Akzo Nobel N.V. · EURONEXT:AKZA
Akzo Nobel — Q1 2010 Earnings Presentation
30 slides from Akzo Nobel's earnings presentation, Apr 23, 2010
Slide 1: Q1 2010 results
April 23, 2010 Q1 2010 results Keith Nichols, CFO
Slide 2: Agenda
Agenda • Strategic ambitions • Q1 2010 highlights and operational review • Financial review • Outlook and medium-term targets
Slide 3: Strategic ambitions
Strategic ambitions
Slide 4: AkzoNobel strategic ambitions
AkzoNobel strategic ambitions Leading in value creation • Outgrow our markets • EBITDA margin > 14 percent by end 2011 • 0.5 percent improvement in operating Tied to incentives, working capital (OWC) as % of revenue, p.a. both for value creation and Leading in sustainability sustainability • Top 3 D
Slide 5: Q1 2010 highlights and operational review
Q1 2010 highlights and operational review
Slide 6: Q1 2010 highlights
Q1 2010 highlights • Improved volumes in March in most businesses underpins revenue growth of 6 percent • Stronger demand in high growth markets and some of our industrial markets; mature markets stable • EBITDA* was €399 million (2009: €289 million), at 12.3 percent (2009: 9.4 percent) • Margin man
Slide 7: Volume and price development per quarter to Q1 2010
Volume and price development per quarter to Q1 2010 Volume development Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Decorative Paints (16) (10) (9) - 5 Performance Coatings (20) (19) (11) (2) 8 Specialty Chemicals (16) (18) (6) 4 15 AkzoNobel (17) (16) (8) 1 10 Price development Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Decor
Slide 8: Q1 2010 revenue and EBITDA
Q1 2010 revenue and EBITDA € million Q1 2010 Δ% Revenue 3,246 6 EBITDA* 399 38 Ratio, % Q1 2010 Q1 2009 EBITDA* margin 12.3 9.4 Revenue development Q1 2010 vs. Q1 2009 10 8 -4% 6 +10% -2% +2% 4 +6% 2 0 Volume Price Acquisitions/ Exchange Total divestments rates * Before incidentals Increase Decrease
Slide 9: Summary – Q1 2010 results
Summary – Q1 2010 results € million Q1 2010 Q1 2009 EBITDA* 399 289 Amortization and depreciation (141) (139) Incidentals (34) (40) Financial income & expense (88) (105) Minorities and associates (13) (14) Income tax (53) (5) Discontinued operations 11 7 Net income total operations 81 (7) Net cash f
Slide 10: Decorative Paints
Decorative Paints In China, where volumes were up 40 percent, we started a campaign for our Dulux product Safe & Beautiful Home Odorless through CCTV, a major national television channel. We rolled out a customized marketing program for individual cities to further develop our Dulux store network. 1
Slide 11: Decorative Paints key facts
Decorative Paints key facts 2009 • Revenue €4.6 billion • 22,210 employees • EBITDA: €487 million* • 36 percent of revenue from high-growth markets • Largest global supplier of decorative paints • Many leading positions, strong brands Some of our strong brands Revenue by geography 4% 10% Europe Asia
Slide 12: Decorative Paints Q1 2010 highlights
Decorative Paints Q1 2010 highlights • Revenue up 7 percent, volumes up 5 percent • EBITDA* at €82 million (2009: €48 million) • EBITDA* margin 7.8 percent (2009: 4.9 percent) • Ongoing restructuring contributed to better results in the mature economies • Significant growth in higher growth markets;
Slide 13: Decorative Paints Q1 2010
Decorative Paints Q1 2010 € million Q1 2010 Δ% Revenue 1,056 7 EBITDA* 82 71 Ratio, % Q1 2010 Q1 2009 EBITDA* margin 7.8 4.9 Revenue development Q1 2010 vs. Q1 2009 8 -1% 6 0% +3% 4 +7% 2 +5% 0 Volume Price Acquisitions/ Exchange Total divestments rates * Before incidentals Increase Decrease 13
Slide 14: Performance Coatings
Performance Coatings AkzoNobel Packaging Coatings Latin America has recently launched Vitalure™ 740, a product line consisting of an interior coating and side seam stripe for paint cans. The can liner protects the steel can from corrosion by the paint and will extend the 'best by' time limit for the
Slide 15: Performance Coatings key facts
Performance Coatings key facts 2009 • Revenue €4.1 billion • 19,880 employees • EBITDA: €594 million* • 45 percent of revenue from high growth markets • Leading positions in performance coatings • Innovative technologies, strong brands Revenue by business unit Revenue by geography 7% 15% 8% Marine a
Slide 16: Performance Coatings Q1 2010 highlights
Performance Coatings Q1 2010 highlights • Revenue increased by 6 percent, volumes up 8 percent • EBITDA* up 36 percent at €143 million (2009: €105 million) • EBITDA* margin at 13.6 percent (2009: 10.6 percent) • Strong volume recovery continues • Lower Marine maintenance activity • Restructuring pro
Slide 17: Performance Coatings Q1 2010
Performance Coatings Q1 2010 € million Q1 2010 Δ% Revenue 1,048 6 EBITDA* 143 36 Ratio, % Q1 2010 Q1 2009 EBITDA* margin 13.6 10.6 Revenue development Q1 2010 vs. Q1 2009 8 6 -3% -1% +2% 4 +8% +6% 2 0 Volume Price Acquisitions/ Exchange Total divestments rates * Before incidentals Increase Decrease
Slide 18: Specialty Chemicals
Specialty Chemicals The formal inauguration of the Ningbo site – which occupies a 50- hectare plot, is the largest plant investment ever and offers ideal opportunities for any future investments – will take place in November this year. AkzoNobel has more than 6,000 employees and 25 locations in Chin
Slide 19: Specialty Chemicals key facts
Specialty Chemicals key facts 2009 • Revenue €4.4 billion • 10,928 employees • EBITDA: €738 million* • 32 percent of revenue from high-growth markets • Major producer of specialty chemicals • Leadership positions in many markets Revenue by business unit Revenue by geography 2% Functional Chemicals 9
Slide 20: Specialty Chemicals Q1 2010 highlights
Specialty Chemicals Q1 2010 highlights • Revenue increase of 6 percent, volumes up 15 percent • Broad demand improvement in both mature and high growth markets • EBITDA* increased 37 percent to €207 million (2009: €151 million) • EBITDA* margin 17.9 percent (2009: 13.8 percent) • Strong results in a
Slide 21: Specialty Chemicals Q1 2010
Specialty Chemicals Q1 2010 € million Q1 2010 Δ% Revenue 1,154 6 EBITDA* 207 37 Ratio, % Q1 2010 Q1 2009 EBITDA* margin 17.9 13.8 Revenue development Q1 2010 vs. Q1 2009 15 -6% 10 +2% +15% -5% 5 +6% 0 Volume Price Acquisitions/ Exchange Total divestments rates * Before incidentals Increase Decrease
Slide 22: Financial review
Financial review
Slide 23: Continued focus on Operating Working Capital is delivering results
Continued focus on Operating Working Capital is delivering results OWC € million 3000 19.1% 20% 19% 18% 2500 16.2% 17% 15.6% 14.6% 16% 2000 15% 13.7% 14% 13% 1500 12% 2,341 2,238 2,007 1,691 2,037 11% 1000 10% 1Q09 2Q09 3Q09 4Q09 1Q10 OWC OWC as % of revenue 23
Slide 24: Capital expenditures remain disciplined
Capital expenditures remain disciplined • Capex 2009 actual spend was €534 million, unchanged from 2008 • Capex 2010 expected to approach €600 million (incl. Ningbo €100 million) OWC split at year-end 2009 2009 Capex split Other Perf 4% Deco 12% 30% Spec Ch 38% Deco 21% Spec Ch 63% Perf 32% 24
Slide 25: No 2010 refinancing needs
No 2010 refinancing needs Debt maturity, € million (nominal amounts) 1,200 800 400 0 2009 2010 2011 2012 2013 2014 2015 2016 € bonds $ bonds GBP bonds Significant liquidity headroom • Undrawn revolving credit facility of €1.5 billion available (2013)* • €1.5 & $1 billion commercial paper programs un
Slide 26: Outlook and medium-term targets
Outlook and medium-term targets
Slide 27: Well positioned to meet current challenges
Well positioned to meet current challenges Sound fundamentals • Strong market positions and brands • Diverse geographic spread in highly attractive sectors • Low cyclicality due to resilient portfolio • Sustainability is integrated in everything we do Strong track record • Operational excellence • S
Slide 28: Outlook and medium-term targets
Outlook and medium-term targets • On-track to achieving our strategic ambitions, including an EBITDA margin of 14 percent by the end of 2011 • Focus on customers, cost reduction and cash generation continues • Investments to capture growth will remain a priority, particularly in high-growth markets
Slide 29: Q&A
Q&A
Slide 30: Safe Harbor Statement
Safe Harbor Statement This presentation 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 be