Akzo Nobel N.V. · EURONEXT:AKZA
Akzo Nobel — Investor Presentation (February 2013)
43 slides from Akzo Nobel's investor presentation, Feb 20, 2013
Slide 1: Leading market positions delivering leading performance
Leading market positions delivering leading performance Media Briefing by Ton Büchner and Keith Nichols February 20, 2013
Slide 2: Agenda
Agenda 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion Questions Strategy Update 2013 2
Slide 3: 2012 highlights
2012 highlights • 2012 revenue up 5 percent driven by favorable currencies and pricing, offset by lower volumes • 2012 EBITDA* 4 percent higher at €1,901 million (2011: €1,834 million) • Performance improvement program 2012 target has been exceeded • Net loss from continuing operations €1,733 millio
Slide 4: Our proposition: Leading market positions delivering leading performance
Our proposition: Leading market positions delivering leading performance AkzoNobel has gone through a significant amount of strategic change over the past five years Today, the company has • Excellent portfolio of businesses • Good long term growth potential on the basis of end-user segment growth •
Slide 5: AkzoNobel strategy
AkzoNobel strategy Strategy Update 2013 5
Slide 6: New and realistic 2015 financial targets
New and realistic 2015 financial targets focused on quality of earnings and value creation Return on sales Return on investment Net debt/EBITDA (Operating income/revenue) (Operating income/average x % 12 months invested capital) % 12 16 14,0 3 9,0 < 2,0 12 8 5,9 * 8,9 * 2 1.4 8 4 1 4 0 0 0 2012 2015
Slide 7: AkzoNobel today
AkzoNobel today • Revenue €15.4 billion • 50,610 employees • 44% of revenue from high growth markets • Major producer of Paints, Coatings and Specialty Chemicals • Leadership positions in many markets Revenue by Operating income* EBITDA** by Business Area by Business Area Business Area Performance C
Slide 8: 2013 market conditions not expected to improve significantly
2013 market conditions not expected to improve significantly 2012 showed challenging market 2013 market conditions are not expected conditions in most end-user segments to improve significantly and geographical end markets • Focus will be on: Key developments in 2012: – Organic growth • Divestment o
Slide 9: 2. Market environment
2. Market environment 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion Strategy Update 2013 9
Slide 10: Revenue by end-user segment
~43% of revenues ~16% of revenues New Build Projects Automotive OEM, Parts and Assembly Maintenance, Renovation and Repair Automotive Repair Building Products and Components Marine and Air Transport ~16% of revenues ~25% of revenues Consumer Durables Natural Resource and Energy Industries Consumer P
Slide 11: High growth markets are 44% of revenue and their importance will increase
High growth markets are 44% of revenue and their importance will increase % of 2012 revenue, excluding Decorative Paints North America Three year GDP growth* 38% 9% Mature Europe 6% 3% 8% 15% Emerging Europe 0% North America UK Eurozone USA Latin America China Developing Asia 2013 2014 2015 26% 2% A
Slide 12: AkzoNobel benefits from its broad end-user segmentation and geographical presence
AkzoNobel benefits from its broad end-user segmentation and geographical presence • AkzoNobel’s four end-user segments show a mixed picture for future development – Buildings and Infrastructure faces challenges, especially in Europe – Marine transportation shows reduced activity levels – Consumer Go
Slide 13: 3. Group strategic update
3. Group strategic update 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion Strategy Update 2013 13
Slide 14: The vision and new targets
The vision and new targets Vision: Leading market positions delivering leading performance To be a leader in: • Operating efficiency and customer service • Innovation • Sustainability New targets • Return on sales (ROS, operating income/revenue) • Return on investment (ROI, operating income/average
Slide 15: AkzoNobel strategy
AkzoNobel strategy Strategy Update 2013 15
Slide 16: We will drive five strategic focus areas
We will drive five strategic focus areas 1. Care for the customer 1. Care for the customer 2. Reduction of product and process complexity 3. Focus on cash and return on investment 3. Cash and return on investment 4. Embedded safety and sustainability 4. Embedded safety and sustainability 5. Diverse
Slide 17: The company core processes will support our strategic focus areas
The company core processes will support our strategic focus areas Core processes Process owner Behavior-based and process safety Integrated Supply Chain (HSE) Operational control cycle CEO/CFO Integrated Supply Chain Continuous improvement (Operations) Innovation RDI Integrated Supply Chain Procurem
Slide 18: Actions
Actions > Deliver dependably > Grow organically > Innovate > Simplify > Standardize > Continuously improve Strategy Update 2013 18
Slide 19: Strategy on a page
Strategy on a page Strategic focus areas Processes Actions End-user segmentation • Care for the customer • Behavior-based • Deliver dependably • Buildings and • Reduction of product and process safety • Grow organically Infrastructure and process complexity • Operational • Innovate • Transportation
Slide 20: Our sustainability strategy: Creating more value with fewer resources
Our sustainability strategy: Creating more value with fewer resources More customer value in our end-user segmentation Resource scarcity across the value chain will create opportunities Scope 3 upstream Scope 1 and 2 Scope 3 downstream Raw materials Own operations, Customer operations End-user End o
Slide 21: Sustainability is business; Business is sustainability
Sustainability is business; Business is sustainability • ‘Downstream eco-premium solutions’: 20% of our revenues by 2020 We will increase the revenue from solutions that generate direct resource and energy benefits for our customers, consumers and users • Reduction of carbon emissions 25-30% reducti
Slide 22: End-user segment trends, combined with sustainability, direct our innovation spend
End-user segment trends, combined with sustainability, direct our innovation spend End-user segments Sustainability Direction of Sustainability = Business innovation Business = Sustainability spend (2.5% of 2012 revenue) Strategy Update 2013 22
Slide 23: AkzoNobel delivers innovation
AkzoNobel delivers innovation Buildings and Transportation Infrastructure Aerobase Dulux Guardian Coating System A premium, low-VOC A consistently and low-odor soft-sheen performing OEM-approved emulsion for interior walls low VOC base coat/clear coat system for aerospace Consumer goods Industrial B
Slide 24: Performance Improvement Program to deliver €500 million in 2013
Performance Improvement Program to deliver €500 million in 2013, one year earlier than planned Performance Improvement Program Operational Functional Business Unit Excellence Excellence Adaptations Key summary to date 2013 Plan • Gains of €250 million, • Accelerate delivery of recurring €500 million
Slide 25: Moving from project based to continuous improvement will be core in 2013
Moving from project based to continuous improvement will be core in 2013 • Product and margin management Operational • Consolidation of RD&I Excellence • Logistic and warehouse optimization • IT infrastructure simplification Functional • HR shared service model Excellence • Finance shared service ce
Slide 26: AkzoNobel strategy
AkzoNobel strategy Strategy Update 2013 26
Slide 27: 4. Business Areas
4. Business Areas 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion Strategy Update 2013 27
Slide 28: The global paints and coatings market is around €75 billion
The global paints and coatings market is around €75 billion By market sector By end-user segment 2011, 100% = €75 billion 2011, 100% = €75 billion Aerospace Yacht Packaging Industrial Coil Marine Decorative Consumer Buildings and Wood Paints Goods Infrastructure (43%) Vehicle Refinish Powder Transpo
Slide 29: AkzoNobel has many leading market positions
AkzoNobel has many leading market positions No.1 Position Other key players Multiple regions outside North PPG, regional players Decorative America North America* Sherwin-Williams PPG, regional players Protective Sherwin-Williams, Jotun Powder Axalta, Jotun, regional players Auto refinish Axalta PPG
Slide 30: Decorative Paints overview
Decorative Paints overview Revenue by end-user Revenue by geographic region sub-segment Mature Europe 8%4% Maintenance, 16% renovation and repair Asia Pacif ic New build projects 14% Latin America 49% Emerging Europe Other regions 84% 25% Decorative Paints key figures (new definition) € million 2012
Slide 31: Performance Coatings overview
Performance Coatings overview Revenue by end-user segment Revenue by geographic region Mature Europe 14% Transportation 8% 4% 27% North America 36% Consumer 11% Goods Asia Pacific 23% Buildings and Emerging Infrastructure Europe Industrial 30% 20% Latin America 27% Other regions Performance Coatings
Slide 32: Specialty Chemicals overview
Specialty Chemicals overview Revenue by end-user segment Revenue by geographic spread Buildings and 3% 4% Mature Europe 18% Infrastructure 10% North America Transportation 40% 6% Asia Pacific Consumer 22% Latin America 58% 18% Goods Emerging Europe Industrial 21% Other regions Specialty Chemicals ke
Slide 33: 5. Financial implications
5. Financial implications 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion Strategy Update 2013 33
Slide 34: Historical EBITDA profitability shows stable results in challenging economic times
Historical EBITDA profitability shows stable results in challenging economic times EBITDA as reported* EBITDA margin € billion % 2.0 14 12 1.5 10 8 1.0 2.0 1.9 1.8 1.7 1.8 6 4 0.5 2 0.0 0 2008 2009 2010 2011 2012 EBITDA margin EBITDA *All years excluding National Starch Strategy Update 2013 34
Slide 35: Targets for 2015 are focused on increased cash generation and value creation
Targets for 2015 are focused on increased cash generation and value creation New targets Old targets Change driver Increase return on sales (ROS, Grow to €20 billion revenues • Increased focus on delivery of operating income/ revenue) operating profit after incidentals to 9% Achieve return on invest
Slide 36: Incidentals are now included in EBITDA as part of our ongoing business
Incidentals are now included in EBITDA* as part of our ongoing business € million 2010 2011 2012 • Incidentals are now included in EBITDA unless genuinely one-off and not related to Incidentals as reported (139) (126) (2,520) normal business Total restated (32) 3 (2,170) • Restructuring charges are
Slide 37: New focus to improve performance and drive value creation
New focus to improve performance and drive value creation € million 2010 2011 2012* 2015 Target 13,605 14,604 15,390 Revenue 1,915 1,717 1,597 EBITDA Depreciation, • Benefits of new targets (590) (563) (625) amortization – Clear focus on value creation Restated – Linked to remuneration (32) 3 (64) i
Slide 38: 6. Summary and conclusion
6. Summary and conclusion 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion Strategy Update 2013 38
Slide 39: New and realistic 2015 financial targets
New and realistic 2015 financial targets focused on quality of earnings and value creation Return on sales Return on investment Net debt/EBITDA (Operating income/revenue) (Operating income/average x % 12 months invested capital) % 12 16 14,0 3 9,0 < 2,0 12 8 5,9 * 8,9 * 2 1.4 8 4 1 4 0 0 0 2012 2015
Slide 40: Summary
Summary • Clear end-user segment focus providing forward looking indicators and direction for our market initiatives and innovation spend • Challenging market conditions expected in the near future • Operational strategy on the basis of: – Well defined strategic focus areas – Core processes – Clear
Slide 41: Leading market positions delivering leading performance
Leading market positions delivering leading performance Today, the company has • Excellent portfolio of businesses • Good long term growth potential on the basis of end-user segment growth • Strong positions in high growth markets (44% of revenue) • Leadership positions in many markets • Clear leade
Slide 42: Thank you for your attention
Thank you for your attention AkzoNobel ¥.
Slide 43: 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