Akzo Nobel N.v. · EURONEXT:AKZA
Akzo Nobel — Q3 2022 Earnings Presentation
102 slides from Akzo Nobel's earnings presentation, Oct 20, 2022
Slide 1: Grow & Deliver Q3 2022
Investor update Investor update Grow & Deliver Q3 2022 February 17, 2022 October 20, 2022 February 17, 2022
Slide 2: Agenda
Agenda Setting the stage Capital allocation GROW Concluding remarks Sustainable innovation Q&A DELIVER Investor update Q3 2022 2022 Investor update | Grow & Deliver 2
Slide 3: Disclaimer/forward-looking statements
Disclaimer/forward-looking statements Alternative performance measures (APM) This presentation does not constitute or form a part of any offer to sell, or any invitation or other solicitation of When presenting operating results, AkzoNobel uses any offer, to buy or subscribe for any securities in th
Slide 4: Speakers
Speakers Thierry Vanlancker Maarten de Vries Michael Friede Klaas Kruithof Karen-Marie Katholm Chief Executive Officer Chief Financial Officer Chief Commercial Officer Chief Technology Officer Chief Integrated Supply Chain Officer 2022 Investor update | Grow & Deliver 4
Slide 5: Setting the stage
Setting the stage Thierry Vanlancker 2022 Investor update | Grow & Deliver 5
Slide 6: A focused paints and coatings company
A focused paints and coatings company EMEA North America 12% 50% North Asia 18% 2021 key data €9.6bn revenue €1.1bn adjusted OPI €1.4bn adjusted EBITDA 16.0% return on investment (ROI) South Asia Pacific 32,800 employees South America 12% 8% Note: Full-year 2021 revenue by destination for all region
Slide 7: People. Planet. Paint.
People. Planet. Paint. Clear purpose as the engine of our organization 2022 Investor update | Grow & Deliver 7
Slide 8: Global paints and coatings industry
Global paints and coatings industry Leading global player in large and attractive market Peer revenue comparison € billion, 2021* Top 12 players ~€140bn ~50% 18 market of the market 16 14 12 10 8 6 4 2 0 * Revenue for BASF, Kansai Paint, Jotun, Asian Paints and Hempel is for 2020. 2022 Investor upda
Slide 9: From 15 by 20 to Grow & Deliver
From 15 by 20 to Grow & Deliver Significant culture change with margins in top tier Strong margin progress versus peers Organizational Health Index (OHI)** AkzoNobel Peer 1 Peer 2 Participation rate at 86% 19 Peer 3 Peer 4 Peer 5 17 72 15 70 13 ROS% 11 9 60 56 7 AkzoNobel 5 2018 2019 2020 2021 50 Q2
Slide 10: Grow & Deliver targets
Grow & Deliver targets Building on new and strong foundation 2018 2021 2023 €1bn €1.4bn €2bn Adj. EBITDA Adj. EBITDA Adj. EBITDA 8.6% 11.4% +150 bps ROS ROS ROS vs 2020* Grow at or above relevant markets * 2020 ROS margin at 12.9%. 2022 Investor update | Grow & Deliver 10 Assumes no significant mark
Slide 11: Grow & Deliver: €2bn adj. EBITDA by 2023
Grow & Deliver: €2bn adj. EBITDA by 2023 ~€200m Deliver results ~€350m €2.0bn Grow revenue Integrated Product supply chain Growth portfolio management €1.44bn adds 1% CAGR 2021-23 market CAGR at 6%* Pricing initiatives Sustainable innovation 150 bps ROS expansion versus 2020 2021 FY 2021 In-line wit
Slide 12: Stronger and faster pricing initiatives
Stronger and faster pricing initiatives Previous cycle as proof point for margin expansion Adj. OPI Price versus raw material costs impact y-o-y (€m) impact 400 15 by 20 Grow & Deliver 300 200 100 0 -100 -200 -300 -400 2017 2018 2019 2020 2021 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 13: GROW
GROW Thierry Vanlancker Michael Friede 2022 Investor update | Grow & Deliver 13
Slide 14: Strong global coatings portfolio with leading positions in key markets
Strong global coatings portfolio with leading positions in key markets Business Market size Position Market Adj. market Current market dynamics ~€bn, 2021* by revenue growth growth value value ‘21-’23 ‘21-’23 Demand for sustainable solutions Powder Strong value proposition including technical qualit
Slide 15: Strong global paints portfolio with leading positions in key regions
Strong global paints portfolio with leading positions in key regions Region Market size Position Market Adj. market Current market dynamics ~€bn, 2021* by revenue growth growth value value ‘21-’23 ‘21-’23 DIY demand stabilized at higher level Recovery of professional and project segments Paints EMEA
Slide 16: Strong start to Grow & Deliver
Strong start to Grow & Deliver Outgrew market by 1% in 2021, in line with strategy 2021 versus 2020 comparison (organic) 2021 versus 2019 comparison (organic) Revenue Outgrew market Revenue growth % in 2021 growth % by 1% revenue 14.8 14.5 18.4 11.9 12.9 10.0 13.2 8.5 8.5 0.4 -3.6 Market AkzoNobel P
Slide 17: Well-positioned in key growth markets
Well-positioned in key growth markets Growth businesses to drive additional 1% revenue CAGR 1/3 of portfolio well-positioned Powder to outgrow Packaging Aero relevant markets Paints China Yacht Paints Cons. LATAM Growth Elect. Wood Coil Marine Paints Paints Protective EMEA South Asia Vehicle Refinis
Slide 18: GROW Coatings
GROW Coatings Michael Friede 2022 Investor update | Grow & Deliver 18
Slide 19: Performance Coatings
Performance Coatings Leading global businesses; strong technologies and brands Marine and Automotive Powder Industrial and Specialty Protective Key sub- Architecture Packaging Marine Vehicle Refinishes segments Automotive Coil & Extrusion Protective Specialty Plastics Functional Wood Yacht Aerospace
Slide 20: Megatrends driving growth in Coatings
Megatrends driving growth in Coatings Liquid-to-powder conversion (low VOC* and waste) Sustainability and Electric vehicle growth with expected 30% market penetration** energy transition Shift from plastic to metal beverage packaging Asset investments into global energy transition Consumer preferenc
Slide 21: Powder Coatings
Powder Coatings Clear leadership position and aggressively investing for growth €10bn market Powder Coatings capital expenditures Key growth drivers: Liquid-to-powder conversion, e.g. North America architectural 8% +€41m New applications including market CAGR 2021-23 e-mobility and wood #1 in the ma
Slide 22: Packaging Coatings
Packaging Coatings Gaining share and success in beverage ‘can-ends’ €2.7bn market Packaging revenue growth Key growth drivers: Accelerated shift from plastic to metal Sustainable technology (BPAni) 8% 3% points of ~85 new can production lines to market CAGR 2021-23 growth driven 25 by can-ends launc
Slide 23: Aerospace Coatings
Aerospace Coatings Leading technology and strong customer relationship €0.5bn market Solid recovery in MRO Sub-segment revenue vs. 2018 Key growth drivers: Accelerated MRO recovery (index at 100) Rebound of OEM business 6% 110 100 Acceleration of film and markings 90 market CAGR 2021-23 Growth traje
Slide 24: Yacht Coatings
Yacht Coatings Attractive growth business with leading brands and technology €0.5bn market Yacht business split by € value Key growth drivers: Leading position in all segments, 6% Professional including maintenance with market CAGR 2021-23 complete offering Retail Increased retail demand from #1 in
Slide 25: GROW Decorative Paints
GROW Decorative Paints Thierry Vanlancker 2022 Investor update | Grow & Deliver 25
Slide 26: Decorative Paints
Decorative Paints One global brand portfolio with strong local positions EMEA LATAM North Asia South Asia UK and Ireland Brazil China retail India Key sub- Indonesia Benelux Argentina China project segments and Nordics, Eastern Colombia (Grupo Vietnam regions Europe Orbis) Middle East, Africa Revenu
Slide 27: Megatrends driving growth in paints
Megatrends driving growth in paints Strong demand for sustainable products supporting well-being & health Sustainability, Driven by legislation, e.g. EU Green Deal health and well-being Growing middle class in Asia leads to higher quality consumption in lower tier cities (especially China & India) S
Slide 28: Strong brand recognition
Strong brand recognition Leveraging our unique global scale for local impact #1 choice Innovation Branding Professional loyalty for consumers and Easycare family Global leveraging Painter Academy professionals 31 markets 17 countries 10 countries Only paint brand listed €130m in 18 months 100k in to
Slide 29: Decorative Paints EMEA
Decorative Paints EMEA Distribution, brand leverage and strong innovation pipeline €24bn market Consumers preferring brands* Key growth drivers: (in AkzoNobel top seven markets) Higher DIY demand 5% EU Green Deal (+1% CAGR) market CAGR 2021-23 70% Expand distribution network 20 leading positions Eff
Slide 30: Paints EMEA outgrowing the market
Paints EMEA outgrowing the market Driven by strong brands and distribution AkzoNobel Decorative Paints Europe development (Excludes Middle East and Africa) (Index at 100) 130 120 110 100 90 2018 2019 2020 2021 AkzoNobel Volume AkzoNobel Revenue At market Above market Strongly outgrowing market Marke
Slide 31: Decorative Paints China
Decorative Paints China Geographic retail expansion with strong brand and sustainable products ~€6bn market Sub-segment revenue vs. 2018 (index at 100) Key growth drivers: Premium Mid-tier Project Geographic expansion focused on 6% 120 tier 3-5 cities market CAGR 2021-23 110 Digital ecosystem upgrad
Slide 32: Decorative Paints Latin America
Decorative Paints Latin America Expanding strong presence with Grupo Orbis acquisition €4bn market* Leader overall with Key growth drivers: Grupo Orbis Proactive margin management to offset 5% raw materials and FX impact market CAGR 2021-23 Developing premium business through innovation and branding
Slide 33: Grow & Deliver: €2bn adj. EBITDA by 2023
Grow & Deliver: €2bn adj. EBITDA by 2023 Grow revenue in line with the market and outgrow selected markets ~€350m Growth portfolio adds 1% CAGR Grow revenue Powder Packaging Aero Yacht 2021-23 market Paints China CAGR at 6%* Paints LATAM Pricing initiatives Sustainable innovation €2.0bn €1.44bn FY 2
Slide 34: Sustainable Innovation
Sustainable Innovation Klaas Kruithof 2022 Investor update | Grow & Deliver 34
Slide 35: Recognized sustainability leader in industry
Recognized sustainability leader in industry AkzoNobel Industry average Investors Customers Investors Europe Society Society Industry average Industry average Industry average Industry average Industry average Industry average AkzoNobel AkzoNobel AkzoNobel AkzoNobel AkzoNobel AkzoNobel Only P&C comp
Slide 36: People. Building a diverse, inclusive and caring organization
People. Building a diverse, inclusive and caring organization Female executives (in %) Demonstrating diversity and inclusion >30% Leading safety record in the industry 30 >1,000 projects to help revitalize 25 22 communities between 2020 and 2025 20 21 20 18 35,000 community members trained 15 betwee
Slide 37: Planet. 50% less carbon emissions by 2030
Planet. 50% less carbon emissions from our own operations by 2030 Waste per ton of production (in kg) Ambitious 2030 environmental targets 22 100% renewable electricity >30% energy reduction* 100% 20 Towards zero waste: Renewable 100% reusable waste electricity in 100% of water intensive sites Europ
Slide 38: Paint. Delivering value with more sustainable solutions
Paint. Delivering value by offering increasingly more sustainable solutions From… Ambitious sustainable portfolio targets ~40% Revenue from sustainable >50% of revenue from sustainable solutions by 2030 solutions in 2021 50% recycled content to be used in plastic packaging by Deco Paints EU by 2025
Slide 39: Carbon reduction target validated by the Science Based Targets initiative
Pioneering carbon reduction target validated by the Science Based Targets initiative First paints and coatings company with a carbon reduction target for the full value chain Our target is to reduce carbon emissions for the whole value chain by 50% by 2030* Our target is aligned with the Paris agree
Slide 40: Sustainable innovation
Sustainable innovation Solutions beyond generations for our customers worldwide €1.25 billion spent on R&D in the last five years SCIENCE BASED TARGETS DRIVING AMBITIOUS CORPORATE CLIMATE ACTION 3,000 scientists employed worldwide 70 laboratories globally 5 global technology centers Patent positions
Slide 41: Collaborative innovation
Collaborative innovation Startup challenges Supplier challenges Academic program 2016-2026 Global – Brazil – China 2019-2021 Employing ~150 PhDs MEMBERS SUBMISSIONS SoMe REACH INVITEES SUBMISSIONS SoMe REACH Scientific leader: Prof. Ben Feringa, 10.008 750 71m 127 214 157k Nobel Prize Chemistry Laur
Slide 42: Collaborative Sustainability Challenge
Collaborative Sustainability Challenge 2022 Expanding our collaborative innovation ecosystem and collectively reducing our carbon footprint together with our value chain partners 42
Slide 43: DELIVER
DELIVER Maarten de Vries 2022 Investor update | Grow & Deliver 43
Slide 44: Strong foundation enables Grow & Deliver
Strong foundation enables Grow & Deliver Precise processes allow for further complexity reduction Current Towards 94% of revenue 1 ERP ERP on four main systems PRISM program SAP platforms Global Annual cost Business 6 GBS hubs productivity of 7-10% (~3,000 FTEs) through automation Services Foundatio
Slide 45: DELIVER Product management
DELIVER Product management Thierry Vanlancker 2022 Investor update | Grow & Deliver 45
Slide 46: Product management unlocking end-to-end value through complexity reduction
Product management unlocking end-to- end value through complexity reduction Legacy… High procurement Unleveraged scale complexity Too much Costly and vulnerable sourcing single sourced Small average High production costs and yield losses batch sizes Weak lifecycle Slow-moving and obsolete products m
Slide 47: Cross-functional collaboration is key to make product management successful
Cross-functional collaboration is key to make product management successful Delivering cost competitive portfolio… … Defining winning product range R&D Sales Optimized formulation Clear core product architecture assortment Procurement Security of supply and Product optimized raw management material
Slide 48: Product management in place
Product management in place Driving standardization and simplification Resulting in Half Double reduced complexity # of raw materials dual sourcing Fewer raw Increased Late Standardized Network materials batch size differentiation packaging optimization Number of raw materials decrease by half is fo
Slide 49: Case study 1: Product management Decorative Paints EMEA
Case study 1: Product management Decorative Paints EMEA From To High complexity in EMEA catalog of formulations and packaging Raw materials and Late differentiation for color, labeling and packaging packaging Reduced complexity in raw materials Finished products Leverage of manufacturing network thr
Slide 50: Case study 2: Resins manufacturing and supply
Case study 2: Resins manufacturing and supply Creating additional in-house value for sustainable growth Resins to support innovation, growth and sustainability Strategically positioned to leverage scale and generate value with 23 resin assets Investments to drive asset efficiency, secure raw materi
Slide 51: Resins: Value creation opportunity
Resins: Value creation opportunity Delivering more balanced supply at lower cost Our global Resin plants’ utilization (%) Resins assets to be better utilized Improving overall profitability 75% 50% 60% Driving supply chain resilience for one of our key raw material streams 2018 2021 2023F (2021: ~€1
Slide 52: DELIVER: Integrated supply chain
DELIVER: Integrated supply chain Karen-Marie Katholm 2022 Investor update | Grow & Deliver 52
Slide 53: Fit-for-purpose integrated supply chain
Fit-for-purpose integrated supply chain Focusing on customer centricity with our 2023 ambitions in mind ~14,000 People 2023 ambitions Safety Safety Service 120 Manufacturing Sites Remain Top notch best-in-class service levels 330 Warehouses Cost Efficiency People ~€300m CapEx/Year offsetting fixed T
Slide 54: Turning supply chain into a competitive advantage
Turning supply chain into a competitive advantage Plan Source Make Deliver Enhanced operating Digital Network optimization End-to-end visibility model transformation with insourcing in logistics capabilities Standardized and Enhanced Optimized integrated processes forecasting Continuous warehouse an
Slide 55: State-of-the-art demand & supply planning
State-of-the-art demand & supply planning Increased reliability, responsiveness and visibility for value-driven decisions From Through To Multiple versions of truth Optimally centralized Efficiently leveraged Plan Manual, disconnected supply planning and resilient supply chain network planning Stand
Slide 56: Digital procurement transformation
Digital procurement transformation Unlocking further value through sourcing efficiency and supply security Challenges Our response Towards 2023 Optimizing operating Increase dual-sourcing model through portfolio Supply optimization disruptions Inflation Improving forecasting Improve supplier risk ca
Slide 57: Customer-centric network optimization
Customer-centric network optimization Organized through manufacturing archetypes, while investing for growth Simple and Lowest total cost for high CAPEX shifting volumes at consistent quality towards growth efficient Example: White wall paint, 60% packaging coatings ~30% of volumes growth Many end p
Slide 58: Driving operational efficiency
Driving operational efficiency Continuous improvement via digitization & automation to offset fixed cost inflation 3+% efficiency gains on average Improvement in OPI per (year-on-year) site vs peers by 2023* 3500 0.33 OPI, €m per site 0.325 3000 0.32 2500 0.315 2000 0.31 0.305 1500 0.3 1000 0.295 0.
Slide 59: Improved customer service
Improved customer service Enabled by transparency and agility at competitive cost levels Improved service levels* Freight optimization COVID-19 Predictive analytics 100 88 93 90 80 70 Warehouse management 60 Network optimization 50 2018 2019 2020 2021 2022F 2023F Optimized warehouse network Tailored
Slide 60: Grow & Deliver: €2bn adj. EBITDA by 2023
Grow & Deliver: €2bn adj. EBITDA by 2023 Deliver efficiency gains and cost optimization ~€200m Deliver results Integrated supply chain Planning optimization Product management Increased productivity Raw material and and archetypes product standardization Network optimization Reduced complexity Impro
Slide 61: Capital allocation
Capital allocation Maarten de Vries 2022 Investor update | Grow & Deliver 61
Slide 62: Total shareholder return
Total shareholder return Significant value unlocked since 2017 Share price Share price Total shareholder €59.71 €94.56 return (per share) Share price 130 appreciation Rebased to AkzoNobel (€) €34.85 +102% 105 Regular +58% dividends +57% €9.28* 80 Special shareholder 55 returns** €17.28 Share price T
Slide 63: Delivering on capital allocation priorities
Delivering on capital allocation priorities Profitable organic growth ~3% capital expenditures/revenue Dividend Stable to rising Acquisitions Strategically aligned and value creating Shareholder returns Modular share buybacks Net debt/EBITDA target 1-2x Retain strong investment grade credit rating 2
Slide 64: On the way to €2bn adj. EBITDA by 2023
On the way to €2bn adj. EBITDA by 2023 Increasing return on invested capital 16.1% 16.0% ~€200m 14.1% ~€350m €2bn 12.6% ROI Adj. EBITDA 1,341 1,442 1,436 (€m) 1,037 2018 2019 2020 2021 Grow Deliver 2023 2022 Investor update | Grow & Deliver 64
Slide 65: Working capital and free cash flow
Working capital and free cash flow Impacted by raw material inflation and supply constraints Operating working capital Free cash flow (FCF) €m (Trade) as a % of revenue excl. pension pre-funding and top-up payments FCF yield* Working capital lower 13.0% versus comparable peers 11.9% 1.8% 5.0% 11.6%
Slide 66: Capital expenditures
Capital expenditures Directing investments to support growth businesses CAPEX expansion to support Grow & Deliver ... …with increased focus on Asia 3.0% 3.0% 2018 2021 350 3.30% 300 2.3% 2.80% 8% 6% 250 2.0% 288 2.30% 258 11% 15% 200 1.80% 46% 150 214 1.30% 184 54% 100 0.80% 27% 33% 50 0.30% 0 -0.20
Slide 67: Shareholder returns
Shareholder returns Significant reduction in shares through share buybacks 256 29% of shares canceled vs 2018 200 191 182 €2.5bn cash returned from Specialty 172* Chemicals divestment in 2019 2,534 New share €1.8bn*** in Q4 2019-22 YTD 1,135 buyback 545 0 500 132 announced €500m new share buyback to
Slide 68: Dividends and earnings per share
Dividends and earnings per share Stable to rising dividends and significant EPS growth Dividends per share (€) Adj. earnings per share* (EPS) (€) 2.3% 113% avg. dividend adj. EPS yield 2018-21 growth 4.07 1.90 1.95 1.98 2018-21 3.88 1.80 3.10 1.49 1.52 1.54 1.91 1.43 0.37 0.41 0.43 0.44 2018 2019 20
Slide 69: Executing on capital allocation priorities
Executing on capital allocation priorities Deployed >75% of cash to shareholder returns (2020-21) (0.4)x* 0.7x 0.8x 1.6x Cash deployment 2020-21 (€m) 2,000 17% 1,500 4% 1,000 54% 25% 500 0 2018 2019* 2020 2021 Year-end net leverage CAPEX Acquisitions Dividend Share buybacks * Adjusted for the cash r
Slide 70: Track record of strategic M&A
Track record of strategic M&A Spain 2018 Leading woodcare position Romania Track record of accretive Leading paints position acquisitions Malaysia Leading paints position Clear mapping to business and Aerospace regional gaps and opportunities 2019 Cabin/interior coatings Delivered 1% CAGR of inorgan
Slide 71: M&A case study: Decorative Paints Spain
M&A case study: Decorative Paints Spain Building on strong foundations with series of acquisitions €600m* market Revenue AkzoNobel paints Spain (€m) Logical +172% fit Leading position** #1 position** Leading local brands: ▪ #1 brand** in color (Bruguer) ▪ #1 brand** in premium wall paint (Titan) ▪ L
Slide 72: GROW & DELIVER recap
GROW & DELIVER recap Thierry Vanlancker 2022 Investor update | Grow & Deliver 72
Slide 73: EBITDA margin on par with US peers
EBITDA margin on par with US peers Adj. EBITDA margin (%) Evolution of EV to trailing 12 months adj. EBITDA** 22x 17.5 20x 16.9 17.3 16.4 15.9 14.4 15.0 18x ~17x 12.5 12.3 11.2 16x 14x ~14x 12x 10x 8x 2018 2019 2020 2021 Q4 2021 Jan-20 Jun-20 Nov-20 Apr-21 Sep-21 Feb-22 AkzoNobel Average US peers* A
Slide 74: Grow & Deliver: €2bn adj. EBITDA by 2023
Grow & Deliver: €2bn adj. EBITDA by 2023 Step-up underpinned by growth and operational efficiencies ~€200m Deliver results ~€350m €2.0bn Grow revenue Integrated Product supply chain Growth portfolio management €1.44bn adds 1% CAGR 2021-23 market CAGR at 6%* Pricing initiatives Sustainable innovation
Slide 75: Investor update Q3 2022
Investor update Q3 2022 October 20, 2022 Powering the future of electric vehicles The electric vehicle market continued to accelerate during Q3, reflected in ongoing interest for our dedicated powder coatings portfolio. We supply products that help batteries to last longer and vehicles to drive furt
Slide 76: Agenda
Agenda Key highlights Financial review Concluding remarks Q&A Alternative performance measures (APM) AkzoNobel uses APM adjustments to the IFRS measures to provide supplementary information on the reporting of the underlying developments of the business. A reconciliation of the alternative performan
Slide 77: Revenue up 19% on strong pricing of 13%
Revenue up 19% on strong pricing of 13% 3rd consecutive quarter offsetting raw material inflation Q3 2022: YTD 2022: Revenue Pricing Revenue €354m of €500m share buyback completed 4% reduction Up 19% Up 13% Up 15% in share count (up 6% in Q3’21) (up 9% in Q3’21) (up 14% in YTD’21) vs 2021YE Adjusted
Slide 78: Progress despite external headwinds
Progress despite external headwinds Cumulative pricing offsets cumulative raw material inflation Growth for 9th Paints EMEA packaging consecutive quarter rationalization: number Cumulative pricing 22% offsets of packs reduced by 35% cumulative raw material inflation In-house resins helped over seven
Slide 79: High macro-economic uncertainty in Europe and China
High macro-economic uncertainty in Europe and China North Latin North South America America EMEA Asia Asia Europe: China: Paints Weakening COVID restrictions consumer Declining real confidence estate market Industrial Deterioration in Weakening economic outlook consumer Continued supply Proactive co
Slide 80: Organic volume trends below 2019 level
Organic volume trends below 2019 level Destocking across distribution channels and market slowdown Paints sales volumes Coatings sales volumes indexed to H2 2019 indexed to H2 2019 Low-single High-single 105 digit % 105 digit % vs H2’19 vs H2’19 100 100 95 95 90 90 85 85 80 80 75 75 H2'19 H2'21 H1'2
Slide 81: Financial review
Financial review Investor update | Q3 2022 81
Slide 82: Revenue 19% higher driven by strong pricing
Revenue 19% higher driven by strong pricing Volumes lower driven by destocking in the distribution € million Q3 2021 Q3 2022 Δ% Δ%CC channels for Deco Europe and Coatings, as well as lower Revenue 2,410 2,862 19% 14% market demand in China Adjusted EBITDA1 325 283 (13%) Revenue growth with pricing,
Slide 83: Pricing offsets inflation headwind for the third consecutive quarter
Pricing offsets inflation headwind for the third consecutive quarter Adjusted operating income1 (€m) Positive impact Negative impact - 279 316 ROS1 10.0% 11 - 53 -6 - 29 - 17 ROS1 6.4% 241 201 184 Q3 2021 FX Volumes Mix Price Raw material and OPEX Q3 2022 excl. Retrospective Q3 2022 freight cost and
Slide 84: Raw material and freight inflation of €1.7bn fully offset by pricing
Raw material and freight inflation of €1.7bn fully offset by strong pricing initiatives over Q1’21-Q3’22 Raw material and freight inflation1 Pricing 22% 20.5% 19% €210m‒ 279 9%‒10% 240m 13% 16% 321 17% 334 325 325 12.5% 12.5% 278 278 9% 9% 128 128 4.5% 4.5% 38 38 2% 2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4F Q1 Q2
Slide 85: Early signs of raw material cycle turning
Early signs of raw material cycle turning Adj. OPI Price/mix versus raw material costs impact y-o-y (€m) impact 450 15 by 20 Grow & Deliver 350 250 150 50 -50 -150 -250 -350 -450 2017 2018 2019 2020 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Price/mix impact Raw m
Slide 86: Paints pricing up 11%
Paints pricing up 11% Strong growth in LATAM and recovery in South Asia EMEA: revenue 1% higher, strong pricing and relatively stable € million Q3 20212 Q3 2022 Δ% Δ%CC demand in professional trade offset by lower volumes in DIY Revenue 1,013 1,170 15% 13% segment Adjusted EBITDA1 184 148 (20%) LATA
Slide 87: Coatings pricing up 15%
Coatings pricing up 15% Volume growth in Automotive & Specialty and Marine & Protective € million Q3 20212 Q3 2022 Δ% Δ%CC Industrial: revenue up 17% despite lower volumes from destocking Revenue 1,396 1,691 21% 15% Powder: revenue up 7% with material impact from destocking Adjusted EBITDA1 168 149
Slide 88: Working capital and free cash flow
Working capital and free cash flow Impacted by raw material inflation and destocking in end-markets Operating working Free cash flow (FCF)2 €m Working capital impacted by capital (Trade)1 excl. pension top-up payments increase in raw material prices as a % of revenue Q3 YTD – vs Q2, inventory reduct
Slide 89: Adjusted EBITDA, adjusted EPS and dividends
Adjusted EBITDA, adjusted EPS and dividends Adjusted EBITDA1 Adjusted earnings per share1 Dividends per share (€m) (EPS) from continuing (€) operations (€) Q3 YTD Number of shares (weighted average) Interim Final 204m 191m 184m 174m 1,135 1,029 1,062 Q3 YTD 1.90 1.95 1.98 937 3.32 2.80 2.35 2.28 1.4
Slide 90: Delivering on capital allocation priorities
Delivering on capital allocation priorities Profitable organic growth ~3% capital expenditures/revenue Dividend Stable to rising Acquisitions Strategically aligned and value creating Shareholder returns Modular share buybacks Net debt/EBITDA target 1-2x Retain strong investment grade credit rating I
Slide 91: Concluding remarks
Concluding remarks Investor update | Q3 2022 91
Slide 92: Q3 Highlights, Q4 Assumptions, Outlook
Q3 Highlights Outlook Pricing up 13% compared with Q3 2021. Revenue 19% higher AkzoNobel targets to grow at or above its relevant Weakening consumer confidence resulting in destocking in Europe markets, in line with the company’s Grow & Deliver and softer demand in China strategy. Several end market
Slide 93: Upcoming events
Upcoming events Ex-dividend date of 2022 interim dividend October 24, 2022 Record date of 2022 interim dividend October 25, 2022 Payment date of 2022 interim dividend November 3, 2022 Report for fourth quarter February 8, 2023 Investor update | Q3 2022 93
Slide 94: A focused, high performing, paints and coatings company
A focused, high performing, paints and coatings company Strong global brands Leading positions in large and attractive markets Balanced geographic exposure: ~50% revenue from emerging markets Grow & Deliver strategy balances growth and margin improvement Sustainability fully integrated with our Peop
Slide 95: Disclaimer/forward-looking statements
Disclaimer/forward-looking statements This presentation1 does not constitute or form a part of any offer to sell, or any invitation or other solicitation of any offer, to buy or subscribe for any securities in the United States or any other jurisdiction. Some statements in this presentation are 'for
Slide 96: Appendix
Appendix Investor update | Q3 2022 96
Slide 97: Robust pricing initiatives continue; Q3 pricing up 13%
Robust pricing initiatives continue; Q3 pricing up 13% Paints Coatings Total Quarterly price/mix development in % year-on-year +13% price +15% price -% mix +11% price +11% price -1% mix +9% price +7% price -% mix -% mix +2% mix +3% mix 16 16 11 1919 12.5 8 9 6 12 7 7 7 14 14 13 4 5 4 5 4 10 1111 5 1
Slide 98: Performance measures
Performance measures Definitions of alternative performance measures Adjusted earnings per share are the basic earnings per share from operations, excluding identified items and taxes thereon Adjusted EBITDA is operating income excluding depreciation, amortization and identified items Adjusted opera
Slide 99: Additional financial information
Additional financial information Consolidated statement of free cash flows1 Operating income to net income Q3 Q3 YTD YTD Q3 Q3 YTD YTD 2021 2022 € million 2021 2022 2021 2022 € million 2021 2022 313 265 EBITDA 1,170 878 226 168 Operating income 913 605 3 2 Impairment losses 3 6 (19) (33) Financing i
Slide 100: Alternative performance measures
Alternative performance measures Q3 Q3 YTD YTD Q3 Q3 YTD YTD Average invested capital (€m) 2021 2022 Δ% Operating income (€m) 2021 2022 Δ% 2021 2022 OPI margin (%) 2021 2022 Oct’20 – Sep’21/Oct’21 – Sep’22 2021 2022 Δ% 143 102 (29%) Decorative Paints 520 343 (34%) 14.1 8.7 Decorative Paints 17.2 10.
Slide 101: Impact from hyperinflation accounting
Impact from hyperinflation accounting € million Revenues Adj. OPI1 Net income Impact related to Q3 19 (8) (22) Impact related to H1 recognized in Q3 (6) (17) (6) Total impact recognized in Q3 13 (25) (28) YTD impact 26 (30) (48) A 1. Alternative performance measure, for definitions and reconciliatio
Slide 102: Recognized sustainability leader in industry
Recognized sustainability leader in industry AkzoNobel Industry average Investors Customers Investors Europe Society Society Industry average Industry average Industry average Industry average Industry average Industry average AkzoNobel AkzoNobel AkzoNobel AkzoNobel AkzoNobel AkzoNobel Only P&C comp