Financial highlights

Revenue

Revenue up in all Business Areas and 7% overall, mainly due to higher volumes and acquisitions.

• Revenue in Decorative Paints was up 7%, with volume growth in all regions and realized consistently throughout the quarter. Volume developments were positive for the sixth consecutive quarter. Positive volume developments and currency effects were partly offset by adverse price/mix
• Revenue in Performance Coatings was up 6%, driven by positive volume development in Industrial and Powder Coatings, as well as Automotive and Specialty Coatings, and the acquisition of BASF’s Industrial Coatings business. Adverse conditions persisted in the marine and oil and gas industries
• Revenue in Specialty Chemicals was up 7%, driven by positive volume developments in all business units and regions and favorable currency impact. Volumes were up 5%

Raw material prices were higher compared to the same period in 2016. We are taking appropriate measures to deal with higher raw material prices in an inflationary environment.

Acquisitions

• In Q1 2016, the outstanding shares in Eko Peroxide LLC, a hydrogen peroxide joint venture, were acquired
• In Q4 2016, the acquisition of BASF’s Industrial Coatings business was completed
• In Q1 2017, the impact of acquisitions on revenue was 2% for AkzoNobel and 5% for Performance Coatings

Specialty Chemicals separation

• In Q1 2017, we announced a review of strategic options for the separation of our Specialty Chemicals business. Further details will be given during the investor update on April 19, 2017

EBIT and operating income

EBIT up in all Business Areas and 13% overall, at €376 million in Q1, reflecting the positive effects of volume growth, continuous improvement and cost discipline. Operating income was up 5% to €376 million.

• In Decorative Paints, EBIT and operating income increased by 48%, mainly as a result of higher revenue and continued focus on cost measures, while recognizing Q1 is a seasonally smaller quarter
• In Performance Coatings, EBIT and operating income were up 1%, mainly due to positive volume and margin development in several segments and regions, most notably in Automotive and Specialty Coatings and North America. These gains were offset by ongoing weakness in the marine and oil and gas industries, as well as costs associated with the integration of the acquired BASF Industrial Coatings business
• In Specialty Chemicals, EBIT and operating income increased 7% as a result of improved volumes and operational efficiencies
• In Other activities and eliminations, EBIT improved. Operating income last year in Q1 2016 was positively impacted by sale of assets of €23 million

Net financing expenses

Net financing expenses decreased mainly as a result of lower interest expenses following the repayment of a high interest bond and the issuance of a low interest bond in Q2 2016, as well as lower interest on provisions.

Tax

In Q1 2017, the effective tax rate was 28% (2016: 25%). Previous year’s effective tax rate was impacted by non-taxable gains and adjustments to previous years.

Net income

Net income attributable to shareholders was €240 million (2016: €240 million). Previous year was impacted by sale of assets of €23 million. Adjusted EPS was up 8% at €1.05 (2016: €0.97).