Slide 1: 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 2: 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 3: 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 4: 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 5: 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 6: 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 7: Financial review
Financial review Investor update | Q3 2022 7
Slide 8: 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 9: 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 10: 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 11: 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 12: 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 13: 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 14: 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 15: 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 16: 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 17: Concluding remarks
Concluding remarks Investor update | Q3 2022 17
Slide 18: 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 19: 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 19
Slide 20: 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 21: 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 22: Appendix
Appendix Investor update | Q3 2022 22
Slide 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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