Report 2014

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AkzoNobel
at a glance

Facts

€14.3 billion revenue

€987 million operating income

€2.23 earnings per share

80+ countries

47,200 employees

200+ production sites

Key regions 
(by revenue)
Key regions (by revenue) (map)

Decorative Paints

Whether our customers are professional decorators or keen DIY-ers, they want great paint that gives a great finish. We supply a huge variety of quality products for every situation and surface, including paints, lacquers and varnishes. We also offer a range of mixing machines, color concepts and training courses for the building and renovation industry, while our specialty coatings for metal, wood and other critical building materials lead the market.

The business operates three units:

Decorative Paints in 2014

Decorative Paints 2014 revenue breakdown by end-user segment
in %

Decorative Paints 2014 revenue breakdown by end-user segment in % (pie chart)

Brands include Coral, Dulux, Flexa, Hammerite, Sadolin and Sikkens.

Some of our customers: thousands of paint distributors around the world and large retail outlets such as B&Q, Leroy Merlin and OBI.

Performance Coatings

We’re a leading supplier of performance coatings with strong product technologies and brands. Our high quality products are used by customers across the world to protect and enhance everything from vessels, cars, aircraft, yachts and architetural components (structural steel, building products, flooring) to consumer goods (mobile devices, appliances, beverage cans, furniture) and oil and gas platforms.

The business operates four units:

Performance Coatings in 2014

Performance Coatings 2014 revenue breakdown by end-user segment
in %

Performance Coatings 2014 revenue breakdown by end-user segment in % (pie chart)

Brands include Awlgrip, International, Interpon and Sikkens.

Some of our customers: Airbus, Boeing, Bosch, Dell, IKEA, Philips, Samsung, Shell, Toyota, Volkswagen and Whirlpool.

Specialty Chemicals

As a major producer of specialty chemicals with leadership positions in many markets, we make sure that industries worldwide are supplied with high quality ingredients and process aids for the manufacture of life’s essentials.

The business operates four units:


Specialty Chemicals in 2014

Specialty Chemicals 2014 revenue breakdown by end-user segment
in %

Specialty Chemicals 2014 revenue breakdown by end-user segment in % (pie chart)

Brands include AkzoNobel, Bindzil, Biostyle, Dissolvine, Ecosel, Eka, Expancel, Jozo and Kromasil.

Some of our customers: BASF, Bayer, Dow, GE, Huntsman, Momentive, Monsanto, P&G, Shin-Etsu, Stora Enso and Unilever.

CEO
statement

We remain on track to
deliver on our 2015 targets”

Dear stakeholder,

When I look back at 2014, I see an eventful year, full of economic and market challenges. It was also a year of many changes at AkzoNobel, all of which were designed to make the company an even better place than it already is.

The beginning of the year was very much dominated by unfavorable conditions with regard to currencies, while markets did seem to recover to a certain extent. That changed in the second half of the year when Europe experienced a lack of growth and the recovery that everyone had hoped for didn’t materialize. At the same time, we saw some of the Asian economies and Latin America slow down. These were serious economic challenges that we needed to adapt to.

Full statement from CEO Ton Büchner

How AkzoNobel
performed

Financial

Strategic targets

9.0%

14.0%

<2.0

Return on sales (ROS)

Achieve return on sales (operating income/revenue) of 9.0 percent by 2015

Return on investment (ROI)

Achieve return on investment (operating income/ average invested capital) of 14.0 percent by 2015

Net debt/EBITDA

Maintain net debt/EBITDA
lower than 2.0 by 2015

2014 progress

6.9%

(excluding incidental items: 7.5%)

10.0%

0.95

2014 financial performance in full

Sustainability

Strategic targets

20%

25-30%

 

Eco-premium solutions

Increase revenue from downstream eco-premium solutions to 20 percent of revenue by 2020

Carbon emissions

Reduce our carbon emissions across the value chain by 25 to 30 percent per ton by 2020 (2012 base)

Resource Efficiency Index

Monitor new index, as future indicator for resource efficiency across the full value chain

2014 progress

19%

-4%

96

2014 sustainability performance in full

How AkzoNobel
created value

Economic value

Input

€6.3 billion

group equity

€3.3 billion

borrowings

€363 million

research and development expenses

Organization

€14.3 billion

revenue

€987 million

operating income

€811 million

cash flow from operations

€588 million

capital expenditures

€9.9 billion

invested capital

We invested in 2014 to keep our facilities in good shape, as well as expanding our manufacturing capability

Revenue breakdown by Business Area
in %
Revenue breakdown by Business Area in % (pie chart)
Revenue breakdown by end-user segment
in %
Revenue breakdown by end-user segment in % (pie chart)

Outcomes

€258 million

income tax paid

€280 million

dividend paid

 

Economic value in detail

6.9% ROS

(excluding incidental items: 7.5%)

10.0% ROI

0.95 net debt
/EBITDA

 

19%

of revenue from eco-premium solutions

RD&I investments have resulted in 19 percent of revenue derived from eco-premium solutions with customer benefits.

 

Environmental value

Input

34%

renewable energy

98,000 TJ

energy use

13%

renewable raw materials as % of organic materials

€5.5 billion

raw materials spend

10.7 million tons

upstream CO2(e) emissions

Organization

4.0 million tons

CO2(e) emissions own operations

24%

reduction in operational eco-efficiency footprint (since 2009)

149 kilotons

total waste

Outcomes

26.9 million tons

CO2(e) emissions cradle-to-grave


 

Environmental value in detail

12.2 million tons

downstream CO2(e) emissions

4%

increase CO2(e) per ton of sales from 2012 cradle-to-grave carbon footprint

96 REI

in resource efficiency index

 

Social value

Input

13,500

number of volunteers for Community Program projects (cumulative since 2005)

 
 

Organization

1.8

total reportable rate of injuries

Employee and supervised contractors total reportable rate of injuries
Target: <2.0 (2015)
Employee and supervised contractors total reportable injuries (bar chart)

17%

female executives

16%

high growth markets executives

Outcomes

€2.8 billion

employee benefits
 

Social value in detail

47,200

employees at year-end 2014

3.97

employee engagement score

 

2,260

Community Program projects
(cumulative since 2005)

Business
performance

Decorative Paints

The work we have done to streamline our business is clearly paying off as we continued to grow in challenging circumstances”

Ruud Joosten
Member of the Executive Committee responsible for Decorative Paints

Decorative Paints strategy

6.3% ROS

8.8% ROI

27%

of revenue from eco-premium solutions

0%

decrease CO2(e) per ton of sales from 2012 cradle-to-grave carbon footprint
 

How Decorative Paints created value

Performance Coatings

It was a year of solid progress towards becoming more cost effective and better positioned for organic growth”

Conrad Keijzer
Member of the Executive Committee responsible for Performance Coatings

Performance Coatings strategy

9.8% ROS

22.0% ROI

15%

of revenue from eco-premium solutions

2%

increase CO2(e) per ton of sales from 2012 cradle-to-grave carbon footprint

How Performance Coatings created value

Specialty Chemicals

We are swiftly responding to changing trends in the chemical industry”

Werner Fuhrmann
Member of the Executive Committee responsible for Specialty Chemicals

 
 

Specialty Chemicals strategy

10.4% ROS

14.8% ROI

17%

of revenue from eco-premium solutions

2%

increase CO2(e) per ton of sales from 2012 cradle-to-grave carbon footprint

How Specialty Chemicals created value