Financial highlights

Revenue

Q2 2018:

Revenue was 3% lower, while up 2% in constant currencies. Selling prices were 4% higher overall and for most businesses. Volumes were 3% lower, mainly due to Marine and Protective Coatings.

• Decorative Paints revenue was up 2% in constant currencies. Higher selling prices were partly offset by lower volumes
• Performance Coatings revenue was 2% higher in constant currencies. Prices were 3% higher, although volumes were lower, mainly for Marine and Protective Coatings

Half-year 2018:

Revenue was 6% lower, although up 1% in constant currencies. Volumes were lower, mainly due to Marine and Protective Coatings.

• Decorative Paints revenue was flat in constant currencies. Higher selling prices were offset by adverse mix effects and lower volumes
• Performance Coatings revenue was up 1% in constant currencies. Price/mix effect was 4% higher, although volumes were lower, mainly for Marine and Protective Coatings

Raw material price development

Raw material prices in 2018 continue to be higher compared with the previous year. Robust pricing initatives are being implemented to deal with these higher raw material costs. The continued inflationary environment means these measures are still expected to take several quarters before the necessary mitigating impact is fully realized.

Acquisitions

The acquisition of Fabryo Corporation S.R.L. to become leading in the Romanian decorative paints market was announced. The planned transaction is expected to be completed in the second half of 2018, subject to regulatory approval. The impact of acquisitions on revenue was 1% for Performance Coatings in the first half year, although nil for AkzoNobel overall. Acquistions impacting revenues were:

• The business of V.Powdertech Co., Ltd., acquired in Q4 2017
• Flexcrete Technologies Ltd and Disa Technology (Disatech), acquired in Q3 2017

Adjusted operating income

Q2 2018

Adjusted operating income at €225 million (2017: €294 million), was mainly impacted by adverse currencies and non-recurring items

• Decorative Paints delivered a strong performance with higher prices and cost savings more than compensating for raw material costs, currency effects and lower volumes
• Performance Coatings was still impacted by foreign currencies, higher raw material costs and lower volumes, mainly due to Marine and Protective Coatings
• Other activities/eliminations was €41 million lower, including €20 million related to transformation costs and other non-recurring items

Half-year 2018

Adjusted operating income at €374 million (2017: €502 million), was impacted by adverse currencies, higher raw material costs and lower volumes, partly compensated by pricing initiatives. Savings from continuous improvement were €60 million and creating a fit-for-purpose organization delivered €35 million of the €110 million planned for 2018.

• Decorative Paints was impacted by higher raw material costs and adverse currency effects, partly compensated by 4% higher selling prices and cost savings
• Performance Coatings was also impacted by foreign currencies, higher raw material costs as well as lower volumes, mainly due to Marine and Protective Coatings
• Other activities/eliminations decreased by €26 million, including €20 million related to transformation costs and other nonrecurring items

Operating income

Q2 2018

Operating income was negatively impacted by identified items totaling €33 million, mainly related to restructuring costs for the transformation of the Paints and Coatings organization.

Half-year 2018

Operating income was negatively impacted by identified items totaling €74 million, mainly related to restructuring costs for the transformation of the Paints and Coatings organization.

Net financing income/(expenses)

Net financing expenses decreased by €23 million, mainly due to a one-off interest benefit on a tax settlement.

Tax

Regular income tax expenses were reduced by re-recognition of certain deferred tax assets and a tax settlement.

Profit from discontinued operations

Profit from discontinued operations increased by €57 million, including the ceasing of depreciation and amortization (as required per IFRS 5).

In the Specialty Chemicals business, revenue was 1% lower, although up 5% in constant currencies, mainly due to positive price/mix. Adjusted operating income was lower, mainly due to restructuring costs related to manufacturing network optimization projects, other one-off costs and adverse currencies, partly offset by strong price/mix and productivity improvements.

Operating income was negatively impacted by identified items of €22 million related to the separation.

Net income

Net income attributable to shareholders was €524 million, of which €226 million was attributable to continuing operations and €298 million to discontinued operations.