Akzo Nobel N.v. · EURONEXT:AKZA
Akzo Nobel — Q2 2008 Earnings Presentation
46 slides from Akzo Nobel's earnings presentation, Jul 29, 2008
Slide 1: Q2 results, July 29, 2008: Resilient performance demonstrates strong fundamentals
Keith Nichols, CFO Q2 results, July 29, 2008 Resilient performance demonstrates strong fundamentals
Slide 2: The new AkzoNobel – key facts
The new AkzoNobel – key facts Revenue by segment Pro forma 2007 Decorative Paints • Revenue €14.4 billion Specialty Chemicals Performance Coatings • Around 60,000 employees • EBITDA: €1.9 billion 32% 31% • EBIT: €1.4 billion • Net income: €0.9 billion 37% • Pension under funding €1.5 billion Q2 Resu
Slide 3: AkzoNobel around the world
AkzoNobel around the world Revenue by origin 21% North America 49% Europe (incl. 7% US Deco) (incl. 7% emerging Europe) 19% Asia Pacific 8% Latin America 2% Other regions Pro forma 2007 Q2 Results 2008 | The new AkzoNobel 3
Slide 4: Q2 operational performance
Q2 operational performance Q2 Results 2008 | The new AkzoNobel 4
Slide 5: Q2 2008 highlights
Q2 2008 highlights Q2 revenue and EBITDA in constant currencies ahead 9 and 5 percent respectively Strong EBITDA margin of 13.6% Benefiting from geographical spread – 35 percent of business in emerging markets Earnings per share from continuing operations before incidentals up 5 percent €1 billion o
Slide 6: Q2: Resilient performance
Q2: Resilient performance € mln 2008 Δ% Revenue reported 3,870 2 Revenue constant currencies 4,136 9 EBITDA reported 526 (3) EBITDA constant currencies 568 5 Net income before fair value adjustments 258 (6) Ratio 2008 2007 EBITDA margin reported, % 13.6 14.3 EBITDA margin constant currencies, % 13.7
Slide 7: Q2: Strong autonomous revenue growth of 8 percent
Q2: Strong autonomous revenue growth of 8 percent % Total Volume Price Currency Acq./div. Decorative Paints (4) 1 – (6) 1 Performance Coatings 1 3 4 (7) 1 Specialty Chemicals 6 5 8 (7) – AkzoNobel 2 4 4 (7) 1 Versus Q2, 2007 proforma Q2 Results 2008 | The new AkzoNobel 7
Slide 8: Q2 revenue and EBITDA in constant currencies ahead 9 and 5%
Q2 revenue and EBITDA in constant currencies ahead 9 and 5% Q2 Results 2008 | The new AkzoNobel 8
Slide 9: Q2 incidentals
Q2 incidentals Incidental charges of €86 million Transformation costs of €72 million included €55m related to impairments of the Decorative Paints businesses under divesture package Impairments affected gross profit on an incidental basis, and were not taken into account in the pro forma 2007 number
Slide 10: Coatings – an attractive industry
Coatings – an attractive industry Q2 Results 2008 | The new AkzoNobel 10
Slide 11: Coatings – an attractive industry with strong growth potential
Coatings – an attractive industry with strong growth potential Attractive industry • Strong and stable cash flow • Low cyclicality • Low capital intensity Fragmented industry – clear signs of consolidation High growth potential Q2 Results 2008 | The new AkzoNobel 11
Slide 12: Stable margins through the cycle
Stable margins through the cycle Coatings industry – average LTM EBITDA margins (1) 15% 14% 13% 12% 2002 2003 2004 2005 2006 2007 (1) Average LTM EBITDA Margins sourced from Capital IQ. Companies included: DuPont, Kansai Paint, PPG, RPM International, Sherwin Willliams and Valspar Q2 Results 2008 |
Slide 13: World leader in Coatings
World leader in Coatings Q2 Results 2008 | The new AkzoNobel 13
Slide 14: Strong growth potential
Strong growth potential Q2 Results 2008 | The new AkzoNobel 14 (1) Per annum
Slide 15: Decorative Paints
Decorative Paints Q2 Results 2008 | The new AkzoNobel 15
Slide 16: Decorative paints around the world
Decorative paints around the world Revenue by origin 59% Europe 29% Americas 12% Asia Pacific Pro forma 2007 Q2 Results 2008 | The new AkzoNobel 16
Slide 17: Decorative Paints: geographical spread allows for stable margins
Decorative Paints: geographical spread allows for stable margins Underlying growth and acquisitions contributed 2 percent to revenue Continued double-digit autonomous growth in Asia and Latin America Revenue in Europe in constant currencies was ahead of 2007, US and UK revenue down in local currenci
Slide 18: Decorative paints: stable performance in constant currencies
Decorative paints: stable performance in constant currencies Q2 Results 2008 | The new AkzoNobel 18
Slide 19: Q2 Decorative paints
Q2 Decorative paints € mln 2008 Δ% Revenue reported 1,412 (4) Revenue constant currencies 1,497 2 EBITDA reported 195 (4) EBITDA constant currencies 204 – Ratio, % 2008 2007 EBITDA margin reported, % 13.8 13.8 EBITDA margin constant currencies, % 13.6 13.8 Before incidentals; 2007 pro forma Q2 Resul
Slide 20: US decorative market
US decorative market Largest (25%) and most attractive coatings market worldwide Under pressure since mid-2006 New build estimated 22% of decorative market new construction - non residential commercial and insitutional new construction - residential maintenance/ repair residential 78% 54% 10% 46% 12
Slide 21: US Decorative paints at AkzoNobel
US Decorative paints at AkzoNobel US Deco paints sales FY 08 estimated 6% of total company revenues Management action – new US Decorative Paints strategy Further restructuring, focus on selected end-user segments Cost reduction and margin improvement while maintaining market share. Q2 Results 2008 |
Slide 22: Performance Coatings
Performance Coatings Q2 Results 2008 | The new AkzoNobel 22
Slide 23: Performance Coatings revenue split
Performance Coatings revenue split Q2 Results 2008 | The new AkzoNobel 23
Slide 24: Leading positions in Performance Coatings
Leading positions in Performance Coatings Industrial Activities: wood, coil and plastic coatings Marine & Protective Coatings: marine, protective, aerospace and yacht coatings. Leadership in innovation Car Refinishes: technology driven Packaging Coatings: attractive new business Q2 Results 2008 | Th
Slide 25: Q2 Performance Coatings: EBITDA margin up at 13.7 percent
Q2 Performance Coatings: EBITDA margin up at 13.7 percent A strong quarter overall Autonomous growth of 7 percent EBITDA margin increased to 13.7 percent Excellent quarter for Marine & Protective Coatings Solid results at Car Refinishes and Powder Coatings Industrial Finishes continues to be affecte
Slide 26: Performance Coatings: excellent result in constant currencies
Performance Coatings: excellent result in constant currencies Q2 Results 2008 | The new AkzoNobel 26
Slide 27: Q2 Performance Coatings
Q2 Performance Coatings € mln 2008 Δ% Revenue reported 1,175 1 Revenue constant currencies 1,258 8 EBITDA reported 161 7 EBITDA constant currencies 171 14 Ratio, % 2008 2007 EBITDA margin reported, % 13.7 12.9 EBITDA margin constant currencies, % 13.6 12.9 Before incidentals; 2007 pro forma Q2 Resul
Slide 28: Specialty Chemicals
Specialty Chemicals Q2 Results 2008 | The new AkzoNobel 28
Slide 29: Specialty Chemicals revenue split
Specialty Chemicals revenue split Q2 Results 2008 | The new AkzoNobel 29
Slide 30: Leading positions in specialty chemicals markets
Leading positions in specialty chemicals markets Pulp & Paper - #1 worldwide in bleaching Base Chemicals - #1 globally in MCA regional N/W Europe leadership in chlorine alkali business Functional Chemicals - leading positions in 3 market segments Surface chemicals - making good progress in turning a
Slide 31: Q2 Specialty Chemicals: securing top-line growth
Q2 Specialty Chemicals: securing top-line growth Stable performance 13 percent underlying growth driven by significant price increases (8 percent) and higher volumes (5 percent) Higher raw materials and energy prices led to a lower EBITDA margin of 16 percent EBITDA, in constant currencies, up 10 pe
Slide 32: Specialty Chemicals strong top-line growth in constant currencies
Specialty Chemicals strong top-line growth in constant currencies Q2 Results 2008 | The new AkzoNobel 32
Slide 33: Q2 Specialty Chemicals
Q2 Specialty Chemicals € mln 2008 Δ% Revenue reported 1,219 6 Revenue constant currencies 1,309 14 EBITDA reported 195 (2) EBITDA constant currencies 217 10 Ratio, % 2008 2007 EBITDA margin reported, % 16.0 17.3 EBITDA margin constant currencies, % 16.6 17.3 Before incidentals; 2007 pro forma Q2 Res
Slide 34: Q2 financial performance
Q2 financial performance Q2 Results 2008 | The new AkzoNobel 34
Slide 35: Strong financial position
Strong financial position € mln June 30, 2008 Dec. 31, 2007 Equity 10,895 12,155 Net debt 1,056 2,832 Q2, € mln 2008 2007 Net cash from operating activities (362) (320) 2007 pro forma Q2 Results 2008 | The new AkzoNobel 35
Slide 36: Share buyback
Share buyback €3 billion share buyback program Open market program Started mid March 2008, €1 billion completed end July Further €1 billion expected to be repurchased by H2 2008 Program expected to be finalized by end Q1/ early Q2 2009 Q2 Results 2008 | The new AkzoNobel 36
Slide 37: H1 operational performance
H1 operational performance Q2 Results 2008 | The new AkzoNobel 37
Slide 38: H1 operational performance
H1 operational performance € mln 2008 Δ% Revenue reported 7,376 1 Revenue constant currencies 7,839 8 EBITDA reported 924 (2) EBITDA constant currencies 993 5 Net income before fair value adjustments* 442 – Ratio 2008 2007 EBITDA margin reported, % 12.5 13.0 EBITDA margin constant currencies, % 12.7
Slide 39: Resilient performance in H1
Resilient performance in H1 Q2 Results 2008 | The new AkzoNobel 39
Slide 40: ICI integration update
ICI integration update Q2 Results 2008 | The new AkzoNobel 40
Slide 41: ICI integration process ahead of schedule
ICI integration process ahead of schedule Making good progress in capturing € 340 million synergies Former ICI HQ closed Integrated sales and export organizations Re-negotiating purchasing and distribution contracts Projects started on improving plant performance Combined, standardized IT systems be
Slide 42: Management agenda 2008
Management agenda 2008 Q2 Results 2008 | The new AkzoNobel 42
Slide 43: Management agenda 2008
Management agenda 2008 Make significant progress with integration ICI Accelerate synergy realization where possible Focus on management of margins Complete required divestures Roll out corporate brand program Q2 Results 2008 | The new AkzoNobel 43
Slide 44: Outlook
Outlook Medium term focus will continue to be on: - making further significant progress with the integration of the retained former ICI businesses; - outgrowing markets - improving EBITDA margin to the upper half of our peer group Latest forecast: reported 2008 EBITDA before incidentals not expected
Slide 45: Questions & Answers Q2 2008 Results
Questions & Answers Q2 2008 Results “Resilient performance”
Slide 46: Safe Harbor Statement
Safe Harbor Statement This press release 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 b