Slide 1: Investor update Q3 2017
Investor update Q3 2017 October 18, 2017
Slide 2: Agenda
Agenda Strategy update Operational and financial review Concluding remarks Questions Investor update | Q3 2017 2
Slide 3: Strategy update
Strategy update Investing in UK production : We opened the world’s most sustainable paint factory, capable of producing over 200 million liters of paint per year. Ashington will be the production center for Dulux, the world’s leading paint brand.
Slide 4: Growth momentum continues while dealing with industry specific headwinds
Growth momentum continues while dealing with industry specific headwinds Higher volumes and increased revenue, despite challenging market conditions in selected areas Capacity expansions in Sweden and China Launched the world’s most advanced and sustainable paint factory in Ashington, UK Industry sp
Slide 5: Creating two focused high-performing businesses
Creating two focused high-performing businesses Phase one of plan to create a fit for purpose Extraordinary General Meeting (EGM) to be Paints and Coatings organization held on November 30, 2017 Deliver €110 million savings in 2018, €1 billion special cash dividend as advance towards 2020 guidance p
Slide 6: Phase one of creating a fit for purpose Paints and Coatings organization
Phase one of creating a fit for purpose Paints and Coatings organization 1 Supply chain re-organization 2 Consolidation of infrastructure €120m one-off costs 2017/ 2018 €110m 3 Leveraging support functions (SG&A and R&D) annual cost savings from New management structure 2018 Investor update | Q3 201
Slide 7: Separation of Specialty Chemicals on track to be completed by April 2018
Separation of Specialty Chemicals on track to be completed by April 2018 Internal separation External separation Dual-track process Standalone Standalone corporate functions corporate functions Private sale Scope of requested shareholder approval Demerger Paints Coatings Specialty Chemicals IPO Tran
Slide 8: Operational and financial review
Operational and financial review Leading the way in sustainability : We are at the top of the influential Dow Jones Sustainability index within the Chemicals Industry Group, underlining our commitment to making a positive impact on the whole value chain.
Slide 9: Mixed market environment
Mixed market environment China Raw material cost Specialty inflation Chemicals Powder Marine Coatings and Protective Coatings South and Disruption SE Asia in the supply Automotive Adverse chain EMEA and currency (ex. UK) Specialty effects Coatings Investor update | Q3 2017 9
Slide 10: Volumes and revenue up despite strong headwinds
Volumes and revenue up despite strong headwinds Volumes Revenue Novel technology platform for producing a wide range of ethylene amines 2% higher up 1% EBIT Interim dividend Product launches include Ultralavable (EasyCare) in Argentina and Forest Breath BioCare in China €383 million up 51% to €0.56
Slide 11: Volume growth for Paints and Coatings and higher positive price/mix in Chemicals
Volume growth for Paints and Coatings and higher positive price/mix in Chemicals 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 -1 -3 * Includes acquisitions Investor up
Slide 12: AkzoNobel Q3 2017: Higher revenue driven by increased volumes and acquisitions
AkzoNobel Q3 2017: Higher revenue driven by increased volumes and acquisitions € million Q3 2016 Q3 2017 Δ% Revenue 3,600 3,624 1 EBIT (Operating income excluding identified items) 442 383 (13) Operating income 454 338 (26) Ratio, % Q3 2016 Q3 2017 ROS* 12.3 10.6 Moving average ROI* 15.2 14.2 Revenu
Slide 13: Decorative Paints Q3 2017: Continued positive volume developments
Decorative Paints Q3 2017: Continued positive volume developments € million Q3 2016 Q3 2017 Δ% Revenue 1,021 1,007 (1) EBIT (Operating income excluding identified items) 123 95 (23) Operating income 132 95 (28) Ratio, % Q3 2016 Q3 2017 ROS* 12.0 9.4 Moving average ROI* 12.5 12.4 Revenue development
Slide 14: Performance Coatings Q3 2017: Volumes and revenue higher
Performance Coatings Q3 2017: Volumes and revenue higher € million Q3 2016 Q3 2017 Δ% Our new aerospace coatings Revenue 1,406 1,428 2 facility in Dongguan will offer EBIT (Operating income excluding identified items) 199 147 (26) faster service to customers in the region and significantly Operating
Slide 15: Specialty Chemicals Q3 2017: Improved further despite supply chain disruptions
Specialty Chemicals Q3 2017: Improved further despite supply chain disruptions € million Q3 2016 Q3 2017 Δ% Revenue 1,202 1,209 1 EBIT (Operating income excluding identified items) 168 169 1 Operating income 168 169 1 Ratio, % Q3 2016 Q3 2017 ROS* 14.0 14.0 Moving average ROI* 17.2 17.9 Increase Rev
Slide 16: Free cash flow impacted by changes in working capital and provisions
Free cash flow impacted by changes in working capital and provisions Q3 2016 Q3 2017 € million EBITDA 593 535 Interest paid -23 -26 Tax paid -101 -104 Changes in working capital, provisions* and other 141 16 Capital expenditures (including intangible assets) -131 -141 Free cash flow, excluding pensi
Slide 17: IAS19 pension deficit remains at €0.8 billion in Q3 2017
IAS19 pension deficit remains at €0.8 billion in Q3 2017 Key pension financial assumptions Q2 2017 Q3 2017 Discount rate 2.4% 2.5% Inflation rate 3.0% 3.0% Pension deficit development during Q3 2017 Increase € million Decrease Investor update | Q3 2017 17
Slide 18: Concluding remarks
Concluding remarks Paint recycling sat squarely at the center of AkzoNobel’s involvement in this year’s global Benches Collective event in Amsterdam. Billed as the world’s largest open air café, the annual initiative invites people to “open” a bench outside their home and interact with neighbors in
Slide 19: Interim dividend up 51% to €0.56 per share
Interim dividend up 51% to €0.56 per share Dividends € per share Dividend policy is to pay a “stable to rising” dividend each year Interim dividend paid in cash, unless shareholders elect to receive a stock dividend (40% maximum) Shares cancelled from the €160 million Yield*: 2.5% 2.5% 2.8% repurcha
Slide 20: Extraordinary shareholder meeting to take place on November 30, 2017
Extraordinary shareholder meeting to take place on November 30, 2017 Appointment of members of the Supervisory Board Appointment of Maarten de Vries as member of the Board of Management Approval of the separation of Specialty Chemicals business Investor update | Q3 2017 20
Slide 21: Outlook
Outlook Positive developments for EMEA (excluding the UK), North America and Asia, while Latin America is expected to stabilize Industry specific headwinds EBIT for 2017 continue, including higher now expected to raw material prices and challenges for marine and be in line with protective coatings 2
Slide 22: Growth momentum continues while dealing with industry specific headwinds
Growth momentum continues while dealing with industry specific headwinds Higher volumes and increased revenue, despite challenging market conditions in selected areas Capacity expansions in Sweden and China Launched the world’s most advanced and sustainable paint factory in Ashington, UK Industry sp
Slide 23: Upcoming events
Upcoming events Ex-dividend date of 2017 interim dividend October 20, 2017 Record date of 2017 interim dividend October 23, 2017 Election period cash or stock interim dividend October 24, 2017 – November 15, 2017 Determination of exchange ratio November 16, 2017 Payment of cash dividend and delivery
Slide 24: Questions
Questions AkzoNobel’s partnership with the Instituto Tomie Ohtake (ITO) in Brazil has been strengthened by a new project to renovate five of the artist’s public artworks.
Slide 25: Appendix
Appendix Investor update | Q3 2017 25
Slide 26: Manufacturing indices up significantly in the Eurozone
Manufacturing indices up significantly in the Eurozone Purchase Managers’ Index (PMI)* Purchase Managers’ Index (PMI)* Figures below 50 indicate pessimism September 2017 60 70 65 Sweden 55 60 Netherlands Germany 50 UK Japan US 55 France Brazil India US Vietnam 45 Eurozone 50 Russia Indonesia China C
Slide 27: Currency effects become adverse again as of Q3 2017
Currency effects become adverse again as of Q3 2017 Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel Exchange rate development in % year-on-year 0 2016 2017 -1 -3 Investor update | Q3 2017 27
Slide 28: 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