnam. The acquisition of Colourland Paints in Malaysia contributed 2% to revenues.