Slide 1: Investor update Q1 2012 results
April 19, 2012 Investor update Q1 2012 results
Slide 2: Highlights
Highlights • Revenue up 6 percent, mainly driven by pricing actions • EBITDA 3 percent lower at €423 million (2011: €437) million as weaker end markets and cost inflation impacted results • Cash from operating activities was impacted by a one one-time time pension payment and the seasonal build-up o
Slide 3: Q1 2012 revenue and EBITDA
Q1 2012 revenue and EBITDA € million Q1 2012 Δ% Revenue 3,972 3 972 6 EBITDA* 423 (3) Ratio, % Q1 2012 Q1 2011 EBITDA* margin 10.6 11.6 Revenue development Q1 2012 vs. Q1 2011 8 +2% +2% 4 +6% 0 +5% -3% -4 Volume Price/Mix Acquisitions/ Exchange rates Total divestments * Before incidentals Increase D
Slide 4: Price increases coming through, volumes remain soft
Price increases coming through, volumes remain soft Quarterly volume development in % year-on-year 10 5 -4% -1% -1% -3% 0 -5 Decorative Paints Performance Specialty AkzoNobel Coatings Chemicals Quarterly price/mix development in % year-on-year 10 8% 6% 5% 5 1% 0 Decorative Paints Performance Special
Slide 5: Decorative Paints Q1 2012 highlights
Decorative Paints Q1 2012 highlights € million Q1 2012 Δ% Revenue 1 242 1,242 4 EBITDA* 76 (16) Ratio % Ratio, Q1 2012 Q1 2011 EBITDA* margin 6.1 7.5 R Revenue d development l t Q1 2012 vs. Q1 2011 Increase Decrease 5 +1% +1% +4% 0 -4% 4% +6% -5 Volume Price/Mix Acquisitions/ Exchange rates Total di
Slide 6: Performance Coatings Q1 2012 highlights
Performance Coatings Q1 2012 highlights € million Q1 2012 Δ% Revenue 1 369 1,369 11 EBITDA* 164 15 Ratio % Ratio, Q1 2012 Q1 2011 EBITDA* margin 12.0 11.6 Revenue development Q1 2012 vs. vs Q1 2011 Increase Decrease 15 +2% +2% 10 5 -1% +8% +11% 0 -5 Volume Price/Mix Acquisitions/ Exchange rates Tota
Slide 7: Specialty Chemicals Q1 2012 highlights
Specialty Chemicals Q1 2012 highlights € million Q1 2012 Δ% Revenue 1 399 1,399 4 EBITDA* 235 (2) R ti % Ratio, Q1 2012 Q1 2011 EBITDA* margin 16.8 17.8 Revenue development Q1 2012 vs. vs Q1 2011 Increase Decrease 6 +2% 4 +2% 2 -1% 1% +1% +4% 0 -2 Volume Price/Mix Acquisitions/ Exchange rates Total
Slide 8: Summary – Q1 2012 results
Summary – Q1 2012 results € million Q1 2012 Q1 2011 EBITDA* EBITDA 423 437 Amortization and depreciation (168) (148) Incidentals (64) (12) Net financing expense (65) (63) Minorities and associates (10) (9) Income tax (46) (73) Discontinued operations 1 (4) Net income total operations 71 128 Net cash
Slide 9: Strong operating returns on invested capital
Strong operating returns on invested capital 30% 27.6% 25.6% 25% 20.8% 20% 15% 10% 5% 10.9% 10.1% 8.4% 0% Q2 09-Q1 10 Q2 10-Q1 11 Q2 11-Q1 12 Moving average ROI % * Operating ROI is calculated as EBIT before amortization divided by average invested capital excluding intangible assets Operating ROI %
Slide 10: Cash flows Q1 2012
Cash flows Q1 2012 € million Q1 2012 Q1 2011 Profit for the period 84 148 Amortization and depreciation 173 150 Change working capital (418) (390) - Pension provisions (553) (334) - Restructuring (4) (2) - Other provisions 11 (22) Ch Change provisions i i (546) (358) Other operating cash flows (54)
Slide 11: Pension deficit decreases to €0.3 billion
Pension deficit decreases to €0.3 billion Key pension metrics Q1 2012 Q4 2011 Disco nt rate Discount 4 5% 4.5% 4 6% 4.6% Inflation assumptions 2.7% 2.5% Pension deficit development during Q1 2012 € billion 0,2 0,1 (36) 0,0 -0,1 239 (169) -0,2 (347) (505) (227) 29 -0,3 322 -0,4 -0 0,5 5 -0,6 Deficit
Slide 12: Medium-term strategic ambitions unchanged
Medium-term strategic ambitions unchanged • We are delivering on price increases • Performance Improvement Program on track - next update with half year results • The economic environment remains uncertain: - volumes remain soft - raw material costs remain a risk • Our solid fundamentals, strong bra
Slide 13: Appendix
Appendix Investor update Q1 2012 results 13
Slide 14: AkzoNobel key facts
AkzoNobel key facts 2011 • Revenue €15.7 billion • 57,240 employees • EBITDA: €1.8 billion* • Net income: €0.5 billion • 40 percent of revenue from high growth markets • A leader in sustainability Revenue by business area EBITDA* by business area 34% 33% 31% Performance Coatings 46% Decorative Paint
Slide 15: Decorative Paints key facts
Decorative Paints key facts 2011 • Revenue €5.3 billion • 22,340 employees • EBITDA: €440 million* • 40 percent of revenue from high growth markets • Largest global supplier of decorative paints • Many leading positions, strong brands Some of our strong brands Revenue by geography 3% 12% M t Mature
Slide 16: Performance Coatings key facts
Performance Coatings key facts 2011 • Revenue €5.2 billion • 21,960 employees • EBITDA: €611 million* • 47 percent of revenue from high growth markets • Leading positions in performance coatings industry • Innovative technologies, strong brands Revenue by business unit Revenue by geography Marine an
Slide 17: Specialty Chemicals key facts
Specialty Chemicals key facts 2011 • Revenue €5.3 billion • 11,510 employees • EBITDA: €906 million* • 33 percent of revenue from high growth markets • Major producer of specialty chemicals • Leadership positions in many markets Revenue by business unit Revenue by geography Functional Chemicals 6% 9
Slide 18: The global paints and coatings market is around €70 billion
The global paints and coatings market is around €70 billion % of market 100% is around €70 billion Wood Finishes 6% General Industrial Coatings 10% Car Refinishes 7% Decorative 44% Performance 3% Marine and Yacht 56% 6% Protective coatings 2% 9% Special purpose 8% 2%3% Auto OEM, OEM metal, metal pla
Slide 19: AkzoNobel is the world’s largest coatings supplier
AkzoNobel is the world’s largest coatings supplier 2010 revenue in € billion 12 10 8 6 4 2 0 Investor update Q1 2012 results 19
Slide 20: Excellent geographic spread of both revenue and profits
Excellent geographic spread of both revenue and profits High growth markets are important (40% of revenue) % of 2011 revenue 38% “Mature” Europe 7% 20% “Emerging” Europe North America 3% 22% Middle East Asia Pacific and Africa 10% Latin America High growth markets’ profitability is above average Inv
Slide 21: Leading positions and strong brands
Leading positions and strong brands 2011 Revenue by y market p position Some of our strong g brands Decorative Paints No. 2 or 3 32% No. 1 Performance Coatings position 59% Other 9% Specialty Chemicals Investor update Q1 2012 results 21
Slide 22: Our strategic ambition
Our strategic ambition Investor update Q1 2012 results 22
Slide 23: Our medium term strategic goals
Our medium term strategic goals • Top quartile safety performance f • Top 3 position in sustainability • Top quartile performance in di diversity, it employee l engagement, t and talent development • Top quartile eco-efficiency improvement rate • Grow to €20 billion revenues • Increase EBITDA each y
Slide 24: How we will expand in both mature and high growth markets
How we will expand in both mature and high growth markets Organic growth • Expand focus from high to mid-market mid market segments • Fueling growth in high growth markets Innovation pipeline • Spend of around 2.5 percent of revenue makes us the clear leader of our p peers in absolute spend p • Emph
Slide 25: Aspirations for high growth markets
Aspirations for high growth markets (currently around 40 percent of our revenue) Double revenues in China • Grow from $1 $1.5 5 to $3 billion of revenues • Already the biggest paint, coatings and specialty chemicals company in China Create significant footprint in India • Grow from €0.25 to €1 billi
Slide 26: High growth markets will become significantly more important
High growth markets will become significantly more important % of revenue, indicative 32% “Mature” Europe 9% 18% “Emerging” Europe North America 25% 5% Asia Pacific Middle East and Africa 11% Latin America g growth High g % of revenue in this decade markets will be around 50% Investor update Q1 2012
Slide 27: Exciting RD&I pipeline with innovative solutions for key market segments
Exciting RD&I pipeline with innovative solutions for key market segments How innovation will support our Revenue by key market growth agenda: g g segment • Functional solutions in key market segments 12% • Increase spend in big R&D • >15 percent of revenue from 13% 43% “breakthrough” innovations* •
Slide 28: Clear sustainability focus
Clear sustainability focus Accelerated sustainability strategy will deliver: • Safety at 2.0 injuries per million hours • 30 percent of revenue from eco-premium solutions • Sustainable fresh water management • 30 percent eco-efficiency improvement • 10 percent carbon footprint reduction (20-25 perce
Slide 29: Innovation in Decorative Paints
Innovation in Decorative Paints Coral Rende Muito Value for money paint, without compromising quality of finish Key Features Customer Benefits • A concentrated paint emulsion • Higher value for money for our customers y up • Paint can be diluted by p to 80% p g rate • Best-in-class spreading • More
Slide 30: Innovation in Performance Coatings
Innovation in Performance Coatings Marine Coatings - Interline® 9001 Next generation low absorption, easy-to-clean lining for chemical cargo tanks Key features Customers benefits • New coating for chemical cargo tanks • Greater efficiency and flexibility in • Low chemical absorption enables operatio
Slide 31: Innovation in Specialty Chemicals
Innovation in Specialty Chemicals Pulp and Performance Chemicals – Bindzil CC Improving the quality of waterborne coatings K F Key Features t C t Customer B Benefits fit • Solves stability and compatibility • Enables paint and lacquer producers to issues in waterborne coatings up-grade their product
Slide 32: Variable costs represent 54.3% of revenue
Variable costs represent 54.3% of revenue % of 2011 annual revenue* 100% Raw materials, energy, and other variable costs Fixed production costs Selling, advertising, administration, R&D costs EBIT margin 0% Decorative Performance Specialty AkzoNobel Paints Coatings Chemicals * Rounded percentages, a
Slide 33: Variable costs analysis
Variable costs analysis 2011 Energy & other Packaging variable costs* Solvents Raw materials 7% 7% 28% Chemicals and intermediates*** 13% 8% 7% Additives Other raw materials** 2% 8% Pigments 12% 8% Titanium dioxide Resins Coatings’ specialties i lti * Other variable costs include variable selling co
Slide 34: Capital expenditure prioritization for growth
Capital expenditure prioritization for growth • Capex 2011 was €708 million (including Ningbo €45) • Guidance for the medium term: Capex level to be at least 4 percent of revenues Capex as a % of revenue 2011 Capex split 5 3% 16% 4 3 52% 29% 2 1 Specialty Chemicals 0 Decorative Paints 2008 2009 2010
Slide 35: Year-on-year Operating Working Capital % of revenue to be reduced towards 12%
Year-on-year Operating Working Capital % of revenue to be reduced towards 12% OWC € million 3000 20% 15.6% 18% 2500 14 3% 14.3% 13.8% 16% 14.2% 13.1% 13.6% 14% 2000 12% 1500 10% 1,899 2,155 2,279 2,341 2,079 2,502 8% 1000 6% 4% 500 2% 0 0% Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 OWC OWC as %
Slide 36: Debt duration 3.4 years and no refinancing needed in 2012
Debt duration 3.4 years and no refinancing needed in 2012 Debt maturities* € million (nominal amounts) 1.200 800 400 0 2012 2013 2014 2015 2016 2017 2018 € bonds $ bonds £ bonds Strong liquidity position to support growth • Undrawn revolving credit facility of €1.8 billion (2016) or €1.5 and $3 bill
Slide 37: Revenue growth and EBITDA margin performance per quarter
Revenue growth and EBITDA margin performance per quarter Reported quarterly revenue growth in % year-on-year 20 15 11% 10 6% 4% 4% 5 0 Decorative Paints Performance Specialty AkzoNobel Coatings Chemicals Quarterly EBITDA* margin in % 20 16.8% 15 12.0% 10.6% 10 6.1% 5 0 Decorative Paints Performance
Slide 38: Unchanged ambition to maintain strong balance sheet
Unchanged ambition to maintain strong balance sheet € million Mar 31, 2012 Mar 31, 2011 Total equity 9 742 9,742 9 358 9,358 Net debt* 2,860 1,578 • Credit ratings unchanged at BBB+/Baa1, BBB+/Baa1 outlook stable • Net debt increased mainly due to the additional one-time payment of €239 million as w
Slide 39: Q1 2012 incidentals
Q1 2012 incidentals € million Q1 2012 Q1 2011 Restructuring costs (46) (9) Results related to major legal, (22) 1 anti-trust and environmental cases Results of acquisitions and divestments - - Other incidental results 4 (4) Total (64) (12) • IIncrease in i restructuring t t i costst due d tot provis
Slide 40: Q1 2012 EBITDA – Cash bridge
Q1 2012 EBITDA – Cash bridge € million Q1 2012 Q1 2011 EBITDA before incidentals 423 437 Incidentals (cash) (55) (5) Change working capital (418) (390) Change provisions (546) (358) Interest paid (117) (153) Income tax paid (48) (50) Net cash from operating activities (761) (519) • Higher cash outfl
Slide 41: Performance improvement program: stepping up operational and functional excellence
Performance improvement program: stepping up operational and functional excellence Underpin p our growth g and margin g objectives j • Enhance our ability to grow • Expected to bring us at or above the mid-point of our 13-15 percent EBITDA margin guidance. Deliver structural competitive advantage •
Slide 42: A comprehensive program
A comprehensive program • Comprehensive – all functions, all businesses • Margin management, R&D and restructuring (~50%) Decorative Perf. Specialty • Supply Chain and Sourcing Paints Coatings Chemicals projects j t (~40%) ( 40%) Finance Information • Improvements implemented over Management Researc
Slide 43: Safe Harbor Statement
Safe Harbor Statement This presentation Thi t ti contains t i statements t t t which hi h address dd suchh kkey iissues as AkzoNobel’s growth strategy, future financial results, market positions, product development, products in the pipeline, and product approvals. Such statements should be carefull