Akzo Nobel N.V. · EURONEXT:AKZA
Akzo Nobel — Q2 2009 Earnings Presentation
33 slides from Akzo Nobel's earnings presentation, Jul 29, 2009
Slide 1: Q2 2009 results press conference
July 29, 2009 Q2 2009 results press conference Hans Wijers, CEO Keith Nichols, CFO
Slide 2: Agenda
Agenda 1. Q2 Highlights 2. Q2 Financial review 3. Strategic ambitions and medium-term targets 4. Q&A
Slide 3: Q2 Highlights
01 Q2 Highlights
Slide 4: Q2 Highlights
Q2 Highlights • Ongoing significant volume pressure • Strong company-wide focus on customers, cost and cash • Margin management and cost restructuring bearing fruit • Operating working capital reduced • Forward visibility remains limited Q2 2009 results 4
Slide 5: Q2 2009 revenue
Q2 2009 revenue € million Q2 2009 Δ% Revenue constant currencies 3,655 (10) Revenue reported 3,668 (10) Revenue development Q2 2009 vs. Q2 2008 0 -2 -4 -10% -6 -8 -16% +1% -10 -12 +5% -14 -16 Volume Price Acquisitions/ Currency Total divestments Increase Decrease Q2 2009 results 5
Slide 6: Q2 2009 results
Q2 2009 results € million Q2 2009 Δ% EBITDA* constant currencies 519 (10) EBITDA* reported 527 (9) Net income total operations 155 (13) Ratio Q2 2009 Q2 2008 EBITDA* margin reported (%) 14.4 14.1 Earnings per share (in €) 0.67 0.70 * Before incidentals ** Net income from continuing operations before
Slide 7: We are delivering on synergies and cost reduction
We are delivering on synergies and cost reduction Cumulative annualized savings € million 600 500 200 400 300 182 200 340 340 67 67 37 37 137 100 188 137 137 97 0 FY 2008 actual Q1 2009 actual Q2 2009 actual FY 2011 target ICI synergies Additional restructuring Total cost savings targeted of at leas
Slide 8: ICI synergies and additional restructuring on track
ICI synergies and additional restructuring on track 2008 – Q2 2009 ICI Additional Total synergies restructuring Net FTE 1,325 1,560 2,885 reductions* Cash costs 115 128 243 (€ million) Annualized savings 188 182 370 (€ million) We will continue to pursue efficiency improvements: • Alignment of manuf
Slide 9: Operational review Decorative Paints
Operational review Decorative Paints Weathershield BackPack Roller System® Complete painting system, combines the power of a pump to dispense and control paint from specially designed packs. Q2 2009 results 9
Slide 10: Decorative Paints key facts
Decorative Paints key facts 2008 • Revenue €5.1 billion • 24,000 employees • EBITDA: €593 million1 • 32 percent of revenue from emerging markets • Largest global supplier of decorative paints • Many leading positions, strong brands Some of our strong brands Revenue by geography 18% 49% 33% Asia Paci
Slide 11: Decorative Paints Q2 2009
Decorative Paints Q2 2009 € million Q2 2009 Δ% Revenue reported 1,320 (5) EBITDA* reported 173 (11) Ratio, % Q2 2009 Q2 2008 EBITDA* margin reported 13.1 14.1 Revenue development Q2 2009 vs. Q2 2008 0 -2 -5% -4 -10% -6 -8 +4% +1% -10 Volume Price Acquisitions/ Currency Total divestments * Before inc
Slide 12: Decorative Paints highlights Q2 2009
Decorative Paints highlights Q2 2009 • Synergy programs and restructuring ahead of plan, net workforce reduced by more than 2,100 employees (8 percent) compared with 2008 • Europe – trade segment continued weakness, retail business more resilient • Americas - US paint market soft demand continued, c
Slide 13: Implementing our strategic action plan
Implementing our strategic action plan Customers Costs Cash • Bolt-on • Synergy and • OWC acquisitions in restructuring improvement France and ahead of plan despite Germany • Rightsizing of seasonal • Glidden ‘Gets European inflow You Going’ manufacturing • Disciplined media campaign and distributio
Slide 14: Operational review Performance Coatings
Operational review Performance Coatings UV LED spray gun for Autoclear® UV Automotive spray gun introduced in May which paints and cures at the same time. No warm up time, up to 25 percent less energy used during total repair. Q2 2009 results 14
Slide 15: Performance Coatings key facts
Performance Coatings key facts 2008 • Revenue €4.5 billion • 21,000 employees • EBITDA: €546 million1 • 42 percent of revenue from emerging markets • Leading positions in performance coatings • Innovative technologies, strong brands Revenue by business unit Revenue by geography 3% 8% 7% Industrial F
Slide 16: Performance Coatings Q2 2009
Performance Coatings Q2 2009 € million Q2 2009 Δ% Revenue reported 1,041 (14) EBITDA* reported 164 (2) Ratio, % Q2 2009 Q2 2008 EBITDA* margin reported 15.8 14.0 Revenue development Q2 2009 vs. Q2 2008 0 -5 -14% -10 -19% -15 +5% -20 Volume Price Acquisitions/ Currency Total divestments * Before inci
Slide 17: Performance Coatings highlights Q2 2009
Performance Coatings highlights Q2 2009 • Cost levels decreased as restructuring programs gathered pace • Strong performance in Marine & Protective Coatings and Packaging Coatings • Industrial Activities completed the closing or restructuring of 8 production sites in mature markets, continues to ali
Slide 18: Implementing our strategic action plan
Implementing our strategic action plan Customers Costs Cash • Packaging • Alignment of • OWC Coatings manufacturing improvement introduced footprint with • Disciplined Aqualure 915 lower trading capital • Car Refinishes levels expenditures launched • Restructuring control StickerFix programs • Openi
Slide 19: Operational review Specialty Chemicals
Operational review Specialty Chemicals Rediset™ asphalt additive Significantly reduces the mixing and paving temperatures, creating fuel savings and reducing operational costs. Also results in lower asphalt fumes, providing better working conditions for the paving crew. Q2 2009 results 19
Slide 20: Specialty Chemicals key facts
Specialty Chemicals key facts 2008 • Revenue €5.7 billion • 13,300 employees • EBITDA: €891 million1 • 35 percent of revenue from emerging markets • Major producer of specialty chemicals • Leadership positions in many markets Revenue by business unit Revenue by geography Functional Chemicals 2% 8% 9
Slide 21: Specialty Chemicals Q2 2009
Specialty Chemicals Q2 2009 € million Q2 2009 Δ% Revenue reported 1,318 (8) EBITDA* reported 219 (8) Ratio, % Q2 2009 Q2 2008 EBITDA* margin reported 16.6 16.6 Revenue development Q2 2009 vs. Q2 2008 0 -5 +4% +1% -8% -10 -18% +5% -15 -20 Volume Price Acquisitions/ Currency Total divestments * Before
Slide 22: Specialty Chemicals highlights Q2 2009
Specialty Chemicals highlights Q2 2009 • Cost and cash savings initiatives contributed in all businesses • Surface Chemistry and Polymer Chemicals results remain under pressure • Strong performance in Pulp & Paper and Functional Chemicals • Industrial Chemicals acquisitions to a large part offset th
Slide 23: Implementing our strategic action plan
Implementing our strategic action plan Customers Costs Cash • Ningbo site • LII Europe • OWC construction & KAC improvement on schedule acquisitions • Stringent • Dissolvine® GL being integrated capital Leading the • Capacity expenditures next generation being optimized control of products in to mee
Slide 24: Financial review
02 Financial review
Slide 25: Cash management discipline
Cash management discipline • OWC reduction Focus on • Capex reduction cash • R&D stable • Only bolt-on acquisitions • Dividend policy unchanged • OWC reduced to 16.3% of revenue (Q2 2008: 17.1%) • Careful priorities of Capex • We continue to look for attractive bolt-on acquisitions • Dividend policy
Slide 26: Ambition to maintain strong credit rating unchanged
Ambition to maintain strong credit rating unchanged € million Jun 30, 2009 Dec 31, 2008 Equity 8,139 7,913 Net debt 2,584 2,084 • Equity influenced by currency translation from the £ (+€352 million), net profit (+€186 million) and dividend payment (-€353 million) • Net debt increased due to capital
Slide 27: Debt maturities lengthened
Debt maturities lengthened No major bonds maturing before 2011 Debt maturity, € million 1.200 800 400 0 2009 2010 2011 2012 2013 2014 2015 2016 € bonds $ bonds GBP bonds Strong liquidity headroom • Undrawn revolving credit facility of €1.5 billion available (2013)* • €40 million drawn under commerci
Slide 28: Strategic ambitions and medium-term targets
03 Strategic ambitions and medium-term targets Q2 2009 results 28
Slide 29: Well positioned to meet current challenges
Well positioned to meet current challenges Sound fundamentals • Strong positions in diverse, highly attractive sectors • Attractive geographic spread • Strong operating cash flow Actions • Continued focus on customers • Rigorous cost restructuring • Cash protecting measures • Prudent capital allocat
Slide 30: AkzoNobel strategic ambitions
AkzoNobel strategic ambitions Leading in value creation • Outgrow our markets • EBITDA margin > 14 percent by end 2011 Tied to incentives, • 0.5 percent improvement in operating both for value working capital (OWC) level, p.a. creation and sustainability Leading in sustainability • Top 3 Dow Jones S
Slide 31: Outlook and medium term targets
Outlook and medium term targets • Forward visibility remains limited, due to continuing uncertain economic development. We continue to expect that 2009 will be a challenging year Nevertheless, we remain focused on: • working towards our medium-term target of an EBITDA margin of 14 percent by the end
Slide 32: Q&A
04 Q&A Q2 2009 results 32
Slide 33: 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