Slide 1: Investor update Half-year and Q2 2017
Investor update Half-year and Q2 2017 July 25, 2017
Slide 2: Agenda
Agenda Shareholder engagement Strategy update Operational and financial review Concluding remarks Questions Investor update | Half-year and Q2 2017 2
Slide 3: Continued focus on actions to improve shareholder relations
Continued focus on actions to improve shareholder relations Extensive dialog to date Next steps 285 meetings/calls with 212 investors in the past 6 Program of meetings to introduce new CEO months (vs 191 meetings/calls last year) EGM on September 8, 2017 with agenda items: 57 meetings/ calls with 10
Slide 4: Strategy update
Strategy update Micronutrients capacity being expanded in Europe: We’re investing more than €10 million in Sweden to expand capacity for our chelated micronutrients, which are used as essential ingredients for agriculture. The project, at Kvarntorp, will help meet growing demand for micronutrients,
Slide 5: Step change in growth and long-term value creation
Step change in growth and long-term value creation Strategy: Create two focused businesses Paints and Coatings Separation within 12 months Dual-track process with project teams in place 2020 2017 Focused Paints and Coatings strategy guidance1 guidance1 EBIT ROS 15% Accelerating sustainable growth an
Slide 6: Accelerating sustainable growth and value creation
Accelerating sustainable growth and value creation Capacity expansions in Brazil, Mexico, Sweden and Thailand Two acquisitions announced to strengthen Performance Coatings business Decorative Paint product launches including Levis in China and EasyCare in Brazil New set-up for Executive Committee Sp
Slide 7: On track to create two focused high-performing businesses
On track to create two focused high-performing businesses Alignment of leadership and organization structure underway Works Council engagement process ongoing Detailed roadmaps being implemented for critical transitions (including Legal and IT) All advisors appointed and working seamlessly with the
Slide 8: Expect continuous improvement savings of €150-200m in 2017
Expect continuous improvement savings of €150-200m in 2017 ALPS GBS HR 50% Expansion Finance Engagement of Paints & Coatings sites opportunities IM 5 regional hubs 90% KPIs Serving improved Focused Delivering benefits 66% on Paints people and Expanding OTIF Coatings into Standardized specific suppor
Slide 9: Operational and financial review
Operational and financial review Colorful mural celebrates community spirit: Artists from Argentina and Belgium have transformed one of the biggest slums in Buenos Aires. We donated more than 400 liters of our Alba decorative paints brand to help create a colorful open air gallery in Saldías. The ma
Slide 10: Mixed market environment
Mixed market environment China Specialty Powder Chemicals Coatings South and Latin SE Asia EMEA America ~ ~ Marine Oil industry and gas industries
Slide 11: Continued growth while dealing with short-term headwinds
Continued growth while dealing with short-term headwinds Half-year 2017 Q2 2017 Volumes Revenue Revenue Announced acquisition of Disatech 2% higher up 4% up 2% and Flexcrete and for all Business Areas EBIT Adjusted EPS Adjusted EPS Official sustainability partner of the up 1% up 4% 2% higher 2017/20
Slide 12: Volumes up for Paints and Chemicals and price/mix effects improving
Volumes up for Paints and Chemicals and price/mix effects improving Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel 2016 2017 Quarterly volume development in % year-on-year 0 Quarterly price/mix development in % year-on-year 0 -1 -3 * Includes acquisitions Investor update | Half
Slide 13: Half-year 2017: Revenue up for all Business Areas
Half-year 2017: Revenue up for all Business Areas € million H1 2016 H1 2017 Δ% Revenue 7,141 7,446 4 EBIT (Operating income excluding identified items) 825 837 1 Operating income 848 817 (4) Ratio, % H1 2016 H1 2017 ROS* 11.6 11.2 Moving average ROI* 15.1 14.8 Revenue development H1 2017 Increase De
Slide 14: Higher volumes while increased raw material costs not yet fully compensated
Higher volumes while increased raw material costs not yet fully compensated Increase Decrease * Other includes raw materials, restructuring costs and productivity improvements, wage inflation, depreciation and amortization Investor update | Half-year and Q2 2017 14
Slide 15: Decorative Paints half-year 2017: Higher volumes and profitability
Decorative Paints half-year 2017: Higher volumes and profitability € million H1 2016 H1 2017 Δ% AkzoNobel has launched its Revenue 1,916 1,968 3 Levis premium paint brand in EBIT (Operating income excluding identified items) 183 198 8 the professional market Operating income 183 198 8 segment in Chi
Slide 16: Performance Coatings half-year 2017: Revenue up, driven by acquisition
Performance Coatings half-year 2017: Revenue up, driven by acquisition € million H1 2016 H1 2017 Δ% Revenue 2,861 2,975 4 EBIT (Operating income excluding identified items) 408 389 (5) Operating income 408 389 (5) Ratio, % H1 2016 H1 2017 ROS* 14.3 13.1 Moving average ROI* 31.0 27.2 Revenue developm
Slide 17: Specialty Chemicals half-year 2017: Revenue and EBIT up due to higher volumes
Specialty Chemicals half-year 2017: Revenue and EBIT up due to higher volumes € million H1 2016 H1 2017 Δ% Ten start-ups will see their Revenue 2,412 2,548 6 innovative ideas move a step closer after being named EBIT (Operating income excluding identified items) 343 355 3 winners of AkzoNobel’s glob
Slide 18: Free cash flow impacted by higher tax paid and changes to provisions
Free cash flow impacted by higher tax paid and changes to provisions H1 2016 H1 2017 € million EBITDA 1,129 1,154 Interest paid -20 -13 Tax paid -111 -158 Changes in working capital, provision* and other -630 -744 Capital expenditures (including intangible assets) -278 -281 Free cash flow, excluding
Slide 19: IAS19 pension deficit €0.8 billion
IAS19 pension deficit €0.8 billion Key pension financial assumptions Q4 2016 Q2 2017 Discount rate 2.4% 2.4% Inflation rate 3.1% 3.0% Pension deficit development during H1 2017 Increase € million Decrease Investor update | Half-year and Q2 2017 19
Slide 20: Concluding remarks
Concluding remarks A large area of Brazilian rainforest located within one of AkzoNobel's sites is being planted with around 12,000 seedlings of species native to the region as part of an ongoing project to safeguard the fragile ecosystem.
Slide 21: Investment in sustainability, innovation and society key for long-term value creation
Investment in sustainability, innovation and society key for long-term value creation Investor update | Half-year and Q2 2017 21
Slide 22: Outlook
Outlook We continue to anticipate positive developments for EMEA (excluding the UK), North America and Asia, improving during the year, while Latin America is expected to stabilize. Market trends will remain challenging for the marine and oil and gas industries. We have improved our ability to respo
Slide 23: Accelerating sustainable growth and value creation
Accelerating sustainable growth and value creation Capacity expansions in Brazil, Mexico, Sweden and Thailand Two acquisitions announced to strengthen Performance Coatings business Decorative Paint product launches including Levis in China and EasyCare in Brazil New set-up for Executive Committee Sp
Slide 24: Upcoming events
Upcoming events Extraordinary General Meeting of shareholders September 8, 2017 Report for the third quarter 2017 October 18, 2017 Report for the full-year and fourth quarter 2017 February 8, 2018 Report for the first quarter 2018 April 24, 2018 Annual General Meeting of shareholders April 26, 2018
Slide 25: Questions
Questions AkzoNobel launches Human Cities Coalition: More than 150 stakeholders and 20 partners – including Arcadis, Philips, ABN-AMRO, the Dutch Ministry of Foreign Affairs and Slumdwellers International – have come together to form the Human Cities Coalition. Founded by AkzoNobel, its key focus is
Slide 26: Appendix
Appendix Investor update | Half-year and Q2 2017 26
Slide 27: Q2 2017: Revenue up, mainly due to acquisitions
Q2 2017: Revenue up, mainly due to acquisitions € million Q2 2016 Q2 2017 Δ% Revenue 3,711 3,785 2 EBIT (Operating income excluding identified items) 491 461 (6) Operating income 491 441 (10) Ratio, % Q2 2016 Q2 2017 ROS* 13.2 12.2 Moving average ROI* 15.1 14.8 Revenue development Q2 2017 Increase D
Slide 28: Decorative Paints Q2 2017: Volume growth driven by Asia and LATAM
Decorative Paints Q2 2017: Volume growth driven by Asia and LATAM € million Q2 2016 Q2 2017 Δ% Artists in Malaysia created Revenue 1,055 1,046 (1) murals for Starbucks stores EBIT (Operating income excluding identified items) 131 121 (8) using colorful paints provided by Operating income 131 121 (8)
Slide 29: Performance Coatings Q2 2017: Continued weak demand in marine
Performance Coatings Q2 2017: Continued weak demand in marine € million Q2 2016 Q2 2017 Δ% Revenue 1,473 1,504 2 EBIT (Operating income excluding identified items) 222 202 (9) Operating income 222 202 (9) Ratio, % Q2 2016 Q2 2017 ROS* 15.1 13.4 Moving average ROI* 31.0 27.2 Revenue development Q2 20
Slide 30: Specialty Chemicals Q2 2017: Revenue up, with growth in all regions
Specialty Chemicals Q2 2017: Revenue up, with growth in all regions € million Q2 2016 Q2 2017 Δ% Revenue 1,206 1,259 4 EBIT (Operating income excluding identified items) 179 179 - Operating income 179 179 - Ratio, % Q2 2016 Q2 2017 ROS* 14.8 14.2 Moving average ROI* 17.1 18.0 Increase Revenue develo
Slide 31: Disclaimer/ forward-looking statements
Disclaimer/ forward-looking statements This presentation does not constitute or form a part of any offer, or any invitation or other solicitation of any offer, to buy or subscribe for any securities in AkzoNobel N.V. in the United States or any other jurisdiction. Some statements in this presentatio