Akzo Nobel N.V. · EURONEXT:AKZA
Akzo Nobel — Q2 2010 Earnings Presentation
37 slides from Akzo Nobel's earnings presentation, Jul 23, 2010
Slide 1: Press conference Q2 2010 results
July 23, 2010 Press conference Q2 2010 results Hans Wijers, CEO Keith Nichols, CFO
Slide 2: Agenda
Agenda • AkzoNobel at a glance • Strategic ambitions and action plans • Q2 2010 highlights • Q2 2010 operational review • Financial review • Sustainability review • Outlook
Slide 3: AkzoNobel is the world's largest Coatings supplier
AkzoNobel is the world’s largest Coatings supplier 2009 revenue in € billion 10 8 6 4 2 0 Press conference Q2 2010 results 3
Slide 4: Excellent geographic spread of both revenue and profits
Excellent geographic spread of both revenue and profits High-growth markets are important (37% of revenue) % of 2009 revenue 39% 21% 7% ‘Mature’ Europe 20% North America ‘High-growth’ Europe Asia Pacific 9% Latin America 4% Rest-of-world High-growth markets profitability is above average Press confe
Slide 5: Strategic ambitions and action plans
Strategic ambitions and action plans
Slide 6: AkzoNobel strategic ambitions
AkzoNobel strategic ambitions Leading in value creation • Outgrow our markets • EBITDA margin > 14 percent by end 2011 • 0.5 percent improvement in operating Tied to incentives, working capital (OWC) as % of revenue, p.a. both for value creation and Leading in sustainability sustainability • Top 3 D
Slide 7: Delivering on our strategic ambitions
Delivering on our strategic ambitions 9 EBITDA margin target reached • 14% EBITDA margin delivered, 1.5 year ahead of schedule • Performance driven by margin management, ICI synergies and additional restructuring measures 9 ICI fully integrated, synergies achieved • €340 million structural cost savi
Slide 8: Q2 2010 highlights
Q2 2010 highlights
Slide 9: Q2 2010 highlights
Q2 2010 highlights • Revenue €3.9 billion (2009: €3.5 billion), up 13 percent (5 percent in constant currencies) • EBITDA* €614 million (2009: €506 million), up 21 percent (13 percent in constant currencies) • EBITDA* margin 15.7 percent (2009: 14.7 percent) • One year rolling EBITDA* margin: 14 per
Slide 10: Q2 2010 highlights
Q2 2010 highlights € million Q2 2010 Δ% Revenue 3,907 13 EBITDA* 614 21 Net income total operations 273 76 Ratio, % Q2 2010 Q2 2009 EBITDA* margin 15.7 14.7 +13% * Before incidentals Increase Decrease Press conference Q2 2010 results 10
Slide 11: Volume and price development per quarter to Q2 2010
Volume and price development per quarter to Q2 2010 Volume development Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Decorative Paints (10) (9) - 5 1 Performance Coatings (19) (11) (2) 8 12 Specialty Chemicals (18) (6) 4 15 15 AkzoNobel (16) (8) 1 10 8 Price development Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Decorative Pain
Slide 12: Q2 2010 operational review
Q2 2010 operational review
Slide 13: Decorative Paints
Decorative Paints We’ve been working with The Home Depot in North America since 1979. We continued to invest in the Glidden brand resulting in a healthy sales increase and share expansion of the Glidden brand in the retail segment. The Glidden Gets You Going campaign won a top US marketing award in
Slide 14: Leading Deco positions in all regions with strong brands
Leading Deco positions in all regions with strong brands AkzoNobel market positions by value 1 2/3 >3 Export countries Source: Euromonitor basis; AkzoNobel analysis 2009 Press conference Q2 2010 results 14
Slide 15: Decorative Paints Q2 2010
Decorative Paints Q2 2010 € million Q2 2010 Δ% Revenue 1,401 8 EBITDA* 205 20 Ratio, % Q2 2010 Q2 2009 EBITDA* margin 14.6 13.2 0% 0% * Before incidentals Increase Decrease Press conference Q2 2010 results 15
Slide 16: Decorative Paints Q2 2010 highlights
Decorative Paints Q2 2010 highlights • Revenue up 8 percent, with volumes up 1 percent • EBITDA* at €205 million, up 20 percent • EBITDA* margin 14.6 percent (2009: 13.2 percent) • Strong revenue growth and increased investment in brands and distribution in high growth markets • Soft demand in the m
Slide 17: Performance Coatings
Performance Coatings AkzoNobel Industrial Coatings signed an agreement to acquire Lindgens Metal Decorating Coatings & Inks- a proof point of our selective growth acquisition strategy. It will enhance our market position and complements our own packaging coatings business with products and expertise
Slide 18: Many market leadership positions
Many market leadership positions 1 Marine and Marine, 2 Protective, Protective Yacht 1 2 Car 3 Refinish, Automotive OEM plastic Refinishes Aerospace commercial 5 coatings Coil, 1 Specialty Industrial 2 Plastics, Coatings Beer & beverage Food cans 1 Wood Wood Finishes coatings, 2 Wood and Adhesives a
Slide 19: Performance Coatings Q2 2010
Performance Coatings Q2 2010 € million Q2 2010 Δ% Revenue 1,260 19 EBITDA* 191 15 Ratio, % Q2 2010 Q2 2009 EBITDA* margin 15.2 15.6 +1% * Before incidentals Increase Decrease Press conference Q2 2010 results 19
Slide 20: Performance Coatings Q2 2010 highlights
Performance Coatings Q2 2010 highlights • Revenue up 19 percent, with volumes up 12 percent • EBITDA* at €191 million, up 15 percent • EBITDA* margin at 15.2 percent (2009: 15.6 percent) • Broad demand improvement in all industrial businesses • Powder Coatings started integration of acquired activit
Slide 21: Specialty Chemicals
Specialty Chemicals More protection and convenient product application - an innovation within the Personal Care business of Surface Chemistry provides manufacturers of sunscreen products with polymer technology and customized formulation expertise, together with specialized sensory/consumer testing.
Slide 22: Many market leadership positions
Many market leadership positions Chelates, Ethylene 1 sulfur products, 1 amines, Functional polysulfides, Salt 2 3 metal alkyls, Chemicals organic Specialties Elotex, peroxides, (N. Europe) Bermocoll 5 CMC 1 1 Chlorine merchant, Industrial Monochloro- 2 Caustic merchant, Chemicals acetic acid Salt (
Slide 23: Specialty Chemicals Q2 2010
Specialty Chemicals Q2 2010 € million Q2 2010 Δ% Revenue 1,258 14 EBITDA* 257 28 Ratio, % Q2 2010 Q2 2009 EBITDA* margin 20.4 18.2 -2% -6% +7% +15% +14% * Before incidentals Increase Decrease Press conference Q2 2010 results 23
Slide 24: Specialty Chemicals Q2 2010 highlights
Specialty Chemicals Q2 2010 highlights • Revenue increased 14 percent, with volumes up 15 percent • Broad demand improvement and favorable currency effects (7 percent) drive top line • EBITDA* at €257 million, up 28 percent • EBITDA* margin 20.4 percent (2009: 18.2 percent) • All units contribute to
Slide 25: Financial review
Financial review
Slide 26: Cash management discipline
Cash management discipline Focus on • OWC reduction • Capex prioritization cash • Selective acquisitions • Dividend policy unchanged • Operating Working Capital reduced to 15.0% of revenue (Q2 2009: 16.2%) • Careful prioritization of capital expenditures • We continue to look for attractive acquisit
Slide 27: Continued focus on Operating Working Capital is delivering results
Continued focus on Operating Working Capital is delivering results OWC € million 19.1% 16.2% 15.6% 14.6% 15.0% 13.7% 2,341 2,238 2,007 1,691 2,037 2,346 OWC OWC as % of revenue Press conference Q2 2010 results 27
Slide 28: Strong balance sheet
Strong balance sheet Debt maturity, € million (nominal amounts) 1.200 800 400 0 2009 2010 2011 2012 2013 2014 2015 2016 € bonds $ bonds GBP bonds No 2010 refinancing needs • Undrawn revolving credit facility of €1.5 billion available (2013)* • €1.5 & $1 billion commercial paper programs in place • N
Slide 29: Sustainability review
Sustainability review
Slide 30: Sustainability is integrated in everything we do
Sustainability is integrated in everything we do We have set ambitious sustainability targets We focus on long-term performance We have linked remuneration to these targets and ambitions Press conference Q2 2010 results 30
Slide 31: Our Research Development & Innovation has a significant sustainability focus
Our Research Development & Innovation has a significant sustainability focus 4,000 people employed globally Over 60 percent of projects sustainability driven 2009: 2.4 percent of revenue spent (> €300 million) on RD&I Geographic spread of RD&I 57% 21% 22% Europe Asia Pacific Americas Press conferenc
Slide 32: Sustainability focus paying off
Sustainability focus paying off Dulux® Weathershield SunReflect™ Lowers the temperature of external walls by up to 5° C and reduces the need for air conditioning by reflecting up to 90 percent more infrared radiation that comparable exterior paints . Intergard® 10220 Waterborne Peelable Coatings The
Slide 33: Outlook
Outlook
Slide 34: Well positioned for growth
Well positioned for growth Sound fundamentals • Strong market positions and brands • Diverse geographic spread in highly attractive sectors • Low cyclicality due to resilient portfolio • Sustainability is integrated in everything we do Strong track record • Operational excellence • Strong operating
Slide 35: Outlook
Outlook • We are emerging from the global economic crisis in better shape underlined by the early achievement of our 2011 EBITDA margin target of 14 percent • The developed markets remain challenging, but we are cautiously optimistic despite the economic uncertainty • We remain focused on accelerati
Slide 36: Q&A
Q&A
Slide 37: Safe Harbor Statement
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