Akzo Nobel N.v. · EURONEXT:AKZA
Akzo Nobel — Q1 2019 Earnings Presentation
26 slides from Akzo Nobel's earnings presentation, Apr 24, 2019
Slide 1: Investor update Q1 2019
Investor update Q1 2019 Turkish town transformed with rainbow of color We’ve transformed the lives of hundreds of people in a town on Turkey’s April 24, 2019 Aegean coast as part of a major “Let’s Colour” project. More than 50,000 liters of our Marshall paint brand has been used to revitalize over 4
Slide 2: Agenda
Agenda Key highlights Financial review Concluding remarks Q&A Investor update | Q1 2019 2
Slide 3: Key highlights
Key highlights Investor update | Q1 2019 3
Slide 4: Q1 2019 results show progress towards Winning together: 15 by 20 strategy
Q1 2019 results show progress towards Winning together: 15 by 20 strategy Adjusted operating income 9% higher at €163 million – Raw material inflation continued; variable costs €77 million higher – Ongoing pricing initiatives resulted in price/mix up 6% – Cost-saving programs delivered €38 million –
Slide 5: Focus on pricing initiatives and cost-saving programs delivered 9% higher profitability
Focus on pricing initiatives and cost-saving programs delivered 9% higher profitability Q1 2019: Revenue Price/mix €2 billion capital Cash top-up repayment and share payments to main UK consolidation pension plans completed in January 2019 Up 1% 6% higher In constant currencies ROS* Adjusted €1 bill
Slide 6: Winning together: 15 by 20 strategy delivering results and gathering momentum
Winning together: 15 by 20 strategy delivering results and gathering momentum Sales force effectiveness Margin management Price/mix increased 6% in Q1 Innovation excellence 160 entries for Paint the Future startup challenge Global Business Services All 5 GBS hubs operational; 8 country transitions c
Slide 7: Dealing with market headwinds
Dealing with market headwinds Powder Coatings EMEA Industrial South Coatings Marine and Protective South America Coatings East China ~ ~ and South Asia Automotive and Specialty Foreign Raw ~ Coatings exchange materials ~ Investor update | Q1 2019 7
Slide 8: Pricing initiatives and clear strategic mandates focus on value over volume
Pricing initiatives and clear strategic mandates focus on value over volume Decorative Paints Performance Coatings Total Quarterly price/mix development in % year-on-year 11 8 9 6 7 7 6 6 0 4 5 1 0 0 5 5 3 2 -3 -3 -3 -5 -1 -1 -1 -1 -1 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q1 17 Q2 17
Slide 9: Financial review
Financial review Investor update | Q1 2019 9
Slide 10: Adjusted operating income 9% higher and revenue up in constant currencies
Adjusted operating income 9% higher and revenue up in constant currencies € million Q1 2018 Q1 2019 Δ% Δ%CC Price/mix was 6% overall, mainly driven by pricing Revenue 2,176 2,185 -% 1% initiatives Adjusted EBITDA 209 248 19% Volumes were 7% lower due Adjusted operating income 149 163 9% to our value
Slide 11: Positive price/mix and cost savings offsetting higher raw materials
Positive price/mix and cost savings offsetting higher raw materials Adjusted operating income bridge: Q1 2018 to Q1 2019 Positive impact Negative impact - 77 - 14 -1 38 140 - 72 163 149 Q1 2018 adjusted FX Volumes Price/mix Raw materials/ OPEX One-offs and other Q1 2019 adjusted operating income Var
Slide 12: Decorative Paints continued good momentum in seasonally low quarter
Decorative Paints continued good momentum in seasonally low quarter € million Q1 2018 Q1 2019 Δ% Δ%CC Revenue 846 844 - 2% Adjusted EBITDA 79 95 20% Adjusted operating income 56 60 7% Operating income 48 54 13% ROS%* 6.6% 7.1% ROI%* 11.7% 12.0% Revenue development Q1 2019 (%) Increase A new Dulux co
Slide 13: Performance Coatings ROS higher; focus on pricing initiatives and cost savings
Performance Coatings ROS higher; focus on pricing initiatives and cost savings € million Q1 2018 Q1 2019 Δ% Δ%CC Revenue 1,342 1,339 - (1%) Adjusted EBITDA 169 182 8% Adjusted operating income 134 138 3% Operating income 121 97 (20%) ROS%* 10.0% 10.3% ROI%* 21.3% 20.1% Revenue development Q1 2019 (%
Slide 14: Adjusted EPS 30% higher
Adjusted EPS 30% higher € million Q1 2018 Q1 2019 Operating income 108 113 Net financing expenses 19 (13) Results from associates and joint ventures 4 5 Profit before tax 131 105 Income tax 1 (31) Profit from continuing operations 132 74 Profit from discontinued operations 142 - Profit for the perio
Slide 15: Free cash flow mainly impacted by pension top-up payments
Free cash flow mainly impacted by pension top-up payments € million Q1 2018 Q1 2019 EBITDA 168 198 Impairment losses - 33 Pre-tax results on acquisitions and divestments (20) - Changes in working capital (360) (421) Pension top-up payments (175) (478)* Other changes in provisions (10) (20) Interest
Slide 16: Concluding remarks
Concluding remarks Investor update | Q1 2019 16
Slide 17: Q1 2019 results show progress towards Winning together: 15 by 20 strategy
Q1 2019 results show progress towards Winning together: 15 by 20 strategy Adjusted operating income 9% higher at €163 million – Raw material inflation continued; variable costs €77 million higher – Ongoing pricing initiatives resulted in price/mix up 6% – Cost-saving programs delivered €38 million –
Slide 18: Outlook
Outlook 2020 guidance* ROS 15% ROI >25% We are delivering towards our Winning together: 15 by 20 strategy and continue creating a fit-for-purpose organization for a focused paints and coatings company, contributing to the achievement of our 2020 guidance. Demand trends differ per region and segment
Slide 19: Upcoming events
Upcoming events Annual General Meeting of shareholders April 25, 2019 Ex-dividend date of 2018 final dividend April 29, 2019 Record date of 2018 final dividend April 30, 2019 Payment of 2018 final dividend May 6, 2019 Report for the second quarter 2019 July 24, 2019 Investor update | Q1 2019 19
Slide 20: A focused, high performing, paints and coatings company
A focused, high performing, paints and coatings company Strong global brands Leading positions in large and attractive markets 2020 Balanced geographic exposure: 50% revenue from emerging markets guidance* Well positioned to accelerate growth and enhance profitability ROS 15% ROI >25% Transformation
Slide 21: 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
Slide 22: Appendix
Appendix Investor update | Q1 2019 22
Slide 23: IFRS 16 has limited impact, adopting the modified retrospective approach
IFRS 16 has limited impact, adopting the modified retrospective approach Q1 2019 Q1 2019 Q1 2019 Q1 2019 before Impact Impact € million including € million before including IFRS16 IFRS 16 IFRS 16 IFRS 16 IFRS16 IFRS 16 Adjusted EBITDA 221 27 248 Intangible assets 3,458 (35) 3,423 EBITDA 171 27 198 P
Slide 24: IAS19 pension surplus following cash top-up payments
IAS19 pension surplus following cash top-up payments Key pension financial assumptions Q4 2018 Q1 2019 Discount rate 2.7% 2.3% Inflation rate 3.1% 3.1% € million Increase 1,200 Decrease 1,000 80 800 508 600 - 860 724 899 400 200 442 5 0 Q4 2018 Top-ups Discount rates on Inflation on DBO Asset return
Slide 25: €6.5 billion return to shareholders
€6.5 billion return to shareholders to be completed before end 2019 Apr 19, 2017 Dec 7, 2017 Oct 1, 2018 Jan 22, 2019 Before end 2019 Announced separation Advance proceeds of Closed sale of €2 billion capital €2.5 billion share of Specialty Chemicals separation paid as Specialty Chemicals to repayme
Slide 26: Breakdown of total raw material spend
Breakdown of total raw material spend 2018 (%) Titanium dioxide Additives 12 16 Specialty resins 14 Commodity resins 19 10 Solvents 7 11 11 Latex and monomers Pigments and colorants Packaging Investor update | Q1 2019 26