Slide 1: Investor update Q3 2021
Investor update Q3 2021 October 20, 2021 ColorSurfaces Edition 17 sparks design inspiration This stunning collection of colors, finishes and effects will inspire surfaces designed for the aerospace, automotive and consumer electronics markets. According to our trend research, what people need most i
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: Key highlights
Key highlights Investor update | Q3 2021 3
Slide 4: Revenue up driven by strong pricing, on track to offset raw material inflation
Revenue up driven by strong pricing, on track to offset raw material inflation Q3 2021: YTD 2021: Revenue Pricing* Revenue €557m of €1bn In constant currencies* In constant currencies* share buyback completed 6% higher Up 9% 16% higher (up 5% vs 2019) (up 8% vs 2019) Adjusted Adjusted EPS* Adjusted
Slide 5: Pricing and growth segment performance underpin confidence in Grow & Deliver strategy
Pricing and growth segment performance, underpin confidence in Grow & Deliver strategy Strong focus on margin Growth for fifth management; pricing 9% consecutive quarter (revenue* up 5% versus 2019) Successful geographic expansion in Deco China while Strong growth in Deco EMEA avoiding project marke
Slide 6: Leading the industry in sustainability, with value chain carbon reduction target
Leading the industry in sustainability, with value chain carbon reduction target First paints and coatings company announcing a carbon reduction target for the full value chain Our target is aligned with the Paris agreement, aiming to limit global warming to max 1.5˚* Reducing scope 1 and 2 is alrea
Slide 7: Underlying demand robust, Q3 impacted by supply constraints and continued lockdowns
Underlying demand robust, Q3 impacted by supply constraints and continued lockdowns North South EMEA North South America America Asia Asia Paints Industrial Powder Automotive and Specialty Marine and Protective Backlog due Backlog due Signs to supply to supply lockdowns constraints constraints are l
Slide 8: Decorative Paints China growth supported by sustainable offering and wider distribution
Decorative Paints China growth supported by sustainable offering and wider distribution ~€5bn market YTD 2021 revenue up 3% in Expanding to Tier 3 and 4 cities constant currency vs. YTD 2019 Expanded to 90 new cities YTD Increased reach to additional 11,000 #1 in premium segment Revenue development
Slide 9: Automotive and Specialty Coatings continues profitable sequential recovery
Automotive and Specialty Coatings continues profitable sequential recovery €1.1bn revenue in 2020 Moving average revenue vs. 2018 (index) VR Aerospace Cons. Electronics Int. Ext. Plastics Vehicle refinish: ~€6bn market (#3) Margin management discipline Renewal of business partnership with Premium OE
Slide 10: Financial review
Financial review Investor update | Q3 2021 10
Slide 11: Revenue up 6% (5% versus 2019), with strong pricing initiatives to continue
Revenue up 6% (5% versus 2019), with strong pricing initiatives to continue € million Q3 2020 Q3 2021 Δ% Δ%CC Δ%CC Vs. Q3 ‘19 Revenue 2,276 2,410 6% 6% 5% Adjusted EBITDA* 439 325 (26%) Adjusted operating income* 353 241 (32%) ROS* 15.5% 10.0% ROI* 14.7% 17.5% Revenue development Q3 2021 (%) Increas
Slide 12: Significant price increases partly offset raw material inflation and volume decline
Significant price increases partly offset raw material inflation and volume decline Adjusted operating income* (€m) - Positive impact Negative impact - 37 ROS* 15.5% 210 - - 278 -4 - - - 64 - 13 ROS* 10.0% 353 Note: €22m temporary cost savings in Q3 2020 241 Q3 2020 FX Volumes Price Mix Raw material
Slide 13: Paints revenues 11% higher than 2019, driven by EMEA and South America
Paints revenues 11% higher than 2019, driven by EMEA and South America € million Q3 2020 Q3 2021 Δ% Δ%CC Δ%CC Vs. Q3 ‘19 Revenue 1,004 1,013 1% 1% 11% Adjusted EBITDA* 243 188 (23%) Adjusted operating income* 208 151 (27%) ROS* 20.7% 14.9% ……. Revenue development Q3 2021 (%) Increase Decrease +7% pr
Slide 14: Coatings revenue up 9%, supported by y-o-y growth in all segments
Coatings revenue up 9%, supported by y-o-y growth in all segments € million Q3 2020 Q3 2021 Δ% Δ%CC Δ%CC Vs. Q3 ‘19 Revenue 1,270 1,396 10% 9% 3% Adjusted EBITDA* 232 176 (24%) Adjusted operating income* 195 136 (30%) ROS* 15.4% 9.7% Revenue development Q3 2021 (%) We’ve agreed to extend our partner
Slide 15: Strong working capital management
Strong working capital management Operating working capital Free cash flow (FCF) €m (Trade)* excl. pension pre-funding and top- Net Debt/EBITDA 1.3 times as a % of revenue up payments** (Q3 2020: 1.0) 466 404 13.9% 13.5% 13.6% 262 225 198 86 Q3 YTD Q3 YTD Q3 YTD Q3 ‘19 Q3 ‘20 Q3 ‘21 2019 2020 2021 *
Slide 16: YTD Adjusted EPS up 19%, interim dividend up at €0.44
YTD Adjusted EPS up 19%, interim dividend up at €0.44 Adjusted EBITDA* Adjusted earnings per share* Dividend (€m) (EPS) from cont. operations (€) (€) Number of shares (weighted average) 204m 191m 184m 3.32 Final dividend Interim dividend 2.80 1.95 1,135 1.80 1.90 1,029 1,062 2.35 1.49 1.52 1.30 1.43
Slide 17: Q3 pricing September run rate at 10%, on track to offset inflation
Q3 pricing September run rate at 10%, on track to offset inflation on run rate basis by end 2021 Raw material price index development AkzoNobel pricing (%)* y-o-y impact (€m) 12-14% FY2021: >20% €310- 9% 340m €278m 4.5% 2% €128m €38m Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 18: Concluding remarks
Concluding remarks Investor update | Q3 2021 18
Slide 19: Q3 Highlights Outlook
Q3 Highlights Outlook Pricing up 9% compared with Q3 2020. AkzoNobel targets to grow at least in line with Revenue 6% higher (up 5% from Q3 2019, in its relevant markets. Trends differ per region and segment, with significant raw material cost constant currencies) inflation and supply constraints ex
Slide 20: Upcoming events
Upcoming events Ex-dividend date of 2021 interim dividend October 22, 2021 Record date of 2021 interim dividend October 25, 2021 Payment date of 2021 interim dividend November 4, 2021 Report for fourth quarter February 9, 2022 Investor update | Q3 2021 20
Slide 21: 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 People. Planet. Paint. approach to sustainabl
Slide 22: Disclaimer/forward-looking statements
Disclaimer/forward-looking statements This presentation 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 'forw
Slide 23: Appendix
Appendix Investor update | Q3 2021 23
Slide 24: Robust pricing initiatives continue, Q3 pricing up 9%
Robust pricing initiatives continue, Q3 pricing up 9% Paints Coatings Total Quarterly price/mix development in % year-on-year +9% price +2% price +4% price +3% price +7% price +1% price +2% price +4% price +2% mix -6% mix -3% mix -5% mix +3% mix -3% mix -3% mix -3% mix 11 11 9 6 11 0 4 5 8 6 4 5 2 1
Slide 25: Delivering on capital allocation priorities
Delivering on capital allocation priorities Profitable organic growth ~2.5% 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
Slide 26: Performance measures and assumptions
Performance measures and assumptions Definitions of alternative performance measures Assumptions for 2021-2023 Adjusted earnings per share are the basic earnings per share from operations, excluding identified items and taxes thereon Revenue growth ≥ market CAGR Adjusted operating income is operatin
Slide 27: Additional financial information
Additional financial information Consolidated statement of free cash flows* Operating income to net income Q3 Q3 YTD YTD Q3 Q3 YTD YTD € million € million 2020 2021 2020 2021 2020 2021 2020 2021 417 313 EBITDA 991 1,170 326 226 Operating income 720 913 1 3 Impairment losses 1 3 (15) (19) Net financi
Slide 28: Alternative performance measures
Alternative performance measures Q3 ’20 Q3 ’21 Δ% Operating income (€m) YTD ‘20 YTD ‘21 Δ% Q3 ’20 Q3 ’21 OPI margin (%) YTD ‘20 YTD ‘21 Average invested capital (€m) 2020 2021 Δ% 202 147 (27%) Decorative Paints 429 532 24% 20.1 14.5 Decorative Paints 16.1 17.6 Decorative Paints 2,882 2,771 (4%) 179
Slide 29: Leading industry in sustainability ratings
Leading industry in sustainability ratings AkzoNobel Industry average Investors Customers Investors Europe Society Chemical sector Only P&C company “Platinum” rating “Low risk” rating First in the chemical Included in Clean200 Highest ranked rated “AAA” industry P&C company