Slide 1: Investor update
Investor update Ton Büchner and Maëlys Castella July 19, 2016
Slide 2: Agenda
Agenda Highlights Q2 2016 Operational review Financial review Summary Questions Investor update 2
Slide 3: Continued volume growth and further profitability improvement
Continued volume growth and further profitability improvement Higher volumes although revenue lower due to adverse currencies EBIT up 9 percent at €491 million, reflecting continuous improvement initiatives and lower costs ROS* and ROI* improved overall and for all Business Areas Net cash inflow fro
Slide 4: Higher volumes and profitability
Higher volumes and profitability Volumes up 1 percent, driven by Decorative Paints and Performance Coatings Revenue down 6 percent, mainly due to adverse currencies EBIT* up 9 percent, reflecting continuous improvement initiatives and lower costs ROS** and ROI** improved overall and for all Business
Slide 5: Agenda
Agenda Highlights Q2 2016 Operational review Financial review Summary Questions Investor update 5
Slide 6: Buildings and infrastructure, Transportation, Consumer goods, Industrial
Buildings and Transportation infrastructure New build projects Maintenance, renovation & repair Building products and components 43% 17% Automotive repair Automotive OEM, parts and assembly Marine and air transport of revenue of revenue Consumer durables Consumer packaged goods 18% 22% Natural resou
Slide 7: Q2 shows some recovery in Europe, but recent events may change this
Q2 shows some recovery in Europe, but recent events may change this Purchase Managers’ Index (PMI)* Purchase Managers’ Index (PMI)* Figures below 50 indicate pessimism June 2016 60 60 Germany Vietnam Russia Netherlands US India Sweden 50 50 Indonesia UK US China Japan France Eurozone China Brazil 40
Slide 8: Consumer confidence high in Asia and US, while lower in Europe and Latin America
Consumer confidence high in Asia and US, while lower in Europe and Latin America Consumer confidence, Q1 2016 Figures below 100 indicate some degree of pessimism 140 Recent trends compared 120 to Q4 2015 100 80 60 134 117 110 109 105 40 97 97 96 85 82 82 75 74 64 63 20 0 India Indonesia US Vietnam C
Slide 9: Too early to determine future impact as a result of the recent UK referendum
Too early to determine future impact as a result of the recent UK referendum UK presence Potential impact on Europe UK pension liabilities
Slide 10: Profitability up, reflecting continuous improvement initiatives and lower costs
Profitability up, reflecting continuous improvement initiatives and lower costs € million Q2 2015 Q2 2016 Δ% Revenue 3,949 3,711 (6) Operating income 486 491 1 EBIT (Operating income excluding incidental items) 452 491 9 Ratio, % Q2 2015 Q2 2016 ROS* 11.4 13.2 Moving average ROI* 12.2 15.1 Increase
Slide 11: Higher volumes although deflationary pressures continue
Higher volumes although deflationary pressures continue Quarterly volume development in % year-on-year Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel 6 4 2% 2 1% 1% 0% 0 -2 -4 2015 2016 Quarterly price/mix development in % year-on-year 2 0 -1% -2 -2% -2% -3% -4 Decorative Paint
Slide 12: Decorative Paints Q2 2016: Higher volumes and profitability
Decorative Paints Q2 2016: Higher volumes and profitability € million Q2 2015 Q2 2016 Δ% Volumes were up in Asia, continued to be down in Latin Revenue 1,134 1,055 (7) America and were slightly lower Operating income 128 131 2 in Europe EBIT (Operating income excluding incidental items) 128 131 2 Re
Slide 13: Performance Coatings Q2 2016: Volumes increased in all reporting units
Performance Coatings Q2 2016: Volumes increased in all reporting units € million Q2 2015 Q2 2016 Δ% Volumes were up with positive developments in all reporting Revenue 1,550 1,473 (5) units Operating income 220 222 1 EBIT (Operating income excluding incidental items) 220 222 1 Revenue down due to ad
Slide 14: Specialty Chemicals Q2 2016: EBIT up 10 percent while volumes flat
Specialty Chemicals Q2 2016: EBIT up 10 percent while volumes flat € million Q2 2015 Q2 2016 Δ% Volumes were flat with positive developments in some Revenue 1,290 1,206 (7) segments offset by lower Operating income 192 179 (7) demand in oil related segments EBIT (Operating income excluding incidenta
Slide 15: Agenda
Agenda Highlights Q2 2016 Operational review Financial review Summary Questions Investor update 15
Slide 16: Strong financial performance in Q2 2016
Strong financial performance in Q2 2016 Operational improvement Operational improvement Operational improvement Cash discipline Shareholder returns Operational improvement Operational improvement EBIT up 9% Net cash inflow from operating Adjusted EPS up 2 percent at activities higher at €453 million
Slide 17: Profitability improved for the half-year
Profitability improved for the half-year € million H1 2015 H1 2016 Δ% Revenue 7,540 7,141 (5) Operating income 792 848 7 EBIT (Operating income excluding incidental items) 758 825 9 Ratio, % H1 2015 H1 2016 ROS* 10.1 11.6 Moving average ROI* 12.2 15.1 Financial review *ROS% = EBIT/revenue. Moving av
Slide 18: EBIT was up 9 percent for the half-year
EBIT was up 9 percent for the half-year Operating income bridge half-year 2015 – half-year 2016 € million 900 848 825 23 800 792 34 758 38 55 204 700 154 600 500 H1 2015 Incidentals H1 2015 Currency/ Volume Price/mix Other H1 2016 Incidentals H1 2016 Increase OPI EBIT acq/div EBIT OPI Decrease Finan
Slide 19: Free cash flow up 20 percent due to higher EBITDA and continued cash discipline
Free cash flow up 20 percent due to higher EBITDA and continued cash discipline € million Q2 2015 Q2 2016 Δ% EBITDA 610 642 5 Interest paid -18 -16 Tax paid -63 -74 Changes in working capital, provision* and other -112 -92 (18) Capital expenditures (including intangible assets) -156 -153 Free cash f
Slide 20: IAS19 pension deficit remains at €0.4 billion
IAS19 pension deficit remains at €0.4 billion Key pension financial assumptions Q2 2016 Q1 2016 Discount rate 2.6% 3.1% Inflation rate 2.6% 2.7% Pension deficit development during Q2 2016 Increase € million Decrease Deficit end Discount Inflation Asset return Deficit end Q1 2016 Top-ups rates on DBO
Slide 21: Further de-risking of pension liabilities including £1.7 billion non-cash buy-ins
Further de-risking of pension liabilities including £1.7 billion non-cash buy-ins* Other post-retirement benefits Various activities to reduce liabilities Other pension plans CPS UK ICI PF UK £7.3 billion insurance buy-ins for UK schemes 100 (2014-16). $0.7 billion buy-out relate to a US 2 scheme (2
Slide 22: Agenda
Agenda Highlights Q2 2016 Operational review Financial review Summary Questions Investor update 22
Slide 23: Key Business Developments Summary
Key Business Developments Summary Investor update 23
Slide 24: Continued volume growth and further profitability improvement
Continued volume growth and further profitability improvement Volumes up 1 percent, driven by Decorative Paints and Performance Coatings Revenue down 6 percent, mostly due to adverse currencies EBIT up 9 percent, reflecting continuous improvement initiatives and lower costs ROS* and ROI* improved an
Slide 25: Upcoming events
Upcoming events Q3 2016 Results October 19, 2016 Full-year and Q4 2016 Results February 15, 2017 Q1 2017 Results April 24, 2017 Annual General Meeting April 25, 2017 Q2 2017 Results July 25, 2017 Q3 2017 Results October 17, 2017 Summary Investor update 25
Slide 26: Agenda
Agenda Highlights Q2 2016 Operational review Financial review Summary Questions Investor update 26
Slide 27: We create essential everyday essentials to make people's lives more liveable and inspiring
Essential ingredients Essential protection WE CREATE Essential EVERYDAY color ESSENTIALS TO MAKE PEOPLE’S LIVES MORE LIVEABLE AND INSPIRING Investor update 27
Slide 28: 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
Slide 29: Appendix
Appendix AkzoNobel 7" Investor update 29
Slide 30: Global paints, coatings and specialty chemicals company
Global paints, coatings and specialty chemicals company €14.9 billion revenue (2015) €2.1 billion EBITDA (2015) 80+ countries 45,600 employees (2015) Leadership positions in many markets Revenue by Business Area Operating income by Business Area Revenue by geographic region North America 3% 17% Perf
Slide 31: Revenue split per Business Unit
Revenue split per Business Unit Decorative Paints Performance Coatings Specialty Chemicals EMEA Marine and Functional 19% 30% 26% Protective 36% Industrial Latin America Automotive and 48% Specialty 56% Surface 21% 14% Asia Industrial and 26% Powder Pulp and 24% Performance A Appendix
Slide 32: Present in large and attractive markets
Present in large and attractive markets Global paints and coatings by market sector Chemicals industry ~€100 billion, 2012 – 2015 ~€3,500 billion, 2012 – 2015 Decorative Decorative Manufactured fibres Paints 42% Automotive OEM (metal) Coatings Wood finishes 9% 5% 16% 5% Adhesives and sealants Vehicl
Slide 33: Strategy delivering results and building foundation for continuous improvement
Strategy delivering results and building foundation for continuous improvement Transformation | New operating models for all Business Areas Realignment of the functions Operational optimization; reduction in: – Factory footprint – Enterprise Resource Planning systems Achievements – SKUs Portfolio op
Slide 34: We delivered all 2015 financial targets
We delivered all 2015 financial targets Return on sales % Return on investment % (Operating income/revenue) (Operating income/average 12 months invested capital) 12 16 15.0 10.6 14.0 14.0 9.8 9.0 12 10.0 8 6.9 9.6 6.6 8.9* 5.9* 8 4 4 0 0 2012 2013 2014 2015** 2015 2015 2012 2013 2014 2015** 2015 201
Slide 35: Core principles and values in place; Incentives aligned with strategy
Core principles and values in place; Incentives aligned with strategy We build successful partnerships Customer Focus with our customers Core principles: Deliver on Commitments We do what we say we will do Safety Integrity Passion for Excellence We strive to be the best in everything we do, every da
Slide 36: Transformation in all Business Areas
Transformation in all Business Areas Decorative Paints • New operating model in Europe • Leverage scale of back office functions Performance Coatings • Footprint optimization resulted in closure of 17 sites • New organization structure; customer-centric Strategic Market Units and clearer accountabil
Slide 37: Performance improved in all businesses
Performance improved in all businesses Return on sales % (Operating income/revenue) 16 13.3 12 12.2 12 12 9.5 9.5 9.4 9.8 9.0 10.4 8.6 7.5 8 6.3 6.0 4 2.2 0 Decorative Paints Performance Coatings Specialty Chemicals Return on investment % (Operating income/average 12 months invested capital) 32 29.4
Slide 38: Support functions are progressing towards the future operating model
Support functions are progressing towards the future operating model Decentralized Function reporting Shared services/ Global Business functions and alignment outsourcing Services Human Resources Information Management Finance Procurement (non product related) A Appendix Investor update 38
Slide 39: Sustainability is business; business is sustainability
Sustainability is business; business is sustainability of revenue by 2020 from products that are more sustainable for our customers than the products of our competitors more efficient resource and energy use across the entire value chain by 2020 (measured by carbon footprint reduction) (Resource Eff
Slide 40: Strategy will be maintained and move towards the next phase
Strategy will be maintained and move towards the next phase Historical issues Building the foundation External environment Continuous improvement Return on sales below peers Vision and strategy: Limited economic Not earning our cost of Organic growth recovery Organic growth capital Operational excel
Slide 41: Focus will shift towards continuous improvement and organic growth
Focus will shift towards continuous improvement and organic growth Hardwire Deliver Build further Drive organic Pursue value new continuous operational growth and generating organization improvement excellence innovation bolt-on model culture acquisitions Next steps Culture Core principles and value
Slide 42: Vision confirmed; financial guidance 2016-2018
Vision confirmed; financial guidance 2016-2018 Vision: Leading market positions delivering leading performance Guidance 2016-2018: Return on sales: 9-11% Return on investment: 13-16.5% Clear aim to build on the foundation we have created and grow in line or faster than our relevant market segments K
Slide 43: Visions confirmed; performance ranges 2016-2018
Visions confirmed; performance ranges 2016-2018 Specialty Chemicals Performance Coatings Decorative Paints Vision: Vision: Vision: Delivering leading performance Leading market positions The leading global Decorative Paints company based on sustainable chemical delivering leading performance platfor
Slide 44: A strong case for investment
A strong case for investment Portfolio of businesses with leadership positions in many markets Strong global brands in both consumer and industrial markets Long-term growth potential from end-user segments Balanced exposure across geographic regions Track record of improving returns and cash flow Hi
Slide 45: A global player with leading market positions
A global player with leading market positions Specialty Chemicals key figures Revenue by end-user segment € million 2015 Buildings and 19% Infrastructure Revenue 4,988 Transportation EBITDA 898 6% 47% Operating income 609 Consumer Goods Return on sales 12.2% 28% Industrial Return on investment 17.2%
Slide 46: Resilient portfolio organized in five strong chemical platforms
Resilient portfolio organized in five strong chemical platforms Our main chemical platforms Our products Our business units – Sodium chlorate Pulp and Performance Bleaching chemicals – Hydrogen peroxide Chemicals – Energy/Salt – Monochloroacetic acid Salt-chlorine chain Industrial Chemicals – Causti
Slide 47: We continue with pursuing differentiated strategies
We continue with pursuing differentiated strategies Actions Capitalize on investments Successfully commercialize Growth range Outgrow the market organically products for attractive applications 2012-2015 ~50% of portfolio Invest when attractive growth 0 to 15% per year opportunities arise Average +3
Slide 48: Quality of business improved
Quality of business improved Revenue Operating income Strategic focus Product portfolio 2003-2015 € million, 2013-2014 Improve performance Current products 2003 platforms 6000 2004 5500 CAGR 2005 2.5% 508 2006 Outgrow the market 5000 2007 New product introductions platforms 418 2008 4500 2009 Geo-sp
Slide 49: Continued market growth expected over the next few years
Continued market growth expected over the next few years Platform Market size* Market growth** Leading positions € billion, 2014 % p.a., 2015-2018 Revenue breakdown by position % of revenue, 2014 Bleaching 1,7 <1.5% chemicals Salt-chlorine 6,6 <1.5% chain Polymer 1,9 >3% chemistry Ethylene 3,9 1.5-3
Slide 50: We have the right strategy in place
We have the right strategy in place Strategic focus areas Processes Action End-user segments Business Area Actions Drive functional excellence – Supply chain and operations – Commercial excellence – Talent management Reduce organizational complexity Strengthen product and process innovation Capitali
Slide 51: Process and product innovation enables growth across all businesses
Process and product innovation enables growth across all businesses Dedicated RD&I resources in world class laboratories End-user requirements/trends around the globe – >500 highly qualified FTE’s – ~€100m per annum; ~2% of sales More than 5,000 patents Resource preservation Increasing end-use Overa
Slide 52: Regional opportunities enable additional growth
Regional opportunities enable additional growth North America Europe Middle East China Shale gas, increased investments in High valued add specialties Moving down the value chain. Urbanization, growing middle class. petrochemicals and plastics Expanding petrochemicals and plastics Improved safety an
Slide 53: Performance Coatings at a glance
Performance Coatings at a glance Performance Coatings key figures Revenue by end-user segment € million 2015 14% Buildings and 24% Infrastructure Revenue 5,955 Transportation EBITDA 938 22% Operating income 792 Consumer Goods Return on sales 13.3% 40% Industrial Return on investment 29.4% Employees
Slide 54: New simplified organization drives operational excellence and organic growth
New simplified organization drives operational excellence and organic growth From To Performance Performance Customer proximity Coatings Coatings 4 business units 7 strategic market units Speed of decision-making 12 sub-business units 6 regions 72 regional units Accountability and collaboration A Ap
Slide 55: Challenging market conditions in emerging economies and oil and gas
Challenging market conditions in emerging economies and oil and gas Weakening trend of global manufacturing continues Limited evidence of upturn in European construction China growth moderating; residential and commercial construction activity down Oil and gas industry capital spending decline Marin
Slide 56: Marine order book has not recovered
Marine order book has not recovered Order book and deliveries Freight rate $/day Million CGT* 100.000 250.000 50.000 deliveries order book 80.000 200.000 40.000 60.000 150.000 30.000 40.000 100.000 20.000 20.000 50.000 10.000 0 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 201
Slide 57: We have leading positions in the markets we serve
We have leading positions in the markets we serve x AkzoNobel market share Segment size Segment growth and position (by value) 2014 € billion, 2014 2016-2018 1 Powder >3% 1 Specialty Plastics 1/2 Aerospace 1 Wood Finishes 2-3% 1 Coil 1 Yacht 2 Packaging 1 Marine <2% 1 Protective 3/4 Vehicle Refinish
Slide 58: We have the right strategy in place
We have the right strategy in place Strategic focus areas Processes Action End-user segments Business Area actions Pursue differentiated growth strategies Drive overarching performance improvement initiatives • Reduce external spend • Improve our operations • Commercial excellence A Appendix Investo
Slide 59: We are outgrowing our markets in targeted areas
We are outgrowing our markets in targeted areas Sector Action examples Powder Coatings • Full wheel offering including powder primer, liquid color and powder clearcoat Protective Coatings • Focus on downstream oil and gas and growth outside of oil and gas (Power) Marine Coatings • Continue to invest
Slide 60: We are driving overarching performance improvement initiatives
We are driving overarching performance improvement initiatives Ambition Achievements Focus areas Standardize product range Local sourcing of raw materials Reduce external spend Double/triple source raw materials Focus on indirect material spend Operational excellence program focused on Manufacturing
Slide 61: Growth through product, process and service innovation across all businesses
Growth through product, process and service innovation across all businesses – Dedicated RD&I resources Strategic drivers – >2,000 highly qualified scientists and technicians – ~3% of revenues Customer efficiency – Strategic research groups: – Sassenheim (NL) – Felling (UK) Customer benefits – Stron
Slide 62: Decorative Paints at a glance
Decorative Paints at a glance Decorative Paints key figures Buildings and Infrastructure revenue breakdown € million 2015 25% Maintenance, renovation Revenue 4,007 and repair EBITDA 495 Operating income 345 New build projects Return on sales 8.6% 75% Return on investment 11.7% Employees 14,900 Key c
Slide 63: Changing growth expectations in maintenance, renovation and repair
Changing growth expectations in maintenance, renovation and repair Maintenance and repair, excluding infrastructure and industrial construction $ billion, output Global Europe Germany 3.9% p.a. Europe* 2.8% p.a. 0.1% p.a. 0.4% p.a. North America 3.4% p.a. UK 4.7% p.a. 3.4% p.a. 6.5% p.a. Italy 1.6%
Slide 64: AkzoNobel has a strong 1 or 2 market position in all regions where present
AkzoNobel has a strong 1 or 2 market position in all regions where present AkzoNobel Market size AkzoNobel market share x Segment growth regions* € million, 2014 position* (by value) 2014 % p.a., 2015-2018 UK & Ireland 1 1.5 – 3.0% >3% South America 1 South East & South >3% Asia & Middle East 2 Chin
Slide 65: Unique competitive positioning demonstrating resilient business model
Unique competitive positioning demonstrating resilient business model Diversified, exposure outside Tikkurila Jotun Nippon AkzoNobel mature geographies Valspar Diversified, mostly mature Cromology PPG geography Focused, exposure outside Asian Paints mature geographies Focused, mature Masco (Behr) Sh
Slide 66: We have updated our strategic actions to reflect our new priorities
We have updated our strategic actions to reflect our new priorities Strategic focus areas Processes Actions End-user segments Business Area actions Win locally Leverage our scale: • Innovation • Commercial excellence • Digital • Painters • Color • Supply chain • Brands • Sustainability A Appendix In
Slide 67: Winning locally by leveraging our scale
Winning locally by leveraging our scale Multi-functional approach Recognized as passionate Innovation Products and services Color color expert Continued emphasis on Commercial Menu to facilitate procurement (including winning locally Supply chain excellence localization) Continuous improvement Consu
Slide 68: Decorative Paints innovation agenda
Decorative Paints innovation agenda End-user segment requirements/trends Differentiation in Beyond Mass market growth Regulatory large scale outlets Energy-efficient commoditization of (emerging markets) Well-being compliance (LSOs) solutions color (aesthetics) Innovation agenda implication Lower co
Slide 69: Transforming Integrated Supply Chain to deliver leading performance
Transforming Integrated Supply Chain to deliver leading performance
Slide 70: Our supply chain is fundamental to our success
Our supply chain is fundamental to our success Largest function in the company, with close to 22,000 colleagues across our three Business Areas Backbone of company, responsible for processes to design, deploy and deliver our products We deliver to our customers from over 200 manufacturing sites Each
Slide 71: The Supply Chain vision and targets support delivering leading performance
The Supply Chain vision and targets support delivering leading performance World class metrics Strategic imperatives Safety World class safety, operational and customer service performance TRR Zero process safety incidents Cost position creates competitive advantage in our industry Service Leveragin
Slide 72: Leading performance is gaining momentum
Leading performance is gaining momentum 1 – 3 years 3 – 6 years 7+ years World class Internal best performance Industry best performance performance Objective: Today Objective: Objective: Functional excellence and capability Delivering leading and sustainable Delivering world class functional and tr
Slide 73: We are implementing the AkzoNobel Leading Performance System (ALPS)
We are implementing the AkzoNobel Leading Performance System (ALPS) Processes Processes Standard and integrated work processes Clear goals and metrics Behaviors Performance-driven, continuous Enablers improvement culture Capability development Change management Behaviors ALPS Enablers Leading edge p
Slide 74: Robust organization utilizing rigorous process
Robust organization utilizing rigorous process Design Deploy Deliver Decorative Paints deploy team Center of Performance Coatings Excellence deploy team Specialty Chemicals deploy team 5 CI experts 100+ CI team members 200+ sites worldwide GO LIVE Governance process Maturity audit Foundational Prima
Slide 75: Decorative Paints: ALPS improvement in productivity
Decorative Paints: ALPS improvement in productivity Filling line down-time dropped 79% after ALPS implementation Batch production time reduced by 11% + less variation ALPS implementation Average cycle time 2014 2015 ALPS implementation Oct 2014 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Weeks A
Slide 76: Performance Coatings: ALPS improvement in on-time in-full
Performance Coatings: ALPS improvement in on-time in-full On-time in-full improved 58% after ALPS implementation 92% 93% 94% 95% 95% 95% 95% 90% 85% 80% 75% 60% On-time in-full target Actual 2015 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec ALPS implementation A Appendix Source : AkzoNobel analy
Slide 77: Specialty Chemicals: ALPS improvement in productivity
Specialty Chemicals: ALPS improvement in productivity Productivity offsets inflation after ALPS implementation 2,5% 10.000 2,0% 8.000 1,5% 6.000 4.000 1,0% 2.000 0,5% - 0,0%0 (2.000)Productivity YTD % -0,5% (4.000)Productivity value YTD -1,0% --- Productivity target % (6.000) -1,5% (8.000) Q1 Q2 Q3
Slide 78: Building a strong financial foundation to deliver leading performance
Building a strong financial foundation to deliver leading performance
Slide 79: Sustained leading performance in working capital management
Sustained leading performance in working capital management Operating Working Capital € million Strong record of operating working capital Operating Working Capital management OWC as % of LQ revenue * 4 2.500 16% Discipline will be maintained and effectiveness 14% improved 2.000 10.7% 12% 9.9% 10.1%
Slide 80: Disciplined capital expenditure based on ROI and investment in growth
Disciplined capital expenditure based on ROI and investment in growth Capital expenditures € million Specialty Chemicals Decorative Paints Build on significant investments made during Performance Coatings Other recent years CAPEX as % revenue Strong discipline 5.4 4.6 4.4 4.1 Prioritization based on
Slide 81: Recent investments support organic growth and operational excellence
Recent investments support organic growth and operational excellence Ashington, UK Frankfurt, Germany Chengdu, China Changzhou, China Dubai, UAE Gwalior, India Ningbo, China Chonburi, Thailand Suzano, Brazil Decorative Paints Performance Coatings Specialty Chemicals A Appendix Investor update 81
Slide 82: Strong financial position provides foundation for growth
Strong financial position provides foundation for growth Average cost of long-term bonds reduced and maturity increased At March 31, 2016 net debt was €1.7 billion (2015: €2.3 billion) In April 2016, repaid £250 million (coupon rate 8%) and issued €500 million (coupon rate 1.125%) Debt maturities €
Slide 83: Triennial of CPS concluded and top-up schedule updated
Triennial of CPS concluded and top-up schedule updated Triennial review of the AkzoNobel (CPS) Pension Scheme completed March 2016 Payment schedule agree with Trustees, resulting in a lower annual top-up contribution ICI Pension Fund de-risking through a non-cash buy-in transaction of €419 million E
Slide 84: Free cash flow continues to improve
Free cash flow continues to improve FY2012 FY2013 FY2014 FY2015 € million EBITDA 1,597 1,513 1,690 2,088 Interest paid -231 -228 -206 -151 Tax paid -209 -230 -258 -261 Changes in working capital, provision* and other 143 69 -145 -224 Capital expenditures (including intangible assets) -905 -695 -612
Slide 85: Increase in dividends a clear sign we are more confident about cash flow generation
Increase in dividends a clear sign we are more confident about cash flow generation Dividends € per share Dividend policy is to pay a “stable to rising” Final dividend dividend each year Interim dividend Interim and final dividend paid in cash, unless shareholders elect to receive a stock dividend 1
Slide 86: Positive net cash generation after paying dividends
Positive net cash generation after paying dividends FY2012 FY2013 FY2014 FY2015 € million Free cash flow -168 21 199 448 Dividend paid -256 -286 -280 -281 Other 65 66 57 29 Net cash generation (from continued operations) excl. acquisitions and divestments -359 -199 -24 196 Acquisitions -145 -34 -13
Slide 87: Cash generation restored to invest in growth and improve shareholder returns
Cash generation restored to invest in growth and improve shareholder returns Capital allocation principles: 1. Support profitable organic growth through innovation and capital expenditures 2. Continue to manage balance sheet and retain BBB+ investment grade credit rating 3. Proactively manage pensio
Slide 88: Planning assumptions
Planning assumptions Market growth 2-3% (based on relevant geographic and market sector presence) Currencies versus €: $1.1, £0.71, RMB 7.1 Oil ~$60/bbl; no significant market disruption Research, development and innovation ~2.5% revenue Tax (ETR/CTR) ~29/24% EBIT OWC 10-12% revenue Capital Expendit
Slide 89: Breakdown of total raw material spend
Breakdown of total raw material spend 2015 Coatings Packaging specialties Titanium dioxide 10% 9% 7% Chemicals and 22% intermediates* Solvents 9% 24% 15% 4% Resins Additives Pigments A Appendix * Chemicals and intermediates include caustic soda, acetic acid, tallow, ethylene, ethylene oxide, sulfur,
Slide 90: Freight and logistics
The net impact of a sustained lower oil price can have a positive impact Freight and logistics Freight and logistics Raw materials Production Sales GDP Inventories A Appendix Investor update 90
Slide 91: Downstream oil related products have clearly different dynamics
Downstream oil related products have clearly different dynamics Feedstocks Base Intermediates and more complex molecules (petro)chemicals Intermediates Monomers, More complex Precursors, etc. molecules Solvents Crude Oil Methanol Monomers & Latex (Shale) Gas Ethylene Coal Ethanol Bio based Propylene