Akzo Nobel N.v. · EURONEXT:AKZA
Akzo Nobel — Q4 2019 Earnings Presentation
30 slides from Akzo Nobel's earnings presentation, Feb 12, 2020
Slide 1: Investor update Q4 2019
Investor update Q4 2019 February 12, 2020 AkzoNobel’s powder coatings take landmark building to another level. Europe will soon have a new tallest building – and it’s being protected from the ravages of the Warsaw weather by a high class powder coatings system supplied by AkzoNobel.
Slide 2: Agenda
Agenda Key highlights Financial review Concluding remarks Q&A Investor update | Q4 2019 2
Slide 3: Key highlights
Key highlights Investor update | Q4 2019 3
Slide 4: Q4 2019 profitability on track despite softer end market demand
Q4 2019 profitability on track despite softer end market demand Adjusted operating income up 23% at €223 million (2018: €181 million), despite softer end market demand ROS, excluding unallocated cost, increased to 11.0% (2018: 9.0%) Margin management and cost-saving programs successfully improved pr
Slide 5: Continued progress towards delivering our Winning together: 15 by 20 strategy
Continued progress towards delivering our Winning together: 15 by 20 strategy Q4 2019: FY 2019: ROS* ROS* Revenue Adjusted EPS (continuing operations) Increased to 11.0% (2018: 9.0%) Increased to 12.0% (2018: 10.6%) Up 0.2% ~ 62% higher Free cash flow Free cash flow Adjusted €2.5 billion share (excl
Slide 6: Performance improvement accelerated during H2 2019
Performance improvement accelerated during H2 2019 Return on sales (ROS), full-year Return on sales (ROS), second half-year % Unallocated cost % Unallocated cost 15.5 15.5 12.0 12.5 14.5 10.6 14.5 10.6 10.6 9.2 FY 2017 FY 2018 FY 2019 FY 2020 H2 2017 H2 2018 H2 2019 FY 2020 Ambition Ambition ROS = a
Slide 7: Uncertain macro-economic environment with softer end market demand
Uncertain macro-economic environment with softer end market demand Powder Coatings EMEA Raw South materials Foreign America exchange ~ ~ ~ ~ South Marine and Protective China Industrial East Coatings Automotive Coatings and and Specialty Coatings Coronavirus is expected to ~ South ~ impact Q1 result
Slide 8: Winning together: 15 by 20 strategy continues to deliver results
Winning together: 15 by 20 strategy continues to deliver results Sales force effectiveness 10% cumulative price increases (2017-2019) Margin management Innovation excellence Moving towards ongoing margin management Global Business Services 38 GBS transitions completed in 2019 Integrated Business Pla
Slide 9: Financial review
Financial review Investor update | Q4 2019 9
Slide 10: Q4 adjusted operating income up 23% despite softer end market demand
Q4 adjusted operating income up 23% despite softer end market demand € million Q4 2018 Q4 2019 Δ% Δ%CC Revenue was 3% lower, and 4% lower in constant Revenue 2,308 2,242 (3%) (4%) currencies. Price/mix was Adjusted EBITDA 240 312 30% up 1% overall Adjusted operating income 181 223 23% ROS, excluding
Slide 11: 2019 adjusted operating income up 24% and total revenue flat
2019 adjusted operating income up 24% and total revenue flat € million FY 2018 FY 2019 Δ% Δ%CC Revenue was flat. Price/mix was up 4% Revenue 9,256 9,276 -% -% overall, mainly driven by Adjusted EBITDA 1,037 1,341 29% pricing initiatives Adjusted operating income 798 991 24% Acquisitions contributed
Slide 12: Momentum to deliver improved ROI in 2020
Momentum to deliver improved ROI in 2020 despite lower growth assumptions and impact of IFRS 16 Return on investment (ROI) % Unallocated cost and invested capital 18.0 17.8 >20 16.6 17.2 Excluding impact of IFRS 16 ROI also impacted by: Lower revenue growth Recent acquisitions 2017 2018 2019 2019 20
Slide 13: Cumulative price/mix increase of 10% now moving towards margin management
Cumulative price/mix increase of 10% now moving towards margin management Decorative Paints Performance Coatings Total Quarterly price/mix development in % year-on-year 11 8 9 6 4 5 7 7 7 0 4 5 2 1 0 0 3 5 3 0 5 6 6 5 4 1 2 -3 -3 -3 -5 -1 -1 -1 -1 -1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 14: Adjusted operating income up 23% due to positive price/mix and cost savings
Adjusted operating income up 23% due to positive price/mix and cost savings Adjusted operating income Positive impact Negative impact ROS* 11.0% - 10 - ROS* 9.0% 3 42 - 43 223 30 181 Q4 2018 FX Volumes Price/mix Raw materials/ OPEX Q4 2019 Variable cost ROS = adjusted operating income as percentage
Slide 15: Decorative Paints ROS up significantly at 9.9% in seasonally low quarter
Decorative Paints ROS up significantly at 9.9% in seasonally low quarter € million Q4 2018 Q4 2019 Δ% Δ%CC Revenue 896 877 (2%) (2%) Adjusted EBITDA 76 127 67% Adjusted operating income 52 87 67% Operating income 37 75 103% ROS1 5.8% 9.9% ROI2 12.4% 13.4% Revenue development Q4 2019 (%) Increase Dul
Slide 16: Performance Coatings ROS up at 11.7% despite softer end market demand
Performance Coatings ROS up at 11.7% despite softer end market demand € million Q4 2018 Q4 2019 Δ% Δ%CC Revenue 1,403 1,361 (3%) (4%) Adjusted EBITDA 187 200 7% Adjusted operating income 153 159 4% Operating income 130 138 6% ROS1 10.9% 11.7% ROI2 20.5% 20.7% Revenue development Q4 2019 (%) -3 Incre
Slide 17: Q4 adjusted EPS up 72% at €0.74 and 2019 adjusted EPS up 62% at €3.10
Q4 adjusted EPS up 72% at €0.74 and 2019 adjusted EPS up 62% at €3.10 Q4 2018 Q4 2019 € million FY 2018 FY 2019 68 173 Operating income 605 841 (23) (18) Net financing expenses (52) (76) 6 4 Results from associates and joint ventures 20 20 51 159 Profit before tax 573 785 (6) (79) Income tax (118) (
Slide 18: Q4 free cash flow improved 47% mainly due to higher EBITDA
Q4 free cash flow improved 47% mainly due to higher EBITDA Q4 2018 Q4 2019 € million FY 2018 FY 2019 127 272 EBITDA 844 1,201 1 5 Impairment losses 1 66 (2) (12) Pre-tax results on acquisitions and divestments (42) (83) 250 258 Changes in working capital (177) (244) - - Pension pre-funding* - (161)
Slide 19: Final dividend of €1.49 per share
Final dividend of €1.49 per share Dividend € per share Related to the Speciality Chemicals business Final dividend Interim dividend 2.50 Dividend policy remains “stable to rising” 0.85 1.80 1.90 1.55 1.65 Dividend paid in cash 1.45 1.65 1.09 1.43 1.49 1.20 1.28 1.12 0.37 0.56 0.37 0.41 0.33 0.35 201
Slide 20: Concluding remarks
Concluding remarks Investor update | Q4 2019 20
Slide 21: Q4 2019 profitability on track despite softer end market demand
Q4 2019 profitability on track despite softer end market demand Adjusted operating income up 23% at €223 million (2018: €181 million), despite softer end market demand ROS, excluding unallocated cost, increased to 11.0% (2018: 9.0%) Margin management and cost-saving programs successfully improved pr
Slide 22: Outlook
Outlook We are delivering towards our Winning together: 15 by 20 strategy and continue creating a fit-for- purpose organization for a focused paints and coatings company, contributing to the achievement of our 2020 ambition. Demand trends differ per region and segment in an uncertain macro-economic
Slide 23: Upcoming events
Upcoming events Investor update - 2020 and beyond February 13, 2020 Publication annual report 2019 March 10, 2020 Report for the first quarter 2020 April 22, 2020 Annual general meeting of Shareholders April 23, 2020 Ex-dividend date of 2019 final dividend April 27, 2020 Record date of 2019 final di
Slide 24: 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 25: 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 26: Appendix
Appendix Investor update | Q4 2019 26
Slide 27: FY 2019: Decorative Paints
FY 2019: Decorative Paints € million FY 2018 FY 2019 Δ% Δ%CC Revenue 3,699 3,703 -% 1% Adjusted EBITDA 438 573 23% Adjusted operating income 346 418 21% Operating income 308 425 38% ROS1 9.4% 11.3% ROI2 12.4% 13.4% Revenue development FY 2019 (%) -1 0 2 Increase Decrease -5 4 Volumes Price/mix Acqui
Slide 28: FY 2019: Performance Coatings
FY 2019: Performance Coatings € million FY 2018 FY 2019 Δ% Δ%CC Revenue 5,587 5,563 -% (1%) Adjusted EBITDA 767 861 12% Adjusted operating income 629 688 9% Operating income 577 565 (2%) ROS1 11.3% 12.4% ROI2 20.5% 20.7% Revenue development FY 2019 (%) 0 1 Increase Decrease -5 4 Volumes Price/mix Ac
Slide 29: IFRS 16 has limited impact; adopting the modified retrospective approach
IFRS 16 has limited impact; adopting the modified retrospective approach Fourth Quarter January - December Restated As Restatement opening reported at due to Before including before including € million balance at Impact € million Impact December adoption IFRS 16 IFRS 16 January 1, IFRS16 IFRS16 31,
Slide 30: 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) Assumes no significant market disruption Other acti