Slide 1: Investor update Q2 2022
Investor update Q2 2022 July 20, 2022 • Rising to the challenge The world’s biggest offshore wind farm is being protected from the ravages of the North Sea by our International coatings. Hornsea 2 is located off the east coast of England and is capable of powering more than 1.3 million homes. All 16
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 14% on strong pricing of 16%
Revenue up 14% on strong pricing of 16% 2nd consecutive quarter offsetting raw material inflation Q2 2022: H1 2022: Revenue Pricing Revenue Pricing vs raw material & freight inflation Up 14% Up 16% Up 13% +€109m* (up 10% in CC) (up 4.5% in Q2’21) (up 10% in CC) (-€36m in H1’21) Adjusted ROS** Adjust
Slide 4: Topline growth, pricing and Focus2 initiatives drive Grow & Deliver strategy
Topline growth, pricing and Focus2 initiatives drive Grow & Deliver strategy Growth for 8th Inclusion in Euronext consecutive quarter Amsterdam’s new AEX® Cumulative pricing above 20% ESG Index offsetting raw material and freight Maintained all-time high inflation over 2-year period Organizational H
Slide 5: Mitigating increasing macroeconomic uncertainty with launch of Focus2 initiatives
Mitigating increasing macroeconomic uncertainty with launch of Focus2 initiatives Focus2 Grow & Deliver initiatives Grow revenue & €2.0bn expand margin Deliver results €1.44bn €200m Margin management: €100m Cost reduction: €100m Adj.FYEBITDA 2021 GROW DELIVER Focus2 Adj. FY EBITDA 2023 2021 2023 Inv
Slide 6: Acquisition of Kansai Paint Africa strengthens position in Africa
Acquisition of Kansai Paint Africa strengthens position in Africa Plascon brand >100 years of heritage, longest-established paint brand in region together with Dulux Strong combination of portfolio, market expertise and platform for future growth (~6% growth rate*) Completion expected during 2023 ~€
Slide 7: Acquisition of Lankwitzer Lackfabrik's aluminum wheel liquid coatings business
Acquisition of Lankwitzer Lackfabrik’s aluminum wheel liquid coatings business AkzoNobel to acquire Lankwitzer Lackfabrik’s aluminum wheel liquid coatings business AkzoNobel is to bolster its performance coatings portfolio after reaching an agreement to acquire the wheel liquid coatings business of
Slide 8: Q2 impacted by short-term headwinds with increasing uncertainties, especially in Europe
Q2 impacted by short-term headwinds with increasing uncertainties, especially in Europe North Latin America America EMEA North Asia South Asia Paints Industrial Powder Automotive and Specialty Marine and Protective Signs of sequential DIY EMEA: slow Q2 Q2 China COVID Strong improvement in start and
Slide 9: Post-lockdown reopening in China
Post-lockdown reopening in China China weekly volumes ‘22 vs ’21 (4-week moving average y-o-y) lockdown 2022 20% 10% 2022 lockdowns in China impacted both Paints and 0% Paints Coatings -10% Paints revenue was supported by geographical expansion -20% Coatings ‒ 66 new cities in Q1 and -30% 113 new in
Slide 10: Case history ‒ Deco UK DIY
Deco EMEA DIY Q2 volume impacted by destocking Case history ‒ Deco UK DIY UK DIY sell-out volumes UK DIY channels inventory build ‘22 vs ‘19 (indexed, 100 = inventory as of Jan 1, 2019) 20% 200 15% 180 2022 10% 160 5% 140 0% 2019 120 -5% -10% 100 -15% 80 Jan Feb Mar Apr May Jun 1 3 Feb 5 17 Mar 9 1
Slide 11: Industrial coatings driving growth through sustainable innovation
Industrial coatings driving growth through sustainable innovation ~€15bn* market Industrial coatings revenue development Sustainable innovation Moving average (index at 100) Packaging €1.9bn 150 Coil Packaging Next-generation BPAni technology for revenue in 2021 130 Wood metal packaging 110 Coil & E
Slide 12: Financial review
Financial review Investor update | Q2 2022 12
Slide 13: Revenue 14% higher driven by strong pricing
Revenue 14% higher driven by strong pricing Q2 Q2 Volumes lower mainly due to destocking in Europe DIY € million 2021 2022 Δ% Δ%CC channels and China lockdowns, Q2 volumes at 2019 levels Revenue 2,511 2,853 14% 10% Revenue growth with pricing offsetting lower volumes Adjusted EBITDA* 419 337 (20%) A
Slide 14: Pricing offsets inflation headwind for the second consecutive quarter
Pricing offsets inflation headwind for the second consecutive quarter Adjusted operating income* (€m) Positive impact Negative impact - 321 392 17 ROS* 13.3% - 118 - 56 ROS* 8.7% 0 - 335 249 Q2 2021 FX Volumes Mix Price Raw material and OPEX and one-offs Q2 2022 freight cost * Alternative performanc
Slide 15: Q2 pricing up 16%, 20% on 2-year stack
Q2 pricing up 16%, 20% on 2-year stack Raw material* price index development AkzoNobel pricing (%)** y-o-y impact (€m) 24 22 16% €321m 17% €334m 20 €260-290m 18 €325m €278m 16 12.5% 12-14% 14 €278m 12 10 9% 9% €128m 8 6 4.5% 4 2% 2 €38m 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2021 2022 2021 2022
Slide 16: Stronger and faster pricing initiatives deliver expanding price-vs-raws
Stronger and faster pricing initiatives deliver expanding price-vs-raws 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 Q
Slide 17: Paints pricing up 13% with volumes impacted by Europe DIY and China lockdowns
Paints pricing up 13% with volumes impacted by Europe DIY and China lockdowns Q2 Q2 EMEA: revenue 7% lower, pricing and strength in professional € million 2021** 2022 Δ% Δ%CC trade offset by lower volumes from destocking in DIY channels Revenue 1,086 1,182 9% 6% LATAM: revenue 99% higher driven by p
Slide 18: Coatings revenue up 17% despite China lockdowns
Coatings revenue up 17% despite China lockdowns Q2 Q2 Industrial: revenue up 22%; growth across all segments, esp. € million 2021** 2022 Δ% Δ%CC in coil and packaging Revenue Powder: revenue up 3% with material impact from China 1,423 1,670 17% 13% lockdowns and supply constraints in North America A
Slide 19: Working capital and free cash flow
Working capital and free cash flow Impacted by raw material inflation and supply constraints Operating working Free cash flow (FCF)** €m capital (Trade)* excl. pension top-up payments Working capital impact from raw as a % of revenue material inflation ~3% of revenue Q2 H1 Grupo Orbis added 0.4% to
Slide 20: Adjusted EBITDA and adjusted EPS
Adjusted EBITDA and adjusted EPS Adjusted EBITDA* Adjusted earnings per share* (€m) (EPS) from continuing €245m shares operations (€) Number of shares (weighted average) repurchased of new Q2 H1 216m 191m 187m 176m €500m buyback program 810 642 654 1.20 €402m shares 623 0.96 repurchased in H1 0.80 0
Slide 21: 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 22: Concluding remarks
Concluding remarks Investor update | Q2 2022 22
Slide 23: Q2 Highlights Outlook
Q2 Highlights Outlook Pricing up 16% compared with Q2 2021. Revenue AkzoNobel targets to grow at or above its relevant 14% higher markets, in line with the company’s Grow & Deliver Raw material and freight costs increased strategy. Trends differ per region and segment, with raw €321 million compared
Slide 24: Upcoming events
Upcoming events Extraordinary General Meeting September 2022 Report for the third quarter 2022 October 20, 2022 Investor update | Q2 2022 24
Slide 25: 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 26: 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 'for
Slide 27: Appendix
Appendix Investor update | Q2 2022 27
Slide 28: Robust pricing initiatives continue; Q2 pricing up 16%
Robust pricing initiatives continue; Q2 pricing up 16% Paints Coatings Total Quarterly price/mix development in % year-on-year +16% price +18% price -% mix +1% mix +13% price -2% mix +5% price +3% price -1% mix +4.5% price 16 -5% mix 11 1919 12.5 8 9 -3.1% mix 16 6 1211 7 7 7 14 4 5 4 5 4 10 10 5 3
Slide 29: Performance measures and assumptions
Performance measures and assumptions Definitions of alternative performance measures Assumptions for 2023 Adjusted earnings per share are the basic earnings per share from Revenue growth ≥ market CAGR** operations, excluding identified items and taxes thereon Adjusted EBITDA is operating income excl
Slide 30: Additional financial information
Additional financial information Consolidated statement of free cash flows* Operating income to net income Q2 Q2 H1 H1 Q2 Q2 H1 H1 2021 2022 € million 2021 2022 2021 2022 € million 2021 2022 469 292 EBITDA 857 613 384 205 Operating income 687 437 (1) 1 Impairment losses (1) 4 (4) (28) Financing inco
Slide 31: Alternative performance measures
Alternative performance measures Q2 Q2 H1 H1 Q2 Q2 H1 H1 Average invested capital (€m) 2021 2022 Δ% Operating income (€m) 2021 2022 Δ% 2021 2022 OPI margin (%) 2021 2022 July 2020 - June 2021/July 2021 - June 2022 2021 2022 Δ% 234 128 (45%) Decorative Paints 377 241 (36%) 21.5 10.8 Decorative Paints
Slide 32: 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