Akzo Nobel N.v. · EURONEXT:AKZA
Akzo Nobel — Q1 2022 Earnings Presentation
31 slides from Akzo Nobel's earnings presentation, Apr 21, 2022
Slide 1: Investor update Q1 2022
Investor update Q1 2022 April 21, 2022 Cetol products used on eye-catching museum Sustainable technology and responsible architecture blend beautifully in this visually stunning museum, which recently opened in Uruguay. Inspired by the shape of an ark and constructed from wood, the futuristic Atchug
Slide 2: Agenda
Agenda Key highlights Financial review Concluding remarks Q&A Alternative performance measures (APM) AkzoNobel uses APM adjustments to the IFRS measures to provide supplementary information on the reporting of the underlying developments of the business. A reconciliation of the alternative performan
Slide 3: Impact of conflict in Ukraine/Russia
Impact of conflict in Ukraine/Russia 2021 Q1 2022 Going forward Ukraine Ukraine Russia Revenue: ~€14m Business activities suspended Implementing the latest sanctions Number of employees: 16 against Russia Supply: no local manufacturing; Russia imported finished products Compliance with sanctions Big
Slide 4: Key highlights
Key highlights Investor update | Q1 2022 4
Slide 5: Revenue up 12% on strong pricing of 17%, offsetting raw material inflation in Q1
Revenue up 12% on strong pricing of 17%, offsetting raw material inflation in Q1 Q1 2022: Revenue Pricing Pricing vs raw €64m of material & freight new €500m share inflation buyback Up 12% Up 17% +€38m* completed (up 10% in CC) (Q1 and exit rate) (+€3m in Q1’21) Adjusted ROS** ROI** €1.2bn operating
Slide 6: Topline growth and continued progress in line with Grow & Deliver strategy
Topline growth and continued progress in line with Grow & Deliver strategy Growth for 7th 5 consecutive quarters consecutive quarter of delivering on pricing and inflation forecast Strong pricing of 17% Completed planned PRISM offsetting raw material and SAP roll-out in Asia freight inflation Awarde
Slide 7: Underlying demand robust, continued supply constraints and China COVID resurgence
Underlying demand robust, continued supply constraints and China COVID resurgence North South EMEA North South America America Asia Asia Paints Industrial Powder Automotive and Specialty Marine and Protective Backlog due Backlog due COVID Strong to supply to supply restrictions: sequential constrain
Slide 8: Volume progression
Volume progression Paints above pre-pandemic level and Coatings constrained Paints sales volumes Coatings sales volumes recovering yet stabilized above 2019 level in Q1 2022 limited by COVID and supply constraints Down 29% Q1'19 Adj. EBITDA downQ1'20 21% Q1'21 Q1'22 Q1’19 Q1'19 Q1’20 Q1'20 Q1’21 Q1'
Slide 9: Powder Coatings
Powder Coatings Clear leadership position and aggressively investing for growth €10bn market Powder coatings revenue growth Growth fundamentals: Liquid-to-powder conversion Powder revenue development 8% 120 110 (index at 100) New applications including e-mobility and industrial wood market CAGR 2021
Slide 10: Decorative Paints China
Decorative Paints China Strong growth from geographic expansion, leading brand and sustainable products ~€6bn market Continuing growth in Premium and Mid-tier segments Growth fundamentals: Geographic expansion focused on tier 3-5 cities 6% Moving average revenue vs 2019 (index at 100) market CAGR 20
Slide 11: Financial review
Financial review Investor update | Q1 2022 11
Slide 12: Revenue up 12% driven by strong pricing initiatives
Revenue up 12% driven by strong pricing initiatives € million Q1 2021 Q1 2022 Δ% Δ%CC Revenue 2,263 2,525 12% 10% Adjusted EBITDA* 391 317 (19%) Adjusted operating income* 307 230 (25%) ROS* 13.6% 9.1% ROI* 17.7% 14.5% Sustainability ratings reflect People. Planet. Revenue development Q1 2022 (%) Pa
Slide 13: Significant pricing more than offsets raw material inflation
Significant pricing more than offsets raw material inflation Adjusted operating income* (€m) - Positive impact Negative impact - 334 372 Adj. OPI margin* 13.6% 3 - 50 - 20 Adj. OPI - - 48 margin* 9.1% 307 230 Q1 2021 FX Volumes Mix Price Raw material and OPEX and one-offs Q1 2022 freight cost * Alte
Slide 14: Q1 pricing up 17%
Q1 pricing up 17% Positive net pricing versus raw material and freight cost inflation for Q1 Raw material* price index development AkzoNobel pricing (%)** y-o-y impact (€m) 20 €334m 18 17% €325m 16 €278m 14 12.5% €290-€320m 12 14%-16% 10 9% 8 €128m 6 4.5% 4.5% €128m 4 2% 2 €38m 0 Q3 Q4 Q1 Q2 Q3 Q4 Q
Slide 15: Stronger and faster pricing initiatives offset raw material cost inflation
Stronger and faster pricing initiatives offset raw material cost inflation Adj. OPI Price/mix versus raw material costs impact y-o-y (€m) impact 400 15 by 20 Grow & Deliver 300 200 100 0 -100 -200 -300 -400 2017 2018 2019 2020 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 16: Paints revenue up 8% despite DIY normalization
Paints revenue up 8% despite DIY normalization € million Q1 2021** Q1 2022 Δ% Δ%CC Revenue 930 1,006 8% 6% Adjusted EBITDA* 179 142 (21%) Adjusted operating income* 144 105 (27%) ROS* 15.5% 10.4% Revenue development Q1 2022 (%) Increase Decrease ……. +13% price Paint the Future winners sign letters o
Slide 17: Coatings revenue up 14% on strong pricing of 19%
Coatings revenue up 14% on strong pricing of 19% € million Q1 2021** Q1 2022 Δ% Δ%CC Revenue 1,332 1,518 14% 12% Adjusted EBITDA* 225 188 (16%) Adjusted operating income* 188 149 (21%) ROS* 14.1% 9.8% Revenue development Q1 2022 (%) Increase Decrease +19% price 0% mix 2 In-house production of resins
Slide 18: Working capital and free cash flow
Working capital and free cash flow Impacted by raw material inflation and supply constraints Operating working Free cash flow (FCF)** €m Working capital impact capital (Trade)* from raw material as a % of revenue inflation ~2% of revenue 16.5% 16.5% Net Debt/EBITDA 1.9 times 13.4% -88 (Q1 2021: 1.0
Slide 19: Adjusted EBITDA and adjusted EPS
Adjusted EBITDA and adjusted EPS Adjusted EBITDA* Adjusted earnings per share* €132m in shares (€m) (EPS) from continuing operations (€) repurchased of €1bn Number of shares (weighted average) program completed in 194m 189m 178m January 2022 391 317 1.18 302 €64m shares repurchased 0.86 of new €500m
Slide 20: Delivering on capital allocation priorities
Delivering on capital allocation priorities Profitable organic growth ~3% capital expenditures/revenue Dividend Stable to rising Acquisitions Strategically aligned and value creating Shareholder returns Modular share buybacks Net debt/EBITDA target 1-2x Retain strong investment grade credit rating I
Slide 21: Concluding remarks
Concluding remarks Investor update | Q1 2022 21
Slide 22: Q1 Highlights and Outlook
Q1 Highlights Outlook Pricing up 17% compared with Q1 2021. Revenue AkzoNobel targets to grow at or above its relevant 12% higher markets, in line with the company’s Grow & Deliver strategy. Trends differ per region and segment, with raw Raw material and freight costs increased €334 material and oth
Slide 23: Upcoming events
Upcoming events Annual general meeting of shareholders April 22, 2022 Ex-dividend date of 2021 final dividend April 26, 2022 Record date of 2021 final dividend April 27, 2022 Payment of 2021 final dividend May 4, 2022 Report for the second quarter 2022 July 20, 2022 Investor update | Q1 2022 23
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 Grow & Deliver strategy balances growth and margin improvement People. Planet. Paint. approach to sustainabl
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 'for
Slide 26: Appendix
Appendix Investor update | Q1 2022 26
Slide 27: Robust pricing initiatives continue, Q1 pricing up 17%
Robust pricing initiatives continue, Q1 pricing up 17% Paints Coatings Total Quarterly price/mix development in % year-on-year 17% price +19% price -1% mix 0% mix +13% price +4% price +1% price -1% mix -3% mix -3% mix +2% price 16 19 -3% mix 12.5 12 14 4 5 8 6 4 5 2 1 4 1010 7 11 7 7 1 0 11 6 9 6 5
Slide 28: Performance measures and assumptions
Performance measures and assumptions Definitions of alternative performance measures Assumptions for 2022-2023 Adjusted earnings per share are the basic earnings per share from Revenue growth ≥ market CAGR** operations, excluding identified items and taxes thereon Adjusted EBITDA is operating income
Slide 29: Additional financial information
Additional financial information Consolidated statement of free cash flows* Operating income to net income € million Q1 2021 Q1 2022 € million Q1 2021 Q1 2022 EBITDA 388 321 Operating income 303 232 Impairment losses — 3 Net financing expenses (8) (12) Pre-tax results on acquisitions and Results fro
Slide 30: Alternative performance measures
Alternative performance measures Operating income (€m) Q1 2021 Q1 2022 Δ% OPI margin (%) Q1 2021 Q1 2022 Average invested capital (€m) April 2020 - March 2021/April 2021 - March 2022 2021 2022 Δ% Decorative Paints 143 113 (21%) Decorative Paints 15.4 11.2 Performance Coatings 185 150 (19%) Decorativ
Slide 31: Recognized sustainability leader in industry
Recognized sustainability leader in industry AkzoNobel Industry average Investors Customers Investors Europe Society Society Industry average Industry average Industry average Industry average Industry average Industry average AkzoNobel AkzoNobel AkzoNobel AkzoNobel AkzoNobel AkzoNobel Only P&C comp