Akzo Nobel N.v. · EURONEXT:AKZA
Akzo Nobel — Q3 2015 Earnings Presentation
21 slides from Akzo Nobel's earnings presentation, Oct 22, 2015
Slide 1: Investor Update Q3 2015 results
Investor Update Q3 2015 results Maëlys Castella October 22, 2015
Slide 2: Agenda
Agenda Highlights Operational review Financial review Conclusion Questions Investor Update Q3 2015 results 2
Slide 3: Q3 2015: Another quarter of improved performance
Q3 2015; Another quarter of improved performance Revenue Operating income Return on Sales % Return on Investment % € million € million +2% +30% 3,760 12.5 436 11.6 10.5 3,686 335 9.1 Q3 2014 Q3 2015 Q3 2014 Q3 2015 Q3 2014 Q3 2015 Q3 2014 Q3 2015 • Net income attributable to shareholders up 39 perce
Slide 4: Revenue by end-market share
~42% of revenues ~16% of revenues New Build Projects Automotive OEM, Parts and Assembly Maintenance, Renovation and Repair Automotive Repair Building Products and Components Marine and Air Transport ~17% of revenues ~25% of revenues Consumer Durables Natural Resource and Energy Industries Consumer P
Slide 5: Mature markets remained stable, while Brazil, Russia and China contract further
Mature markets remained stable, while Brazil, Russia and China contract further Purchase Managers’ Index (PMI)* Purchase Managers’ Index (PMI)* Figures below 50 indicate pessimism September 2015 60 60 US US 55 Germany Japan Netherlands France India 50 Eurozone 50 China Russia 45 Brazil China 40 40 *
Slide 6: Consumer confidence remains low, although trends differ per country
Consumer confidence remains low, although trends differ per country Consumer confidence, Q2 2015 Figures below 100 indicate some degree of pessimism 140 Recent trends compared 120 to Q1 2015 100 80 60 131 120 107 104 101 99 97 40 90 87 87 83 81 78 70 66 20 0 Source: Nielsen Investor Update Q3 2015 r
Slide 7: Financial performance improved again during Q3 2015
Financial performance improved again during Q3 2015 € million Q3 2014 Q3 2015 Δ% Revenue 3,686 3,760 2 Operating income 335 436 30 Ratio, % Q3 2014 Q3 2015 Return on sales 9.1 11.6 Return on sales (excluding restructuring costs) 10.6 12.0 Moving average return on investment 10.5 12.5 Revenue develop
Slide 8: All Business Areas impacted by challenging market conditions
All Business Areas impacted by challenging market conditions Quarterly volume development in % year-on-year 2014 2015 6 2 0% -2% 0% -1% -2 -6 Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel Quarterly price/mix development in % year-on-year 5 2% 2 -2% -2% 0% -1 -4 Decorative Pain
Slide 9: Decorative Paints Q3 2015 highlights
Decorative Paints Q3 2015 highlights € million = Q3 2014 Q3 2015 Δ% • Revenues flat due to favorable currency effects Revenue 1,050 1,052 - offset by adverse price/mix Operating income 113 121 7 • Volumes up in Asia; down in Europe and Latin Ratio, % Q3 2014 Q3 2015 America Return on sales 10.8 11.5
Slide 10: Performance Coatings Q3 2015 highlights
Performance Coatings Q3 2015 highlights € million Q3 2014 Q3 2015 Δ% • Revenue up as favorable price/mix and currencies Revenue 1,420 1,493 5 offset lower volumes Operating income 135 210 56 • Volumes declined due to lower demand from the oil Ratio, % Q3 2014 Q3 2015 and gas industry and further wea
Slide 11: Specialty Chemicals Q3 2015 highlights
Specialty Chemicals Q3 2015 highlights • Revenue flat due to € million Q3 2014 Q3 2015 Δ% favorable currency Revenue 1,239 1,235 - offsetting adverse price/mix and divestments Operating income 156 163 4 • Volumes flat as growth in some segments Ratio, % Q3 2014 Q3 2015 compensated for lower Return o
Slide 12: Some business highlights from Q3 2015
Some business highlights from Q3 2015 Decorative Paints Performance Coatings Specialty Chemicals Color expertise V§ Organic growth Doing more with less A striking shade of gold is the We’ve announced plans to As part of a new partnership Color of the Year for 2016. An double capacity at our powder w
Slide 13: Net income increased due to lower costs and currencies
Net income increased due to lower costs and currencies € million Q3 2014 Q3 2015 Δ% EBITDA 487 590 +21% Depreciation and amortization (152) (154) Operating income before incidentals 335 436 +30% Incidentals - - Operating income 335 436 +30% Net financing expenses (38) (28) Minorities and associates
Slide 14: On track to become free cash flow positive after dividends
On track to become free cash flow positive after dividends € million Q3 2014 Q3 2015 Δ% Profit for the period from continuing operations 219 300 Amortization and depreciation 152 154 Change working capital 137 166 Change provisions (48) (74) Other changes 29 37 Net cash from operating activities 489
Slide 15: Cash management discipline continues
Cash management discipline continues Operating Working Capital Capital Expenditures € million € million Operating Working Capital Specialty Chemicals Decorative Paints OWC as % of LQ revenue * 4 Performance Coatings Other Capex as % of revenue 2,500 16% 14.1% 3.7% 3.7% 12.8% 14% 12.1% 12.4% 2,000 2,
Slide 16: IAS19 pension deficit down to €0.9 billion due to lower inflation
IAS19 pension deficit down to €0.9 billion due to lower inflation Key pension assumptions metrics Q3 2015 Q2 2015 Discount rate 3.5% 3.5% Inflation rate 2.9% 3.1% Increase Pension deficit development during Q3 2015 € million Decrease (893) (1,099) (53) (59) (6) 301 10 13 Deficit end Q2 Top-ups Disco
Slide 17: Conclusion
Conclusion • Strong performance improvement in all businesses • Interim dividend up 6 percent to €0.35 per share (2014: €0.33) • Number one ranking on the influential Dow Jones Sustainability Index (DJSI), in the Materials industry group, for the fourth consecutive year • Market outlook is unchanged
Slide 18: Questions
Questions Investor Update Q3 2015 results 18
Slide 19: 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
Slide 20: Appendices
Appendices Investor Update Q3 2015 results 20
Slide 21: Restructuring charges by quarter
Restructuring charges by quarter € million Q1 2014 Q2 2014 Q3 2014 Q4 2014 FY 2014 Q1 2015 Q2 2015 Q3 2015 Decorative Paints 22 23 1 34 80 5 11 5 Performance Coatings 15 17 41 75 148 6 10 7 Specialty Chemicals 7 2 6 2 17 0 3 1 Other 0 3 7 -2 8 0 0 2 Total 44 45 55 109 253 11 24 15 Total restructurin