akzonobel q3 2014 media presentation
DESCRIPTION
Read the Press briefing presentation for the third quarter of 2014.TRANSCRIPT
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Media Update Q3 2014 results
Ton Büchner & Maëlys Castella
October 21, 2014
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Agenda
Media Update Q3 2014 results
1. Q3 2014 highlights
2. Visible results in Q3
3. Conclusion
4. Questions
2
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Q3 2014 Operational and financial review
3 Media Update Q3 2014 results
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Q3 2014 highlights
4 Media Update Q3 2014 results
• Operating income of €335 million reflects benefits from improvement actions and lower restructuring
charges
• Q3 volumes up 1 percent, more than offset by currency effects and divestments, resulting in revenues
down 2 percent
• Return on sales (ROS) 9.1 percent (2013: 8.0 percent). Excluding restructuring costs of €55 million
(2013: €75 million), ROS is 10.6 percent (2013: 10.0 percent)
• Net income attributable to shareholders was €205 million (2013: €155 million), due to higher operating
income and lower financing expenses
• Adjusted EPS increased 24 percent to €0.92 (2013: €0.74)
• Interim dividend of €0.33 declared
• Net cash inflow from operating activities €489 million (2013: €552 million)
• On track to deliver 2015 targets despite the continued fragile economic environment
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Return on Sales improvement continued in Q3 2014
€ million Q3 2014 Δ%
Revenue 3,686 -2
Operating income 335 11
Ratio, % Q3 2014 Q3 2013
Return on sales 9.1 8.0
Return on sales (excluding restructuring costs) 10.6 10.0
Moving average return on investment 10.5 8.6
Increase
Decrease
-1%
-1%
+1%
-2%
Volume Price/Mix Acquisitions/Divestments
Exchange rates Total
-1%
Revenue development Q3 2014 vs. Q3 2013
5 Media Update Q3 2014 results
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Continued fragile economic environment impacting all Business Areas
-6
-2
2
6
Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel
Quarterly volume development in % year-on-year
-4
-1
2
5
Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel
Quarterly price/mix development in % year-on-year
0% +2%
+1% 0%
-3% -1% +1%
-1%
2013
2014
6 Media Update Q3 2014 results
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Foreign exchange rates have become less of a headwind in Q3
-8
-4
0
4
Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel
Quarterly foreign exchange rate development in % year-on-year
-1% -1% -1% -1%
2013
2014
7
• Adverse currency effects, impacting 1H 2014, were visible in all Business Areas and any lost income
related to this will not come back in our results
• Negative currency effects levelling off in Q3, with less impact on this quarter’s results
Media Update Q3 2014 results
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~44% of revenues
New Build Projects
Maintenance, Renovation & Repair
Building Products & Components
~16% of revenues
Automotive OEM, Parts and Assembly
Automotive Repair
Marine and Air Transport
~16% of revenues
Consumer Durables
Consumer Packaged Goods
~24% of revenues
Natural Resource and Energy Industries
Process Industries
8 Media Update Q3 2014 results
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= • Volumes were flat compared with
previous year
• Revenues down 8 percent due to
divestments and adverse
price/mix
• Price/mix largely driven by the
sale of the German stores
• Operating income was up 6
percent, mainly due to lower
restructuring expenses and
effects from restructuring
programs contributing to results
Decorative Paints Q3 2014 highlights
€ million Q3 2014 Δ%
Revenue 1,050 -8
Operating income 113 6
Ratio, % Q3 2014 Q3 2013
Return on sales 10.8 9.4
Return on sales (excluding
restructuring costs)
10.8 10.1
Increase
Decrease Revenue development Q3 2014 vs. Q3 2013
-4%
-1%
-8%
0% -3%
Volume Price/Mix Acquisitions/Divestments
Exchange rates Total
-4%
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Performance Coatings Q3 2014 highlights
€ million Q3 2014 Δ%
Revenue 1,420 0
Operating income 135 -16
Ratio, % Q3 2014 Q3 2013
Return on sales 9.5 11.3
Return on sales (excluding
restructuring costs)
12.4 11.9
Increase
Decrease
-1% +2% 0%
0%
Volume Price/Mix Acquisitions/ Divestments Exchange rates Total
Revenue development Q3 2014 vs. Q3 2013
• Volumes were up 2 percent
compared with previous year,
driven by Marine and Protective
Coatings and Powder Coatings
• Revenues were flat, with positive
volumes offset by negative
price/mix and adverse currency
effects
• Operating income down 16
percent, return on sales at 9.5
percent (2013:11.3 percent), due
to higher restructuring charges
-1%
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• Volumes were flat compared with
the previous year
• Revenues down 1 percent, due to
adverse currency effects and
divestments
• Operating income up 46 percent at
€156 million, due to lower
restructuring costs, cost control
and improved mix
• Continuous improvement
measures continue in all
businesses
Specialty Chemicals Q3 2014 highlights
€ million Q3 2014 Δ%
Revenue 1,239 -1
Operating income 156 46
Ratio, % Q3 2014 Q3 2013
Return on sales 12.6 8.5
Return on sales (excluding
restructuring costs)
13.1 12.2
Increase
Decrease
0% -1%
-1% -1%
+1%
Volume Price/Mix Acquisitions/Divestments
Exchange rates Total
Revenue development Q3 2014 vs. Q3 2013
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Summary – Q3 2014 results
€ million Q3 2014 Q3 2013
EBITDA 487 456
Amortization and depreciation (152) (153)
Incidentals - -
Operating income 335 303
Net financing expenses (38) (56)
Minorities and associates (10) (10)
Income tax (84) (83)
Discontinued operations 2 1
Net income attributable to shareholders 205 155
Ratio Q3 2014 Q3 2013
Adjusted earnings per share (in €) 0.92 0.74
12 Media Update Q3 2014 results
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Visible results in Q3
13 Media Update Q3 2014 results
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14 Media Update Q3 2014 results
Progress in Q3
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Human Cities: Commitment to the Clinton Global Initiative
15 Media Update Q3 2014 results
We made a commitment to the Clinton Global Initiative by establishing a partnership with The Rockefeller Foundation through its 100 Resilient Cities program.
We will contribute by:
• Compiling an urban resilience guide for cities
• Taking on special projects in four cities named on the 100 Resilient Cities list
• Making our expertise in paints, coatings and chemicals available to the program’s advisory committees
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Conclusion
16 Media Update Q3 2014 results
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Conclusion
17 Media Update Q3 2014 results
• Fifth consecutive quarter of improvement in return on sales at group level and
underlying return on sales improvement visible in all Business Areas
• Continuous improvement programs are ongoing in all businesses, with expectation of
at least €250 million restructuring costs in 2014
• Number one ranking in our industry on the influential Dow Jones Sustainability Index
(DJSI)
for the third consecutive year
• Continued investment in sustainability and innovation will help to further enhance our
operational efficiency and stimulate organic growth and will also boost
our market leading positions
• We are on track to deliver the 2015 targets despite a continued
fragile economic environment
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Questions
18
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Safe Harbor Statement
This presentation contains statements which address such key issues as
AkzoNobel’s growth strategy, future financial results, market positions, product development, products in
the pipeline, and product approvals. Such statements should be carefully considered, and it should be
understood that many factors could cause forecasted and actual results to differ from these statements.
These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw
material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative,
fiscal, and other regulatory measures. Stated competitive positions are based on management estimates
supported by information provided by specialized external agencies. For a more comprehensive discussion
of the risk factors affecting our business please see our latest Annual Report, a copy of which can be found
on the company’s corporate website www.akzonobel.com.
19 Media Update Q3 2014 results
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Appendices
Media Update Q2 2014 results 20
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Key Features
• Waterborne interior woodstain
available as clear varnish and
opaque finishes that are
compatible with current color
solutions
• Anti-bacterial properties
• Improves indoor air quality by
absorbing and destroying
atmospheric formaldehyde
21
Customer Benefits
• Family friendly:
– low odor whilst painting
– affordable anti-bacterial, easily
cleanable surfaces throughout the
home
• Very easy to apply
• Good hardness and scratch
resistance
Growth Potential
• Launched in China in May 2014
• Drive cross-selling in retail
channel through Dulux branded
stores
• Positioned as an eco-premium
solution offering family-friendly,
well-being advantages
Innovation Pipeline Q3 2014 Decorative Paints – Dulux Forest Breath
High performance waterborne interior woodcare for the China market
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Reinventing the paper cup with EvCote paper coatings
Key features: • Cups produced with EvCote are both recyclable
and compostable
• Produced from recycled PET and bio-renewable
oils
• Quantifiable sustainability through the reuse of
paper fiber, recycling of waste materials, and
reduced environmental impact
Customer benefits: • Enabling the industry to separate itself from the
petro-chemical value chain
• Low barriers to adoption and no capital expenses
required
EvCote paper coatings offers the market a
disruptive alternative to 40-year old poly-
coated cup technology
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Innovation Pipeline Q3 2014 Functional Chemicals – ELOTEX® CAST
Key Features
• A new specialty additive for
dispersing and stabilizing
calcium sulfate in mortar
mixes, enabling the use of all
gypsum types for flooring
applications
• Provides good workability and
excellent levelling properties,
resulting in high strength and
smooth surface floors
• Product is delivered in powder
form which simplifies handling
and product formulation
• Sustainable contribution in an
eco-premium product
Customer Benefits
• Possibility to use any kind of
available gypsum for leveling
compounds and screeds
• Savings on time and costs for
raw material and logistics
Growth Potential
• Elotex® CAST 700 and CAST
710 launched in Q1/2013 and
Q2/2014, respectively
• Global potential in all regions
with access to natural or
synthetic gypsum (esp. RU,
CN, BR, US, TR)
• Opportunity for building
product formulators to
differentiate from competition
and open new markets
CALCIUM SULFATE TECHNOLOGY - a unique and innovative technology for gypsum floorings
Media Update Q3 2014 results