Akzo Nobel N.v. · EURONEXT:AKZA
Akzo Nobel — Q3 2020 Earnings Presentation
29 slides from Akzo Nobel's earnings presentation, Oct 21, 2020
Slide 1: Investor update Q3 2020
Investor update Q3 2020 October 21, 2020 Unearth your courage in 2021 with AkzoNobel’s Color of the Year Brave Ground has been unveiled as AkzoNobel’s Color of the Year for 2021. It’s a warm and grounding neutral shade that gives us the courage to embrace change. A range of palettes has been develop
Slide 2: Agenda
Agenda Key highlights Financial review Concluding remarks Q&A Investor update | Q3 2020 2
Slide 3: Key highlights
Key highlights Investor update | Q3 2020 3
Slide 4: Strong profitability during Q3, driven by disciplined margin and cost focus
Strong profitability during Q3, driven by disciplined margin and cost focus ROS, excluding unallocated costs, increased to 17.7% (2019: 13.8%) due to strong margin management and cost savings Growth in volumes of 3%, with strong demand trends for most segments and regions Total cost savings delivere
Slide 5: Q3 2020 ROS improved to 17.7%, and 51% increased cash generation
Q3 2020 ROS* improved to 17.7%, and 51% increased cash generation Q3 2020: YTD 2020: ROS* Revenue Adjusted EPS In constant currencies From continuing operations Increased to 17.7% Up 1% Up 19% at €2.80 (2019: 13.8%) ROI** Free cash flow Leverage (Net Debt/EBITDA) 18.8% 51% higher 1.0x (2019: 16.8%)
Slide 6: COVID-19 headwinds eased in Q3; revenue up 1% in constant currencies
COVID-19 headwinds eased in Q3; revenue up 1% in constant currencies Revenue development YTD 2020 (Δ%)* 50% Paints 0% Total Coatings -50% Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk Wk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Slide 7: Demand trends continue to differ per region and segment
Demand trends continue to differ per region and segment South Powder America Industrial ~ EMEA China Automotive South Asia and Specialty ~ Marine and Protective Investor update | Q3 2020 7
Slide 8: Taking steps to rapidly reduce costs and key parts of transformation resumed
Taking steps to rapidly reduce costs and key parts of transformation resumed Sales force effectiveness Margin management Delivering strong margin management Innovation excellence Powder technology acquisition accelerated access to low curing technology Global Business Services 10 GBS transitions com
Slide 9: Financial review
Financial review Investor update | Q3 2020 9
Slide 10: ROS increased 390bps during Q3 2020, due to margin management and cost savings
ROS* increased 390bps during Q3 2020, due to margin management and cost savings € million Q3 2019 Q3 2020 Δ% Δ%CC Revenue was 5% lower, while up 1% up in constant Revenue 2,398 2,276 (5%) 1% currencies. Volumes were Adjusted EBITDA 387 439 13% up 3% overall, mainly driven by Decorative Adjusted oper
Slide 11: Revenue up 1% in constant currencies, with differing trends per segment
Revenue up 1% in constant currencies, with differing trends per segment Decorative Paints Performance Coatings Total Quarterly price/mix development in % year-on-year +2% price 11 8 -6% geo-mix 9 6 2 7 7 7 6 6 0 4 5 4 5 1 4 5 3 0 0 1 5 5 4 1 3 3 2 2 2 -4 -1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3
Slide 12: Margin management and cost savings delivered 18% higher profitability in Q3 2020
Margin management and cost savings delivered 18% higher profitability in Q3 2020 Adjusted operating income Positive impact €27m transformation Negative impact €22m temporary ROS* 17.7% 49 - 30 ROS* 13.8% - 15 38 - 21 32 - 353 300 Q3 2019 FX Volumes Price/mix Raw materials/ Transformation and One-off
Slide 13: Decorative Paints ROS at 20.7%, driven by strong demand globally
Decorative Paints ROS at 20.7%, driven by strong demand globally € million Q3 2019 Q3 2020 Δ% Δ%CC Revenue 968 1004 4% 11% Adjusted EBITDA 174 243 40% Adjusted operating income 135 208 54% Operating income 130 202 55% ROS* 13.9% 20.7% ROI** 12.5% 18.5% AkzoNobel is to further grow in Europe after ag
Slide 14: Performance Coatings demand improving with revenue in constant currency up in September
Performance Coatings demand improving with revenue in constant currency up in September € million Q3 2019 Q3 2020 Δ% Δ%CC Revenue 1,413 1,270 (10%) (5%) Adjusted EBITDA 238 232 (3%) Adjusted operating income 194 195 1% Operating income 156 179 15% ROS* 13.7% 15.4% ROI** 20.8% 19.0% Revenue developme
Slide 15: Adjusted EPS for continuing operations up 34% for Q3 and 19% YTD
Adjusted EPS for continuing operations up 34% for Q3 and 19% YTD Q3 2019 Q3 2020 € million YTD 2019 YTD 2020 The outstanding share capital was 190.6 million common 247 326 Operating income 668 720 shares at the end of (27) (15) Net financing expenses (58) (53) September 2020 6 6 Results from associa
Slide 16: Q3 free cash flow improved by 51%; maintained strong balance sheet
Q3 free cash flow improved by 51%; maintained strong balance sheet Q3 2019 Q3 2020 € million YTD 2019 YTD 2020 334 417 EBITDA 929 991 28 1 Impairment losses 61 1 Pre-tax result on acquisitions and (5) (10) (71) (10) divestments 35 101 Changes in working capital (502) (182) - - Pension pre-funding (1
Slide 17: Delivering on capital allocation priorities
Delivering on capital allocation priorities ~2.5% CAPEX/revenue Dividend € per share Profitable organic growth Investing in our sites and systems Related to the Specialty Chemicals business Final dividend Interim dividend 2.50 Policy “stable to rising” Dividend Interim dividend €0.43 0.85 1.90 (2019
Slide 18: Concluding remarks
Concluding remarks Investor update | Q3 2020 18
Slide 19: Strong profitability during Q3, driven by disciplined margin and cost focus
Strong profitability during Q3, driven by disciplined margin and cost focus ROS, excluding unallocated costs, increased to 17.7% (2019: 13.8%) due to strong margin management and cost savings Growth in volumes of 3%, with strong demand trends for most segments and regions Total cost savings delivere
Slide 20: Outlook
Outlook AkzoNobel has suspended its 2020 financial ambition in response to the significant market disruption resulting from the pandemic. Headwinds related to COVID-19 continued to ease, although demand trends differ per region and segment in an uncertain macro-economic environment. Raw material cos
Slide 21: Upcoming events
Upcoming events Ex-dividend date of 2020 interim dividend October 23, 2020 Record date of 2020 interim dividend October 26, 2020 Payment of 2020 interim dividend November 5, 2020 Report for the full-year and the fourth quarter February 17, 2021 Investor update | Q3 2020 21
Slide 22: 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 23: 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 24: Appendix
Appendix Investor update | Q3 2020 24
Slide 25: YTD 2020
YTD 2020 € million YTD 2019 YTD 2020 Δ% Δ%CC Adjusted operating income was €805 million (2019: Revenue 7,034 6,321 (10%) (7%) €768 million); driven by Adjusted EBITDA 1,029 1,062 3% margin management and cost-saving programs. Adjusted operating income 768 805 5% Continuous improvement initiatives su
Slide 26: YTD 2020: Decorative Paints
YTD 2020: Decorative Paints € million YTD 2019 YTD 2020 Δ% Δ%CC Decorative Paints performance continued to Revenue 2,801 2,657 (5%) -% improve. Margin Adjusted EBITDA 446 554 24% management and cost savings more than Adjusted operating income 331 447 35% compensated for lower volumes Operating incom
Slide 27: YTD 2020: Performance Coatings
YTD 2020: Performance Coatings € million YTD 2019 YTD 2020 Δ% Δ%CC Performance Coatings adjusted operating income Revenue 4,184 3,651 (13%) (10%) was lower, with positive price/mix, margin Adjusted EBITDA 661 601 (9%) management and cost Adjusted operating income 529 488 (8%) savings more than offse
Slide 28: Representation of revenue 2019
Representation of revenue 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2019 € million Reported Represented Reported Represented Reported Represented Reported Represented Decorative Paints EMEA 506 498 620 611 573 565 462 454 Decorative paints South America 99 98 103 102 121 120 139 137 Decorative Paints Asia 240
Slide 29: Definitions and assumptions 2020
Definitions and 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) Other activities/eliminations €140-