Slide 1: Investor update Q2 2019
Investor update Q2 2019 Operation Night Watch We recently partnered with the Rijksmuseum for one of the most innovative projects in the history of art – the live restoration of Rembrandt’s Night July 24, 2019 Watch. In a spectacular fusion of old and new, Operation Night Watch will use ground-breaki
Slide 2: Agenda
Agenda Key highlights Financial review Concluding remarks Q&A Investor update | Q2 2019 2
Slide 3: Key highlights
Key highlights Investor update | Q2 2019 3
Slide 4: Q2 2019 results show continued progress towards Winning together: 15 by 20 strategy
Q2 2019 results show continued progress towards Winning together: 15 by 20 strategy Adjusted operating income 36% higher at €305 million (2018: €225 million) ROS, excluding unallocated costs, increased to 13.7% (2018: 12.1%) Focus on value over volume resulted in price/mix up 5% and 6% lower volumes
Slide 5: Profit up 36% and ROS 13.7% driven by pricing initiatives and cost-saving programs
Profit up 36% and ROS* 13.7% driven by pricing initiatives and cost-saving programs Q2 2019: Revenue Price/mix Adjusted EPS Up 1% 5% higher 85% higher In constant currencies ROS* Adjusted Operating €1.5 billion shares Income repurchased in H1 part of €2.5 billion share buyback to be completed by end
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 Price/mix increased 5% (versus Q2 2018) Margin management Innovation excellence Agreements signed with all Paint the Future finalists Global Business Services GBS: 18 country transitions complete;
Slide 7: Dealing with market headwinds
Dealing with market headwinds EMEA South America Industrial Powder Coatings Marine and Protective South Coatings Coatings East China ~ ~ and South Asia Automotive and Specialty Foreign Raw ~ Coatings exchange materials ~ Investor update | Q2 2019 7
Slide 8: Financial review
Financial review Investor update | Q2 2019 8
Slide 9: Adjusted operating income 36% higher and revenue up in constant currencies
Adjusted operating income 36% higher and revenue up in constant currencies € million Q2 2018 Q2 2019 Δ% Δ%CC Price/mix up 5% overall, mainly driven by pricing Revenue 2,446 2,451 -% 1% initiatives Adjusted EBITDA 285 394 38% Volumes 6% lower due to Adjusted operating income 225 305 36% value over vo
Slide 10: 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 7 6 6 0 4 5 4 1 0 0 5 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 Q2 19
Slide 11: Positive price/mix and cost savings offsetting higher raw material costs
Positive price/mix and cost savings offsetting higher raw material costs Adjusted operating income bridge: Q2 2018 to Q2 2019 Positive impact Negative impact 21 - 33 43 -1 - 114 - 64 - 305 225 Q2 2018 adjusted FX Volumes Price/mix Raw materials/ OPEX One-offs and other Q2 2019 adjusted operating inc
Slide 12: Decorative Paints ROS up, driven by strong performance in EMEA
Decorative Paints ROS up, driven by strong performance in EMEA € million Q2 2018 Q2 2019 Δ% Δ%CC Revenue 1,006 1,005 - 2% Adjusted EBITDA 145 177 22% Adjusted operating income 123 136 11% Operating income 111 166 50% ROS%* 12.2% 13.5% ROI%* 11.8% 12.2% Revenue development Q2 2019 (%) 2 Increase Our
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 Q2 2018 Q2 2019 Δ% Δ%CC Revenue 1,454 1,445 (1%) -% Adjusted EBITDA 207 241 16% Adjusted operating income 172 197 15% Operating income 162 174 7% ROS%* 11.8% 13.6% ROI%* 19.9% 20.6% Revenue development Q2 2019 (
Slide 14: Adjusted EPS increased 85% mainly due to higher operating income
Adjusted EPS increased 85% mainly due to higher operating income Q2 2018 Q2 2019 € million H1 2018 H1 2019 192 308 Operating income 300 421 (28) (18) Net financing expenses (9) (31) 6 5 Results from associates and joint ventures 10 10 170 295 Profit before tax 301 400 (47) (69) Income tax (46) (100)
Slide 15: Q2 free cash flow improved driven by increased EBITDA
Q2 free cash flow improved driven by increased EBITDA Q2 2018 Q2 2019 € million H1 2018 H1 2019 252 397 EBITDA 420 595 - - Impairment losses - 33 (2) (66) Pre-tax results on acquisitions and divestments (22) (66) (222) (116) Changes in working capital (582) (537) (10) (1) Pension top-up payments (18
Slide 16: Concluding remarks
Concluding remarks Investor update | Q2 2019 16
Slide 17: Q2 2019 results show continued progress towards Winning together: 15 by 20 strategy
Q2 2019 results show continued progress towards Winning together: 15 by 20 strategy Adjusted operating income 36% higher at €305 million (2018: €225 million) ROS, excluding unallocated costs, increased to 13.7% (2018: 12.1%) Focus on value over volume resulted in price/mix up 5% and 6% lower volumes
Slide 18: Outlook
Outlook 2020 guidance* ROS 15% ROI >25% We’re 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 i
Slide 19: Upcoming events
Upcoming events Report for the third quarter 2019 October 23, 2019 Report for the full-year and the fourth quarter February 12, 2020 Investor update | Q2 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 'forw
Slide 22: Appendix
Appendix Investor update | Q2 2019 22
Slide 23: H1 2019: Profit up 25% and ROS 11.5%
H1 2019: Profit up 25% and ROS* 11.5% € million H1 2018 H1 2019 Δ% Δ%CC Price/mix up 5% overall, mainly driven by pricing Revenue 4,622 4,636 -% 1% initiatives Adjusted EBITDA 494 642 30% Volumes 6% lower due to Adjusted operating income 374 468 25% value over volume strategy Operating income 300 42
Slide 24: H1 2019: Decorative Paints
H1 2019: Decorative Paints € million H1 2018 H1 2019 Δ% Δ%CC Revenue flat and up 2% in constant currencies Revenue 1,852 1,849 - 2% Continued focus on pricing Adjusted EBITDA 224 272 21% initiatives contributed to Adjusted operating income 179 196 9% positive price/mix of 5%, while volumes were lowe
Slide 25: H1 2019: Performance Coatings
H1 2019: Performance Coatings € million H1 2018 H1 2019 Δ% Δ%CC Revenue flat, and 1% lower in constant currencies Revenue 2,796 2,784 - (1%) Price/mix was more than Adjusted EBITDA 376 423 13% offset by lower volumes Adjusted operating income 306 335 9% Adjusted operating income Operating income 283
Slide 26: IFRS 16 has limited impact; adopting the modified retrospective approach
IFRS 16 has limited impact; adopting the modified retrospective approach Second quarter January - June Restated As Restatement opening reported at due to Before including before including € million balance at Impact € million Impact December adoption IFRS 16 IFRS 16 January 1, IFRS16 IFRS16 31, 2018
Slide 27: IAS19 pension surplus following cash top-up payments
IAS19 pension surplus following cash top-up payments Key pension financial assumptions Q1 2019 Q2 2019 Discount rate 2.3% 2.1% Inflation rate 3.1% 3.1% € million 1,200 Increase Decrease 1,000 1 800 66 - 240 229 - - 24 600 - 899 400 799 200 0 Q1 2019 Top-ups Discount rates on Inflation on DBO Asset r