Slide 1: Full year 2008 and Q4 results
February 24, 2009 Full year 2008 and Q4 results
Slide 2: Agenda
Agenda 1. 2008 review- Hans Wijers 2. Financial review - Keith Nichols 3. Outlook and medium term targets - Hans Wijers 4. Questions and answers session
Slide 3: Full year 2008 and Q4 highlights
Full year 2008 and Q4 highlights • Full year revenues above last year • Full year EBITDA before incidentals and National Starch, in constant currencies, in-line with guidance • Significant slowdown in most markets towards year-end • Effective margin management offset raw material price increases • I
Slide 4: Full year 2008 revenue: Effective margin management offset currency impact
Full year 2008 revenue: Effective margin management offset currency impact € mln 2008 Δ% Revenue constant currencies 16,202 6 Revenue reported 15,415 1 Total revenue growth 2008 vs. 2007 pro forma 6 +1 5 4 -5 3 +6 2 1 1 0 -1 -1 Volume Price Acquisitions/ Currency Total divestments Increase Decrease
Slide 5: Full year 2008 results: resilient performance
Full year 2008 results: resilient performance € mln 2008 Δ% EBITDA constant currencies 1,841 (2) (excl National Starch)* EBITDA constant currencies* 1,987 (1) EBITDA reported* 1,878 (7) Net income from continuing operations* 742 (14) Net income/(loss) from total operations (1,086) after incidentals
Slide 6: Q4 revenue: Effective margin management offset by volume decline
Q4 revenue: Effective margin management offset by volume decline € mln 2008 Δ% Revenue constant currencies 3,669 - Revenue reported 3,561 (3) Total revenue growth Q4 2008 vs. Q4 2007 pro forma 0 +1 -1 -3 -3 -2 -3 -4 -5 -10 +9 -6 -7 -8 -9 -10 Volume Price Acquisitions/ Currency Total divestments Incr
Slide 7: Q4 results: slowdown evident
Q4 results: slowdown evident € mln 2008 Δ% EBITDA constant currencies 356 (13) (excl National Starch)* EBITDA constant currencies* 391 (12) EBITDA reported* 368 (17) Net income from continuing operations* 121 (38) Net income/(loss) from total operations (1,486) after incidentals Ratio 2008 2007 EBIT
Slide 8: Q4 other costs and incidental charges
Q4 other costs and incidental charges Other costs in EBITDA of €19 million (2007: €33 million), mainly corporate and technology costs Incidental charges of €1,562 million ( 2007: €192 million) include: • €1,275 million impairment charges • €205 million restructuring costs • €25 million transformatio
Slide 9: Restructuring and ICI integration at an advanced stage
Restructuring and ICI integration at an advanced stage Full year 2008 ICI Additional Total integration restructuring Net FTE 566 1,094 1,660 reductions* Cash Costs 77 79 156 (€ million) Annualized savings 97 37 134 (€ million) We will continue to pursue efficiency improvements: • Site rationalizatio
Slide 10: Operational review Decorative Paints
Operational review Decorative Paints Full year 2008 and Q4 results 10
Slide 11: Decorative Paints: Margin management compensated for volume decline
Decorative Paints: Margin management compensated for volume decline • Revenue in Europe in 2008, in constant currencies, stable • Significant cost reduction in Europe • UK market share holding up • US revenue declined by 9 percent due to recessionary market conditions • Asia delivered double-digit c
Slide 12: Decorative Paints full year 2008: resilient performance
Decorative Paints full year 2008: resilient performance € mln 2008 Δ% Revenue constant currencies 5,385 2 Revenue reported 5,118 (3) EBITDA constant currencies 628 – EBITDA reported 593 (6) Ratio, % 2008 2007 EBITDA margin reported 11.6 11.9 Total revenue growth 2008 vs. 2007 pro forma +1 2 1 -5 0 +
Slide 13: Decorative Paints Q4: lower volumes impact profitability
Decorative Paints Q4: lower volumes impact profitability € mln Q4 2008 Δ% Revenue constant currencies 1,179 (2) Revenue reported 1,128 (6) EBITDA constant currencies 101 (20) EBITDA reported 89 (29) Ratio, % Q4 2008 Q4 2007 EBITDA margin reported 7.9 10.5 Total revenue growth Q4 2008 vs. Q4 2007 pro
Slide 14: Operational review Performance Coatings
Operational review Performance Coatings Full year 2008 and Q4 results 14
Slide 15: Performance Coatings: a mixed year
Performance Coatings: a mixed year • Full year and Q4: continued strong performance at Marine & Protective Coatings • Global economic downturn had greater impact on trading levels in Industrial Activities as the year developed • Volumes at Car Refinishes close to 2007 • Stable year for Packaging Coa
Slide 16: Performance Coatings full year 2008: stable results
Performance Coatings full year 2008: stable results € mln 2008 Δ% Revenue constant currencies 4,691 4 Revenue reported 4,463 (1) EBITDA constant currencies 566 – EBITDA reported 546 (4) Ratio, % 2008 2007 EBITDA margin reported 12.2 12.6 Total revenue growth 2008 vs. 2007 pro forma 6 +1 4 2 -1 +4 -5
Slide 17: Performance Coatings Q4: weaker
Performance Coatings Q4: weaker € mln Q4 2008 Δ% Revenue constant currencies 1,077 (2) Revenue reported 1,054 (4) EBITDA constant currencies 116 (15) EBITDA reported 115 (16) Ratio, % Q4 2008 Q4 2007 EBITDA margin reported 10.9 12.5 Total revenue growth Q4 2008 vs. Q4 2007 pro forma 0 -2 0 -4 -6 -2
Slide 18: Operational review Specialty Chemicals
Operational review Specialty Chemicals Full year 2008 and Q4 results 18
Slide 19: Specialty Chemicals: solid performance, but volume declined in Q4
Specialty Chemicals: solid performance, but volume declined in Q4 • Solid performance for 2008, volume declined in Q4 • Demand weakness in Polymer Chemicals and a significant decline in results for the Pakistan PTA business • Functional Chemicals finished behind 2007 as demand softened in Q4 and sul
Slide 20: Specialty Chemicals full year 2008: solid performance but volume declined
Specialty Chemicals full year 2008: solid performance but volume declined € mln 2008 Δ% Revenue constant currencies 5,964 10 Revenue reported 5,687 5 EBITDA constant currencies 951 3 EBITDA reported 891 (4) Ratio, % 2008 2007 EBITDA margin reported 15.7 17.2 Total revenue growth 2008 vs. 2007 pro fo
Slide 21: Specialty Chemicals Q4: volume down
Specialty Chemicals Q4: volume down € mln Q4 2008 Δ% Revenue constant currencies 1,438 6 Revenue reported 1,399 3 EBITDA constant currencies 195 (9) EBITDA reported 183 (14) Ratio, % Q4 2008 Q4 2007 EBITDA margin reported 13.1 15.8 Total revenue growth Q4 2008 vs. Q4 2007 pro forma 10 +1 -3 +3 5 0 -
Slide 22: To sum things up
To sum things up Hans Wijers
Slide 23: We continue to successfully innovate
We continue to successfully innovate Intersleek® 900 • Ship number 100 coated during 2008. Reduces fuel consumption with up to 6 percent. Autoclear® UV • Clearcoat which cures by UV light, saving energy and increases body shop productivity. The Freshaire Choice™ • Zero VOC paint & colorant system la
Slide 24: Actions underway to deliver future strength
Actions underway to deliver future strength Sound fundamentals • Strong positions in diverse, highly attractive sectors • Wide geographic spread • Strong balance sheet Actions • Significant level of additional restructuring • Rigorous cost management • Prudent capital allocation without jeopardizing
Slide 25: Financial review
Financial review Keith Nichols
Slide 26: Strong balance sheet maintained after share buy back and impairment
Strong balance sheet maintained after share buy back and impairment € million Dec 31, Dec 31, 2008 20071 Equity 7,913 12,091 Net debt 2,084 2,910 Pension deficit 988 1,510 € million 2008 2007 Net cash from operating activities 91 643 • Equity impacted by share buyback, impairments and currency trans
Slide 27: Pro-active pension risk management
Pro-active pension risk management • 2004 pro forma (including ICI) pension under funding was around €4 billion • End-2008 pension under funding €988 million • Committed to further de-risk over time • Defined Benefits closed to new entrants, major plans closed in 2001 (ICI) and 2004 (Akzo Nobel) • I
Slide 28: Strong liquidity headroom
Strong liquidity headroom €1.0 billion debt maturing in May 2009 Debt maturity, € million 1,200 800 400 0 2009 2010 2011 2012 2013 2014 € bonds $ bonds GBP bonds Objective is to lengthen the duration of the debt book • Undrawn revolving credit facility of €1.5 billion available (2013) • Undrawn comm
Slide 29: Increased focus on capital efficiency
Increased focus on capital efficiency • Capex 2008 was expected to be €550 - 600 million (incl. Ningbo €95 million), actual spend €534 million • 2008 equally split between “growth” and “maintenance” Capex • Capex 2009 expected to be around €475 million (incl. Ningbo €125 million) • Working capital i
Slide 30: Managing Corporate and financial costs
Managing Corporate and financial costs • Tax rate expected to be around 27 - 28% through 2011 • Besides corporate costs, the “other” line includes pensions, IAS 39 fair value adjustments, captive insurance costs, corporate technology and costs of country offices. • 2009 reporting will improve transp
Slide 31: Dividend maintained, share buy back not completed
Dividend maintained, share buy back not completed Dividend 2008 • Proposed dividend 2008 is €1.80 per share – payout ratio of 48% • Interim dividend of €0.40 and final dividend of €1.40 Dividend policy • Pay-out ratio remains minimum of 45% of net income from total operations before incidentals and
Slide 32: Outlook and medium-term targets
Outlook and medium-term targets Hans Wijers
Slide 33: Outlook and medium term targets
Outlook and medium term targets • Global market conditions and lack of visibility do not allow certainty. We expect 2009 to be very challenging. Nevertheless, we remain focused on: • working towards our medium-term target of an EBITDA margin of 14 percent by the end of 2011 • delivering the €340 mil
Slide 34: Actions underway to deliver future strength
Actions underway to deliver future strength Sound fundamentals • Strong positions in diverse, highly attractive sectors • Wide geographic spread • Strong balance sheet Actions • Significant level of additional restructuring • Rigorous cost management • Prudent capital allocation without jeopardizing
Slide 35: Questions and answers
Questions and answers
Slide 36: Safe Harbor Statement
Safe Harbor Statement This presentation contains statements which address such key issues as Akzo Nobel’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 b