Performance Coatings

  • ROS up with price/mix of 7%, driven by pricing initiatives
  • Profitability increased for all business units, except for Automotive and Specialty Coatings
  • Automotive and Specialty Coatings was adversely impacted by order pattern and lower demand

Q1 2019:

  • Revenue was flat, although 1% lower in constant currencies, with 7% positive price/mix offset by lower volumes
  • Adjusted operating income was up at €138 million (2018: €134 million) as pricing initiatives and cost savings more than offset higher raw material costs and lower volumes
  • ROS up at 10.3% (2018: 10.0%); ROI at 20.1% (2018: 21.3%)
AkzoNobel opens ground-breaking R&D innovation campus (photo)

AkzoNobel opens ground-breaking R&D innovation campus
A trailblazing lab complex which can test new products in conditions that mimic the world’s most extreme environments has been officially opened by AkzoNobel in the UK. Located in Felling, the €13 million R&D innovation campus fuses the site’s 115-year history of product development with state-of-the-art facilities designed to keep AkzoNobel at the forefront of the coatings industry.

Q1 2019:

Revenue was flat, although 1% lower in constant currencies. Price/mix was offset by lower volumes in all segments.

Adjusted operating income increased to €138 million (2018: €134 million) as pricing initiatives and cost control more than compensated for higher raw material costs and lower volumes.

Operating income at €97 million was adversely impacted by €41 million identified items, mainly relating to the transformation of the organization and non-cash impairments in Industrial Coatings, following the implementation of our portfolio management. In 2018, operating income of €121 million was impacted by €13 million identified items.

Revenue

First quarter

 

 

 

 

in € millions

2018

2019

∆%

∆% CC *

*

Change excluding currency impact

Powder Coatings

292

298

2%

2%

Marine and Protective Coatings

300

300

–%

(1%)

Automotive and Specialty Coatings

346

336

(3%)

(4%)

Industrial Coatings

423

424

–%

–%

Other/intragroup eliminations

(19)

(19)

 

 

Total

1,342

1,339

–%

(1%)

Revenue development Q1 2019

Performance Coatings – 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 (€130 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

134

138

3%

Operating income

121

97

(20%)

ROS%

10.0

10.3

 

 

 

 

 

Average invested capital 2

2,890

3,146

 

ROI%

21.3

20.1

 

Powder Coatings

Revenue was up 2% and 2% higher in constant currencies. Growth was supported by pricing initiatives and new applications such as Interpon antimicrobial range and our premium solutions for the architectural segment.

Marine and Protective Coatings

Revenue was flat, while 1% lower in constant currencies. Profitability improved due to our value over volume strategy and measures focused on restructuring and right sizing. A new innovation lab in the UK was opened to deliver product innovations for the marine and the oil and gas industries.

Automotive and Specialty Coatings

Revenue was 3% lower and 4% lower in constant currencies due to lower volumes, partly compensated by positive price/mix. Strong demand for aerospace coatings was offset by lower demand for automotive OEM coatings. Volumes for vehicle refinishes were adversely impacted by order pattern.

Industrial Coatings

Revenue was flat. Positive price/mix effects offset lower volumes, while strategic portfolio management was implemented. Investments were announced to strengthen the wood coatings business in the US. A new fast-drying Sikkens wood coatings system was introduced, offering exceptional fire resistance and offering major improvements in production efficiency.