Slide 1: Investor update Q2 2020
Investor update Q2 2020 July 22, 2020 Partnership with SOS Children’s Villages extended Our global partnership with SOS Children’s Villages has been extended for another three years. Part of our “Let’s Colour” initiative, the collaboration has already benefited more than 20,000 children and young pe
Slide 2: Agenda
Agenda Key highlights Financial review Concluding remarks Q&A Investor update | Q2 2020 2
Slide 3: Key highlights
Key highlights Investor update | Q2 2020 3
Slide 4: Robust profitability during Q2, despite COVID-19 headwinds
Robust profitability during Q2, despite COVID-19 headwinds ROS, excluding unallocated costs, increased to 14.0% (2019: 13.7%) due to strong margin management and cost savings Headwinds related to COVID-19 eased during the quarter, with revenue almost 30% lower in April and nearly 5% lower in June To
Slide 5: Weathering the COVID-19 storm, ROS increased to 14%
Weathering the COVID-19 storm, ROS* increased to 14% Q2 2020: H1 2020: ROS* Price/mix Adjusted EPS From continuing operations Increased to 14% Up 2% Up 8% at €1.51 (2019: 13.7%) ROI** Free cash flow Leverage (Net Debt/EBITDA) 17.4% 147% higher 1.4x (2019: 16.5%) (Target 1-2x by end 2020) *ROS = adju
Slide 6: Market headwinds eased in June, with Paints recovering faster than Coatings
Market headwinds eased in June, with Paints recovering faster than Coatings Decorative Paints Performance Coatings Revenue development H1 2020 (Δ%)* Revenue development H1 2020 (Δ%)* 50% 50% EMEA 25% 25% 0% 0% Paints Coatings -25% -25% Automotive and Specialty Coatings -50% 1 2 3 4 5 6 7 8 9 10 11 1
Slide 7: Market headwinds continue and differ per region and segment
Market headwinds continue and differ per region and segment EMEA China Industrial Powder Coatings Coatings South East and South Asia ~ ~ South Marine and America Automotive Protective and Specialty Coatings Coatings ~ Investor update | Q2 2020 7
Slide 8: Taking steps to rapidly reduce costs, parts of transformation selectively resumed
Taking steps to rapidly reduce costs, parts of transformation selectively resumed Sales force effectiveness Margin management Delivering strong margin management Innovation excellence Price/mix up 2% Global Business Services Key parts of transformation selectively restarting Integrated Business Plan
Slide 9: Financial review
Financial review Investor update | Q2 2020 9
Slide 10: Q2 2020 ROS increased 30bps to 14%, despite significant market headwinds
Q2 2020 ROS* increased 30bps to 14%, despite significant market headwinds € million Q2 2019 Q2 2020 Δ% Δ%CC Revenue was 19% lower, and 17% lower in constant Revenue 2,451 1,987 (19%) (17%) currencies. Price/mix was Adjusted EBITDA 394 321 (19%) up 2% overall. Volumes were 18% lower, mainly Adjusted
Slide 11: Strong margin management delivering, volumes lower due to COVID-19
Strong margin management delivering, volumes lower due to COVID-19 Decorative Paints Performance Coatings Total Quarterly price/mix development in % year-on-year 11 8 9 6 2 7 7 7 6 6 0 4 5 4 5 1 4 5 0 0 5 5 4 1 3 3 3 2 2 2 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q1 18 Q2 18 Q3 18
Slide 12: Margin management and cost-savings helped to offset lower end market demand
Margin management and cost-savings, helped to offset lower end market demand Adjusted operating income Positive impact Negative impact - ROS* 13.7% -8 €116m cost savings -4 ROS* 14% 78 - 242 305 38 32 238 39 Q2 2019 FX Volumes Price/mix Raw materials/ Transformation Temporary cost One-offs and other
Slide 13: Decorative Paints ROS up 590bps at 19.5%, driven by strong performance in EMEA
Decorative Paints ROS up 590bps at 19.5%, driven by strong performance in EMEA € million Q2 2019 Q2 2020 Δ% Δ%CC Revenue 997 899 (10%) (6%) Adjusted EBITDA 177 211 19% Adjusted operating income 136 175 29% Operating income 166 169 2% ROS* 13.6% 19.5% ROI** 12.2% 15.5% Revenue development Q2 2020 (%)
Slide 14: Performance Coatings revenue 24% lower, due to weak end market demand
Performance Coatings revenue 24% lower, due to weak end market demand € million Q2 2019 Q2 2020 Δ% Δ%CC Revenue 1,438 1,086 (24%) (23%) Adjusted EBITDA 241 139 (42%) Adjusted operating income 197 103 (48%) Operating income 174 89 (49%) ROS* 13.7% 9.5% ROI** 20.6% 19.0% Revenue development Q2 2020 (%
Slide 15: Adjusted EPS for continuing operations €0.80 for Q2 and €1.51 for H1
Adjusted EPS for continuing operations €0.80 for Q2 and increased to €1.51 for H1 Q2 2019 Q2 2020 € million H1 2019 H1 2020 The outstanding share capital was 193.3 million common 308 207 Operating income 421 394 shares at the end of June (18) (25) Net financing expenses (31) (38) 2020. This included
Slide 16: Free cash flow improved by 147%; maintained strong balance sheet
Free cash flow improved by 147%; maintained strong balance sheet Q2 2019 Q2 2020 € million H1 2019 H1 2020 397 297 EBITDA 595 574 - - Impairment losses 33 - Pre-tax result on acquisitions and (66) - (66) - divestments (116) 70 Changes in working capital (537) (283) - - Pension pre-funding (161) - (1
Slide 17: Concluding remarks
Concluding remarks Investor update | Q2 2020 17
Slide 18: Robust profitability during Q2, despite COVID-19 headwinds
Robust profitability during Q2, despite COVID-19 headwinds ROS, excluding unallocated costs, increased to 14.0% (2019: 13.7%) due to strong margin management and cost savings Headwinds related to COVID-19 eased during the quarter, with revenue almost 30% lower in April and nearly 5% lower in June To
Slide 19: Outlook
Outlook AkzoNobel has suspended its 2020 financial ambition in response to the significant market disruption resulting from the pandemic. COVID-19 will continue to impact the second half of 2020, although demand trends differ per region and segment in an uncertain macro-economic environment. Raw mat
Slide 20: Upcoming events
Upcoming events Report for the third quarter October 21, 2020 Investor update | Q2 2020 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 Well positioned to accelerate growth and enhance profitability Transformation plans in place and clear path t
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 | Q2 2020 23
Slide 24: Half-year 2020
Half-year 2020 € million H1 2019 H1 2020 Δ% Δ%CC Revenue 13% lower and 11% lower in constant Revenue 4,636 4,045 (13%) (11%) currencies, with 2% Adjusted EBITDA 642 623 (3%) positive price/mix and 12% lower volumes, mainly due Adjusted operating income 468 452 (3%) to the impact of COVID-19 Operatin
Slide 25: Half-year 2020: Decorative Paints
Half-year 2020: Decorative Paints € million H1 2019 H1 2020 Δ% Δ%CC Revenue was 10% lower and 7% lower in constant Revenue 1,833 1,653 (10%) (7%) currencies; positive Adjusted EBITDA 272 311 14% price/mix of 3% was more than offset by 10% lower Adjusted operating income 196 239 22% volumes, mainly d
Slide 26: Half-year 2020: Performance Coatings
Half-year 2020: Performance Coatings € million H1 2019 H1 2020 Δ% Δ%CC Revenue was 14% lower and 13% lower in constant Revenue 2,771 2,381 (14%) (13%) currencies, with 2% positive price/mix, more Adjusted EBITDA 423 369 (13%) than offset by 15% lower Adjusted operating income 335 293 (13%) volumes,
Slide 27: Representation of revenue 2019
Representation of revenue 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2019 € million Reported Represented Reported Represented Reported Represented Reported Represented Decorative Paints EMEA 506 498 620 611 573 565 462 454 Decorative paints South America 99 98 103 102 121 120 139 137 Decorative Paints Asia 240
Slide 28: Assumptions 2020
Assumptions 2020 ROS = adjusted operating income as percentage of revenue (excluding unallocated cost) ROI = adjusted operating income of the last 12 months as percentage of average invested capital (excluding unallocated cost and invested capital) Other activities/eliminations €140-180m Leverage 1-