Change

Raw materials

On average, raw material costs were stable compared with the previous year, with the upward pressure on oil prices offsetting softer TiO2 prices.

EBITDA

Decorative Paints

In Decorative Paints, EBITDA for the year was 11 percent lower at €425 million, reflecting weaker demand from our European markets. The euro crisis and the general slowdown in global markets continued to affect our business. Restructuring activities continued across Europe.

Performance Coatings

In Performance Coatings, overall margins improved due to a combination of margin management activities and ongoing cost control. The major restructuring activities were undertaken in mature markets. Margin management and operational efficiency improvements resulted in EBITDA of €769 million, 26 percent higher than the previous year.

Specialty Chemicals

In Specialty Chemicals, we recorded a robust performance on the back of margin management, cost control measures and strong market and technology leadership positions.

Incidental items included in operating income

  • We incurred higher restructuring costs mainly in mature markets, as we implemented the performance improvement program. Restructuring activities are ongoing across the businesses, and we stepped up restructuring in the European businesses in Decorative Paints. Besides the costs of the performance improvement program of €292 million, we had a number of writedowns for an amount of €32 million, bringing the total amount of restructuring costs to €324 million. The impairment amount in Q3 was adjusted to exclude Decorative Paints North America, which is reported as a discontinued operation
  • We increased a provision for an environmental case in Sweden
  • We incurred a loss of €36 million from recycling the cumulative translation differences in equity to the statement of income due to the completed divestment of Chemicals Pakistan

Incidental included in operating income

 

 

 

 

 

In € millions

 

2011

 

2012

Restructuring costs

 

(129)

 

(324)

Impairment

 

 

(2,106)

Results related to major legal, antitrust and environmental cases

 

(9)

 

(36)

Results on acquisitions and divestments

 

10

 

(45)

Other incidental results

 

2

 

(9)

Total

 

(126)

 

(2,520)

EBIT in “other”

Corporate costs were higher due to increased information management and integrated supply chain costs as a consequence of functional excellence initiatives and one-off costs.

Costs for research and development in 2013 are expected to be in line with 2012, with 50 percent aimed at breakthrough innovations.

EBIT in “other”

 

 

 

 

 

In € millions

 

2011

 

2012

Corporate costs

 

(98)

 

(113)

Pensions

 

(14)

 

(4)

Insurances

 

1

 

(6)

Other

 

(65)

 

(71)

EBIT in “other”

 

(176)

 

(194)

Net financing expenses

Net financing charges for the year decreased by €69 million, from €336 million to €267 million. Significant variances were:

  • Financing expenses on net debt decreased by €63 million to €239 million (2011: €302 million) following the buy-back of bonds in December 2011, which had a one-off impact in 2011 of €67 million
  • Interest on provisions decreased by €17 million to €29 million (2011: €46 million) due to higher discount rates
  • Financing expenses related to pensions increased by €8 million to €65 million (2011: €57 million) due to a lower expected return on assets
  • Other items decreased by €5 million to €7 million (2011: €12 million), mainly explained by lower interest on discounted long-term receivables (€3 million)

Net financing expenses

 

 

 

 

 

In € millions

 

2011

 

2012

Financing income

 

57

 

59

Financing expenses

 

(302)

 

(239)

Net interest on net debt

 

(245)

 

(180)

Financing expenses related to pensions

 

(57)

 

(65)

Interest on provisions

 

(46)

 

(29)

Other items

 

12

 

7

Net other financing expenses

 

(91)

 

(87)

Net financing expenses

 

(336)

 

(267)

Tax

Excluding the non-tax-deductible goodwill impairment charge of €2,106 million, the year-to-date tax rate was 30 percent (2011: 27 percent). The tax rate was negatively impacted by several adjustments to previous years and by other non-taxable items. The loss carryforward recognized in the balance sheet and its usage in the coming years has a decreasing impact on the cash tax rate in coming years.

Workforce

At year-end 2012, we employed 50,610 staff in continuing operations (year-end 2011: 52,020 employees). The net decrease was due to:

  • A decrease of 1,450 employees due to ongoing restructuring
  • A net decrease of 540 employees due to acquisitions and divestments, mainly from the Boxing Oleochemicals acquisition (620 employees) and the divestment of Chemicals Pakistan (1,100 employees)
  • An increase of 580 employees mainly due to new hires in high growth markets
  • In 2013 we will see the impact of restructuring in the mature markets. In the context of our performance improvement program, restructuring has started in Decorative Paints in Europe

EBITDA AkzoNobel 2010 – 2012
in € millions

EBITDA AkzoNobel 2010 – 2012 (bar chart)
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