Slide 1: Year of transformation
Year of transformation Hans Wijers, CEO Q4 and 2007 results Amsterdam, March 6, 2008
Slide 2: Safe Harbor Statement
Safe Harbor Statement* This presentation contains statements which address such key issues as Akzo Nobel’s growth strategy, future financial results, market positions, product development, pharmaceutical products in the pipeline, and product approvals. Such statements should be carefully considered,
Slide 3: Agenda
Agenda 1. Year of transformation 2. Operational performance Akzo Nobel Full Year & Q4 2007 - Akzo Nobel Coatings - Akzo Nobel Chemicals ICI Full Year & Q4 2007 The new company: pro-forma 2007 3. Integration update 4. Management agenda 2008
Slide 4: 1. Year of transformation
AKZO NOBEL 1. Year of transformation
Slide 5: 2007 – Year of transformation
2007 – Year of transformation 9 From conglomerate to focused company in 12 months 9 Total Shareholder Return #2 in 2007 peer group 9 Initial share buyback EUR 1.6 bln completed, dividend increased by 50% 9 Significant decrease of pension deficits 9 Relocation corporate headquarters to Amsterdam 9 #1
Slide 6: 2A. Operational Performance
2A. Operational Performance
Slide 7: Strong operational focus during transformation
Strong operational focus during transformation 5% autonomous growth EBIT up 25% EBITDA up 15%; EBITDA margin further improved to 12.4% Net income before incidentals up 29% EUR 8.5 billion profit on the divestment of Organon BioSciences Pension deficit significantly down from EUR 1.8 bln
Slide 8: 2007 – strong operational focus
2007 – strong operational focus EUR mln* FY 2007 Δ% Revenue 10,217 2 EBITDA 1,271 15 EBIT 916 25 Net income 580 29 Ratios*, in % FY 2007 FY 2006 EBITDA margin 12.4 11.0 EBIT margin 9.0 7.3 Moving average ROI 16.8 13.3 * before incidentals, continuing operations
Slide 9: Q4 – growth momentum continued
Q4 – growth momentum continued EUR* mln Q4 2007 Δ% Revenue 2,431 2 EBITDA 264 22 EBIT 174 43 Net income 125 62 Ratios*, in % Q4 2007 Q4 2006 EBITDA margin, in % 10.9 9.1 EBIT margin, % 7.2 5.1 * before incidentals, continuing operations
Slide 10: Coatings – dirt-repellant paints
Coatings – dirt-repellant paints
Slide 11: Coatings – excellent performance
Coatings – excellent performance Autonomous revenue growth 4% – both volumes and prices 2% higher EBIT up 15% – benefiting from margin management and cost saving programs EBITDA margin of 11.3% Decorative Coatings – substantial earnings improvement Industrial activities – solid performance
Slide 12: Coatings – excellent performance
Coatings – excellent performance EUR* mln FY 2007 Δ% Revenue 6,537 5 EBITDA 737 12 EBIT 594 15 Ratios* FY 2007 FY 2006 EBITDA margin, in % 11.3 10.6 EBIT margin, % 9.1 8.3 Moving average ROI 21.1 20.2 * before incidentals, continuing operations
Slide 13: Coatings Q4 – excellent performance
Coatings Q4 – excellent performance EUR* mln Q4 2007 Δ% Revenues 1,522 2 EBITDA 143 25 EBIT 104 33 Ratios* Q4 2007 Q4 2006 EBITDA margin, in % 9.4 7.6 EBIT margin, % 6.8 5.2 * before incidentals, continuing operations
Slide 14: Chemicals – investing in China
Chemicals – investing in China
Slide 15: Chemicals – record year
Chemicals – record year 7% autonomous growth – negative impact from currency (2%) and divestments (2%) EBIT up 20% EBITDA margin of 16.8% Active margin management offsetting impact of steep raw material and energy price rises Moving average ROI to a record 21.7% All business units turned
Slide 16: Chemicals – record year
Chemicals – record year EUR* mln FY 2007 Δ% Revenues 3,639 3 EBITDA 610 9 EBIT 408 20 Ratios* FY 2007 FY 2006 EBITDA margin, in % 16.8 15.8 EBIT margin, % 11.2 9.6 Moving average ROI 21.7 17.8 * before incidentals, continuing operations
Slide 17: Q4 – record year
Q4 – record year EUR* mln Q4 2007 Δ% Revenues 907 7 EBITDA 137 5 EBIT 87 16 Ratios* Q4 2007 Q4 2006 EBITDA margin, in % 15.1 15.5 EBIT margin, in % 9.6 8.9 * before incidentals, continuing operations
Slide 18: 2007 incidentals
2007 incidentals EUR mln 2007 2006 Special (charges)/benefits (55) 28 Results on divestments (23) 206 Restructuring and impairment charges (62) (104) Charges related to major legal, antitrust and environmental cases (29) (4) Total incidentals (169) 126
Slide 19: 2B. Financial Performance
AKZO NOBEL 2B. Financial Performance
Slide 20: Strong financial position
Strong financial position Year end; EUR mln 2007 2006 Net cash from operating activities 643 547 Equity 11,129 4,263 (Cash)/ Net debt (8,039) 1,090 Moving Ratios Moving average ROI 16.8 13.3
Slide 21: Dividend
Dividend Dividend up 50% to EUR 1.80 per share Higher dividend triggered by – Higher net income before incidentals – Influence of initial share buyback: shares outstanding decreased by 10% – New pay-out ratio of minimum of 45%
Slide 22: 2C. ICI Performance
AKZO NOBEL 2C. ICI Performance
Slide 23: ICI – strong performance
ICI – strong performance ICI Paints – Revenue on balance up 3% – Strong growth in emerging markets – EBIT improved by 17% – All regions contributing to EBIT rise – U.S. revenues down 6%, EBIT margins significantly improved Specialty Polymers – Strong performance – Revenue up 10%, EBIT increased
Slide 24: The new company – Pro Forma 2007
The new company – Pro Forma 2007
Slide 25: Pro Forma 2007
Pro Forma 2007 Revenues by segment 2007 revenue 14.4 billion 32% 36% Around 60,000 employees EBITDA: EUR 1.9 bln EBIT: EUR 1.4 bln Net income: EUR 942 mln Pension under funding EUR 32% 1,475 million Decorative Paints Performance Coatings Specialty Chemicals
Slide 26: Well balanced portfolio
Well balanced portfolio #1 global position in Performance Coatings The world’s largest Decorative Paints company One of the world’s leading Specialty Chemicals producers Geo spread 33% Emerging Europe 42% 7% Europe 19% Asia-Pacific Other 8% 21% Latin America North-America
Slide 27: Great products and brands for a better tomorrow
Great products and brands for a better tomorrow
Slide 28: 3. Integration Update
AKZO NOBEL 3. Integration Update
Slide 29: Welcome to ICI employees
Welcome to ICI employees
Slide 30: Visiting ICI locations
Visiting ICI locations Stronger together – visiting Canada, US and Dublin Taking care of the Dulux dog, UK
Slide 31: Status report
Status report Integration process well underway – Making good progress in preparing full integration plan – Complimentary company cultures supporting the integration process – More than 100 people active in the integration teams, strong mix of ICI and Akzo Nobel New management structure establis
Slide 32: 4. Management Agenda 2008
AKZO NOBEL 4. Management Agenda 2008
Slide 33: Management Agenda 2008
Management Agenda 2008 Significant progress with integration ICI Capture first round of synergies Divestures on sale to Henkel and Specialty Starches Remedies divestures Conclude worldwide brand review by end of April Outgrow our markets, further improve EBITDA-margin Embark on share b
Slide 34: Year of Transformation Q&A
Year of Transformation Q&A March 6, 2008