Akzo Nobel N.V. · EURONEXT:AKZA
Akzo Nobel — ESG Presentation (November 2016)
50 slides from Akzo Nobel's sustainability presentation, Nov 22, 2016
Slide 1: Sustainability overview
2016 Sustainability overview
Slide 2: Contents
Contents Integrated thinking Integrated strategy Integrated management cycle Integrated reporting Selected slides from investor overview Sustainability overview 2
Slide 3: Integrated thinking
Integrated thinking Sustainability overview 3
Slide 4: The global urbanization challenge
The global urbanization 6.3 billion people will be challenge: living in cities by 2050 Over 65% of the World’s population 1 million move to cities globally every week Just one of the mega trends that we need to address Sustainability Update 4
Slide 5: Creating more value from fewer resources
Creating more value from fewer resources Our ambition and imagination are unrestricted by limited world resources Radical resource efficiency enables us working with customers and suppliers to open up infinite possibilities in a finite world We are committed to finding opportunities even where there
Slide 6: Building and Infrastructure, Transportation
Building and Transportation Infrastructure 95% of new building stock using zero net energy Reductions in carbon emissions <6% buildings heated with fossil fuels 80% reduction light duty vehicles Customers expect long lasting, efficient products 4-10 fold improvement in eco-efficiency of Recycling is
Slide 7: Integrated strategy
Integrated strategy Sustainability Update 7
Slide 8: Focus will shift towards continuous improvement and organic growth
Focus will shift towards continuous improvement and organic growth Hardwire Deliver Build further Drive organic Pursue value new continuous operational growth and generating organization improvement excellence innovation bolt-on model culture acquisitions Next steps Culture Core principles and value
Slide 9: Core principles and values in place; incentives aligned with strategy
Core principles and values in place; Incentives aligned with strategy We build successful partnerships Customer Focus with our customers Core principles: Deliver on Commitments We do what we say we will do Safety Integrity Passion for Excellence We strive to be the best in everything we do, every da
Slide 10: Strategy focuses on key financial and sustainability metrics
Strategy focuses on key financial and sustainability metrics Financial Guidance Sustainability Metrics of revenue by 2020 from products that are of return on sales more sustainable for our customers than the (EBIT/revenue) 2016-2018 products of our competitors more efficient resource and energy use
Slide 11: Progress made towards the 2020 sustainability ambitions
Progress made towards the 2020 sustainability ambitions Eco-premium solutions Cradle-to-Grave REI with downstream benefits Resource Efficiency Index in % of revenue Carbon Footprint Gross margin/CO2(e) indexed % reduction CO2(e) per ton of sales from 2012 Ambition Ambition 113 25-30 100 98 96 95 94
Slide 12: Closing the carbon gap
Closing the carbon gap Own operations Carbon Footprint Up- and downstream Carbon Footprint Including VOC emissions 25 25 -10% 20 20 15 15 23,1 22,4 22,9 10 10 20,8 -19% 5 5 4,7 3,9 3,9 3,8 0 0 2012 2013 2014 2015 2012 2013 2014 2015 Integrated strategy Sustainability overview 12
Slide 13: What does it mean to move to circular?
What does it mean to move to circular ? Product shipped to pulp customers Chemical Island Concept Packaging crushed/ sent to landfill Recycled metal/ plastic material in packaging Left over paint stored in cans then landfilled Left over paint reused Excess steam released into atmosphere Excess steam
Slide 14: Doing more with less
Doing more with less Material effectiveness Partnerships to develop renewable raw materials Partnerships to turn waste into energy/raw materials Renewable energy reducing fossil material use Material efficiency Thinner coatings with same properties/ protection Dulux ReColour – customer left over pai
Slide 15: Leading in processes as well as circular partnerships
We are leading in processes as well as “circular” partnerships Taken steps to increase share of renewables in our energy supplies and decrease our carbon footprint Joined forces to invest in sustainable steam generation in Delfzijl, the Netherlands Production records set in all three of the Nordic V
Slide 16: Eco-premium solutions - Definition
Eco-premium solutions - Definition A product qualifying for the list of AkzoNobel Eco-premium solutions must meet the following criteria when assessed against the competing mainstream products/solutions: 1. It provides the same or better functionality for the customer application. 2. When assessed a
Slide 17: Opportunities for growth and increased profitability from Eco-premium solutions
Opportunities for growth and increased profitability from Eco-premium solutions Deliver advantages to our direct customers or consumers Leading the market Assessment is always a comparison with other solutions – stretching us to go further than the competition 2/3rd of innovation spend is sustainabi
Slide 18: Dulux Charm waterborne woodcare
Dulux Charm waterborne woodcare Key features Customer benefits Financial benefits Indoor woodcare paint Improved wellbeing: low odor Affordable for mass market Improved flexibility Lower price Higher market share Balanced performance in Better in-can appearance chemical resistance and hardness Longe
Slide 19: Aquacote PP coil coating
Aquacote PP coil coating Key features Customer benefits Financial benefits Water-based primer Two-coats paint system in a Reduced conversion costs single pass Eliminates need for More cost competitive pre-treatment stage Doubles line capacity Cured at 80°C Reduced materials handling Less energy cons
Slide 20: Berol DR-B1 degreasing ingredient approved for direct release applications
Berol® DR-B1 degreasing ingredient approved for direct release applications Key features Customer benefits Financial benefits High performance degreasing High performing cleaner Price premium ingredient with low environmental impact Approved for “direct release” Specifically developed for “Safer Cho
Slide 21: Integrated management cycle
Integrated management cycle Sustainability Update 21
Slide 22: Dashboards drive sustainable performance in businesses
Dashboards drive sustainable performance in businesses Baseline Results Results Milestone Target Status KPI Unit 2012 2014 2015 2015 2020 against 2020 We measure our progress on sustainability Sustainable KPI’s using standardized dashboards business KPI No. 1 GM/Kton 100 96 108 t.b.d t.b.d. Used in
Slide 23: Sustainability also integrated in all functional processes
Sustainability also integrated in all functional processes Finance Capital Expenditure, materiality assessment RD&I Funnel process R D and I Procurement Vendor policies, supplier visits Procurement Commercial Excellence Market segmentation Commercial Excellence HR Recruitment, training, remuneration
Slide 24: Progress on all key elements to safety
Progress on all key elements to safety People Product A common approach to behavior-based safety Identify, review and score hazardous substances implemented at all sites Higher score substances designated as priority Reached the 2015 target (<2) in total reportable injury rate Risk managed 100% prio
Slide 25: Engagement increased during ongoing change
Engagement increased during ongoing change Our people are the key to our success ViewPoint score employee engagement (1 to 5 scale) We aim for a high performance culture of engagement, feedback and trust Clear evidence that higher engagement drives business performance 4.03 3.97 3.88 3.8 2012 2013 2
Slide 26: Leadership changes providing clear direction and driving culture change
Leadership changes providing clear direction and driving culture change Diversity is an important factor Female executives in % Reflects the societies where we do business Ambition Better insights into our customer and employee base Objective is to create a high performing culture where 25 employees
Slide 27: Integrated reporting
Integrated reporting Sustainability Update 27
Slide 28: Our integrated reporting journey
Our integrated reporting journey The International Integrated Reporting Council (IIRC) framework: Non-financial topics increasingly determine firm’s value creation potential Integrated reporting requires “integrated thinking” an “integrated strategy” and an “integrated management cycle Implemented i
Slide 29: Sustainability opportunities and risks evaluated and measured
Sustainability opportunities and risks evaluated and measured Updated materiality to assess current and important topics Prioritized and plotted in a matrix Most important topics energy resource use carbon emissions throughout the value chain people and process safety Eco-premium solutions Most mate
Slide 30: Consulted key stakeholder groups to develop integrated materiality matrix
Consulted key stakeholder groups to develop integrated materiality matrix Financial and Sustainability Key opportunities, issues and risks material Regulatory opportunities opportunities to stakeholders grouped using bullets and risks and risk Items at centre are opportunities, issues and risks mate
Slide 31: Continued development of four-dimensional profit and loss
Continued development of four-dimensional profit and loss Methodology represents value creation in multiple dimensions: financial, natural, human and social capital 2014: piloted at Pulp and Performance Chemicals business in Brazil Actions implemented during 2015 to reduce negative aspects and build
Slide 32: Evaluation of results
Evaluation of results Financial and natural capital Social capital (risk in each part of the life cycle) Financial capital (positive) Natural capital (negative) Very high High Medium Low Very low No data Chemicals/ Energy Own Downstream Total salt operations Human capital Financial capital is positi
Slide 33: Selected slides from investor overview
Selected slides from investor overview Sustainability overview 33
Slide 34: Global paints, coatings and specialty chemicals company
Global paints, coatings and specialty chemicals company €14.9 billion revenue (2015) €2.1 billion EBITDA (2015) 80+ countries 45,600 employees (2015) Leadership positions in many markets Revenue by Business Area Operating income by Business Area Revenue by geographic region North America 3% 17% Perf
Slide 35: Buildings and infrastructure, Transportation, Consumer goods, Industrial
Buildings and Transportation infrastructure New build projects Maintenance, renovation & repair Building products and components 43% 17% Automotive repair Automotive OEM, parts and assembly Marine and air transport of revenue of revenue Consumer durables Consumer packaged goods 18% 22% Natural resou
Slide 36: Present in large and attractive markets
Present in large and attractive markets Global paints and coatings by market sector Chemicals industry ~€100 billion, 2012 – 2015 ~€3,500 billion, 2012 – 2015 Decorative Manufactured fibres Decorative Paints 42% Automotive OEM (metal) Coatings Wood finishes 9% 5% 16% 5% Adhesives and sealants Vehicl
Slide 37: Vision confirmed; financial guidance 2016-2018
Vision confirmed; financial guidance 2016-2018 Vision: Leading market positions delivering leading performance Guidance 2016-2018: Return on sales: 9-11% Return on investment: 13-16.5% Clear aim to build on the foundation we have created and grow in line or faster than our relevant market segments K
Slide 38: Visions confirmed; performance ranges 2016-2018
Visions confirmed; performance ranges 2016-2018 Specialty Chemicals Performance Coatings Decorative Paints Vision: Vision: Vision: Delivering leading performance Leading market positions The leading global Decorative Paints company based on sustainable chemical delivering leading performance platfor
Slide 39: A strong case for investment
A strong case for investment Portfolio of businesses with leadership positions in many markets Strong global brands in both consumer and industrial markets Long-term growth potential from end-user segments Balanced exposure across geographic regions Track record of improving returns and cash flow Hi
Slide 40: A global player with leading market positions
A global player with leading market positions Specialty Chemicals key figures Revenue by end-user segment € million 2015 Buildings and 19% Infrastructure Revenue 4,988 Transportation EBITDA 898 6% 47% Operating income 609 Consumer Goods Return on sales 12.2% 28% Industrial Return on investment 17.2%
Slide 41: Continued market growth expected over the next few years
Continued market growth expected over the next few years Platform Market size* Market growth** Leading positions € billion, 2014 % p.a., 2015-2018 Revenue breakdown by position % of revenue, 2014 Bleaching 1,7 <1.5% chemicals Salt-chlorine <1.5% 6,6 chain Polymer 1,9 chemistry >3% Ethylene 3,9 oxide
Slide 42: Performance Coatings at a glance
Performance Coatings at a glance Performance Coatings key figures Revenue by end-user segment € million 2015 14% Buildings and 24% Infrastructure Revenue 5,955 Transportation EBITDA 938 22% Operating income 792 Consumer Goods Return on sales 13.3% 40% Industrial Return on investment 29.4% Employees
Slide 43: We have leading positions in the markets we serve
We have leading positions in the markets we serve x AkzoNobel market share Segment size Segment growth and position (by value) 2014 € billion, 2014 2016-2018 1 Powder 1 Specialty Plastics >3% 1/2 Aerospace 1 Wood Finishes 2-3% 1 Coil 1 Yacht 2 Packaging 1 Marine <2% 1 Protective 3/4 Vehicle Refinish
Slide 44: Decorative Paints at a glance
Decorative Paints at a glance Decorative Paints key figures Buildings and Infrastructure revenue breakdown € million 2015 25% Maintenance, renovation Revenue 4,007 and repair EBITDA 495 Operating income 345 New build projects Return on sales 8.6% 75% Return on investment 11.7% Employees 14,900 Key c
Slide 45: AkzoNobel has a strong 1 or 2 market position in all regions
AkzoNobel has a strong 1 or 2 market position in all regions where present AkzoNobel Market size AkzoNobel market share x Segment growth regions* € million, 2014 position* (by value) 2014 % p.a., 2015-2018 UK & Ireland 1 1.5 – 3.0% >3% South America 1 South East & South >3% 2 Asia & Middle East >3%
Slide 46: Free cash flow continues to improve
Free cash flow continues to improve FY2012 FY2013 FY2014 FY2015 € million EBITDA 1,597 1,513 1,690 2,088 Interest paid -231 -228 -206 -151 Tax paid -209 -230 -258 -261 Changes in working capital, provision* and other 143 69 -145 -224 Capital expenditures (including intangible assets) -905 -695 -612
Slide 47: Strong financial position provides foundation for growth
Strong financial position provides foundation for growth Maintain investment grade rating of BBB+ Net debt (€ billion)/EBITDA 3 1,5 1.5 Net debt reduced to 0.6 x EBITDA 1.4 Undrawn revolving credit facility and commercial paper programs 1.0 2 2.3 1.0 11 Average interest rate reduced further with rep
Slide 48: Positive net cash generation after paying dividends
Positive net cash generation after paying dividends FY2012 FY2013 FY2014 FY2015 € million Free cash flow -168 21 199 448 Dividend paid -256 -286 -280 -281 Other 65 66 57 29 Net cash generation (from continued operations) excl. acquisitions and divestments -359 -199 -24 196 Acquisitions -145 -34 -13
Slide 49: Interim dividend up 6 percent
Interim dividend up 6 percent 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 1.12 (normal uptake 35-40 percent) 1.20 1.12 1.12 1.12 Interim dividend up 6 percent to €0.37 per
Slide 50: 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