Akzo Nobel N.v. · EURONEXT:AKZA
Akzo Nobel — FY2017 Earnings Presentation
32 slides from Akzo Nobel's earnings presentation, Mar 8, 2018
Slide 1: Investor update Full-year and Q4 2017
Investor update Full-year and Q4 2017 March 8, 2018 Sikkens Autoclear UV, a product made by Vehicle Refinishes, needs less drying time thanks to the use of UV light
Slide 2: Agenda
Agenda Key highlights Financial review Concluding remarks Q&A Investor update 2
Slide 3: On track to create two focused high performing businesses
On track to create two focused high performing businesses Separation of Specialty Phase Revenue Higher Chemicals one Specialty of creating a fit up 4% volumes on track Chemicals for purpose excluding currency reported as Paints and impact for both Paints discontinued Coatings and Coatings, and opera
Slide 4: Delivering higher revenue and EBIT
AkzoNobel full-year 2017: Delivering higher revenue and EBIT Full-year Q4 Revenue Adjusted EPS Revenue Adjusted EPS 4% higher Up 6% at €4.40 6% higher Up 39% at €0.92 excluding currency impact (2016: €4.15) excluding currency impact (2016: €0.66) EBIT Total dividend EBIT Completed acquisition propos
Slide 5: Capitalizing on positive market trends and dealing with specific headwinds
Capitalizing on positive market trends and dealing with specific headwinds Specialty Chemicals China Raw Powder Materials Coatings South and SE Asia Foreign Specialty exchange Coatings Oil EMEA and gas industries Marine ~ Latin America industry Investor update 5
Slide 6: Investment in sites, and acquisitions, to support organic growth
Investment in sites, and acquisitions, to support organic growth Ashington, UK Changzhou, China Dongguan, China LeMoyne, US Flexcrete, UK Disatech, France V.Powdertech, Thailand Gujurat, India Sao Paulo, Brazil Ningbo, China Boxing, China Decorative Paints Specialty Chemicals Performance Coatings Co
Slide 7: Separation of Specialty Chemicals remains on track for April 2018
Separation of Specialty Chemicals remains on track for April 2018 Nov 30, 2017 Dec 7, 2017 Dec, 2017 Jan 1, 2018 Feb, 2018 Apr, 2018 Q2/ Q3, 2018 EGM to approve Advance Information Internal Early look External Distribution of separation of proceeds of memorandum separation of meetings and separation
Slide 8: Financial review
Financial review AkzoNobel’s color expertise was called upon to create a special gold custom coating for China’s latest generation of high-speed trains. We supplied a bold new look for the sleek Fuxing CR400BF, which has been dubbed the Golden Phoenix (fuxing means rejuvenation).
Slide 9: Growth driven by volumes and acquisitions
Paints and Coatings full-year 2017: Growth driven by volumes and acquisitions € million FY 2016¹ FY 2017 Δ% Revenue up 4% excluding currencies Revenue 9,434 9,612 2 EBITDA 1,210 1,181 (2) Revenue growth for both business areas EBIT (Operating income excluding identified items) 928 905 (2) Price/mix
Slide 10: Higher volumes and increased profit
Paints and Coatings Q4 2017: Higher volumes and increased profit € million Q4 2016¹ Q4 2017 Δ% Revenue up 5% Revenue excluding currencies 2,291 2,283 - EBITDA 220 240 9 Higher volumes driven by Decorative Paints EBIT (Operating income excluding identified items) 149 178 19 with growth in all regions
Slide 11: Volumes up 7%, with growth in all regions
Decorative Paints full-year 2017: Volumes up 7%, with growth in all regions € million FY 2016 FY 2017 Δ% Revenue 3,835 3,898 2 EBIT (Operating income excluding identified items) 357 351 (2) Operating income 366 334 (9) Ratio, % FY 2016 FY 2017 ROS%* 9.3 9.0 ROI (in %)* 12.8 12.5 Revenue development
Slide 12: Strong volume growth continues
Decorative Paints Q4 2017: Strong volume growth continues € million Q4 2016 Q4 2017 Δ% Revenue 898 923 3 EBIT (Operating income excluding identified items) 51 58 14 Operating income 51 41 (20) Ratio, % Q4 2016 Q4 2017 ROS%* 5.7 6.3 ROI (in %)* 12.8 12.5 Revenue development Q4 2017 (%) Increase Decre
Slide 13: Profit lower due to marine and oil and gas
Performance Coatings full-year 2017: Profit lower due to marine and oil and gas € million FY 2016 FY 2017 Δ% Revenue 5,665 5,775 2 EBIT (Operating income excluding identified items) 759 669 (12) Operating income 735 668 (9) Ratio, % FY 2016 FY 2017 ROS%* 13.4 11.6 ROI (in %)* 29.4 23.4 Revenue devel
Slide 14: Marine and oil and gas headwinds persist
Performance Coatings Q4 2017: Marine and oil and gas headwinds persist € million Q4 2016 Q4 2017 Δ% Revenue 1,398 1,372 (2) EBIT (Operating income excluding identified items) 152 133 (13) Operating income 135 132 (2) Ratio, % Q4 2016 Q4 2017 ROS%* 10.9 9.7 ROI (in %)* 29.4 23.4 Revenue development Q
Slide 15: Strong volume growth for Paints and acquisitions for Coatings
Strong volume growth for Paints and acquisitions for Coatings Decorative Paints Performance Coatings Paints and Coatings Quarterly volume development in % year-on-year 066 Quarterly price/mix development in % year-on-year -1 -3 * Includes acquisitions Financial review (continuing operations) Investo
Slide 16: Higher raw material costs, partly offset by continuous improvement and cost control
Paints and Coatings full-year 2017: Higher raw material costs, partly offset by continuous improvement and cost control Includes Fixed cost inflation, cost control, restructuring expenses, Increase and other items Decrease Financial review (continuing operations) Investor update 16
Slide 17: Higher revenue, volumes and profit
Specialty Chemicals full-year 2017: Higher revenue, volumes and profit € million FY 2016 FY 2017 Δ% Revenue up 5% excluding currencies Revenue 4,783 4,985 4 EBITDA 953 1,015 7 EBIT (Operating income excluding identified items) 629 689 10 Volume growth for all Operating income 629 689 10 business uni
Slide 18: Increased volumes and positive price/mix
Specialty Chemicals Q4 2017: Increased volumes and positive price/ mix € million Q4 2016 Q4 2017 Δ% Revenue up 9% excluding currencies Revenue 1,169 1,228 5 EBITDA 199 238 20 EBIT (Operating income excluding identified items) 118 165 40 Volumes up with strong development in Operating income 118 165
Slide 19: Free cash flow impacted by changes in working capital, provisions and other items
AkzoNobel full-year 2017: Free cash flow impacted by changes in working capital, provisions and other items FY2016 FY2017 € million EBITDA 2,108 2,132 Interest paid -87 -84 Tax paid -285 -338 Changes in working capital, provisions¹ and other -181 -520 Capital expenditures (including intangible asset
Slide 20: Cash management discipline continues
AkzoNobel full-year 2017: Cash management discipline continues Paints & Coatings Operating Working Capital €million Capital expenditures €million Specialty OWC as % of LQ revenue x 4 % of revenue Chemicals Financial review (continuing and discontinued operations) Investor update 20
Slide 21: €1bn special cash dividend paid in 2017
AkzoNobel Full-Year 2017: €1bn special cash dividend paid in 2017 FY2016 FY2017 € million Free cash flow 640 334 Dividend paid -336 -1,187 Other* 29 -136 Net cash generation 333 -989 excl. acquisitions and divestments Acquisitions -416 -80 Divestments 53 52 Net cash generation -30 -1,017 Net Debt 1,
Slide 22: IAS19 pension deficit reduced due to top-ups and remeasurement
AkzoNobel full-year 2017: IAS19 pension deficit reduced due to top-ups and remeasurement Key pension financial assumptions Q4 2016 Q4 2017 Discount rate 2.4% 2.4% Inflation rate 3.1% 3.0% Pension deficit development during 2017 Increase € million Decrease €525m deficit held for sale €362m surplus co
Slide 23: Total proposed dividend up 52%
AkzoNobel full-year 2017: Total proposed dividend up 52% Dividend € per share Dividend policy is to pay a “stable to rising” dividend each year ¹ Dividend paid in cash, unless shareholders elect to receive a stock dividend Final dividend (40% maximum) Interim dividend 2.5% 2.5% 2.8% 3.4% Yield² Shar
Slide 24: Concluding remarks
Concluding remarks Specialty Chemicals is expanding capacity of colloidal silica in Sweden. The expansion will help meet growing customer demand and strengthen the market leadership position. From delicate applications like filtrating beverages and polishing the chip inside your smartphone, to indus
Slide 25: On track to create two focused high performing businesses
On track to create two focused high performing businesses Separation of Specialty Phase Revenue Higher Chemicals one Specialty of creating a fit up 4% volumes on track Chemicals for purpose excluding currency reported as Paints and impact for both Paints discontinued Coatings and Coatings, and opera
Slide 26: Outlook
Outlook Headwinds experienced during 2017, including higher raw material costs and adverse effects from foreign currency, 2020 guidance* are projected to continue in 2018, especially during the start of the year. ROS 15% We anticipate ongoing positive developments for Decorative Paints in ROI >25% a
Slide 27: Upcoming events
Upcoming events Analyst roundtable: Winning Together – 15 by 20 March 8, 2018 Annual report 2017 March 15, 2018 Report for the first quarter 2018 April 24, 2018 Annual General Meeting April 26, 2018 Ex-dividend date of 2017 final dividend April 30, 2018 Payment date of cash dividend and delivery of
Slide 28: Questions
Questions As an extension of the “Let’s Colour” initiative, created 141 “walls of connection” in 31 cities in 2017. In Nepal, the Shree Bhunesthan Primary School in the Kavre district was part of this project.
Slide 29: Appendix
Appendix Investor update 29
Slide 30: AkzoNobel Full-Year 2017: Delivering higher revenue and EBIT
AkzoNobel Full-Year 2017 : Delivering higher revenue and EBIT € million FY 2016 FY 2017 Δ% Revenue 14,197 14,575 3 EBIT (Operating income excluding incidental items) 1,502 1,525 2 Operating income 1,519 1,396 (8) Ratio, % FY 2016 FY 2017 ROS%* 10.6 10.5 ROI (in %)* 15.0 15.1 *ROS% = EBIT/revenue. RO
Slide 31: Specialty Chemicals revenue development
Specialty Chemicals revenue development Quarterly volume development in % year-on-year Quarterly price/mix development in % year-on-year Exchange rate development in % year-on-year -1 2016 -3 2017 A Financial review (reported as discontinued operations) Investor update 31
Slide 32: 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 'for