Financial highlights

Volumes up for all Business Areas and up 2 percent overall. Revenue down 4 percent. Higher volumes were offset by adverse currency effects, price/mix and divestments. EBIT (operating income excluding incidental items) up 9 percent at €334 million (2015: €306 million), reflecting continuous improvement initiatives and lower costs, partly offset by adverse currency effects. Operating income up at €357 million (2015: €306 million). ROS* improved to 9.7 percent and ROI* improved to 14.5 percent.

Revenue

Volumes were up 2 percent, while adverse currency effects, price/mix and divestments resulted in revenue down 4 percent.

  • Revenue in Decorative Paints was down 3 percent. Volumes increased 6 percent, offset by negative currency effects, particularly in Latin America, as well as adverse price/mix. Volumes increased in Asia and Europe, while continued to be down in Latin America
  • Revenue in Performance Coatings was down 3 percent, due to higher volumes offset by currencies and unfavorable price/mix. Demand trends differed per region
  • Revenue in Specialty Chemicals was down 7 percent due to the divestment of the Paper Chemicals business, price deflation in several segments and adverse currency effects. Volumes were up 1 percent with positive developments in some segments partly offset by lower demand in oil related segments
Revenue

First quarter

 

 

 

in € millions

2015

2016

∆%

Decorative Paints

890

861

(3)

Performance Coatings

1,430

1,388

(3)

Specialty Chemicals

1,296

1,206

(7)

Other activities/eliminations

(25)

(25)

 

Total

3,591

3,430

(4)

in % versus Q1 2015

Volume

Price/mix

Divest­ments

Exchange rates

Total

Decorative Paints

6

(2)

(7)

(3)

Performance Coatings

2

(1)

(4)

(3)

Specialty Chemicals

1

(4)

(2)

(2)

(7)

Total

2

(2)

(1)

(3)

(4)

Volume development per quarter
(year-on-year)

Q1 15

Q2 15

Q3 15

Q4 15

Q1 16

Decorative Paints

(3)

(1)

1

6

Performance Coatings

(3)

(3)

(2)

2

Specialty Chemicals

1

Total

(2)

(2)

(1)

2

Price/mix development per quarter
(year-on-year)

Q1 15

Q2 15

Q3 15

Q4 15

Q1 16

Decorative Paints

(1)

(2)

(2)

Performance Coatings

1

2

1

(1)

Specialty Chemicals

(1)

(2)

(2)

(4)

Total

(1)

(2)

Revenue development Q1 2016

AkzoNobel – Revenue development Q1 2016 (bar chart)AkzoNobel – Revenue development Q1 2016 (bar chart)

Acquisitions and divestments

  • The divestment of the Paper Chemicals business was completed in Q2 2015, and accounts for the divestment impact
  • In Q1 2016, the outstanding shares in Eko Peroxide LLC, a hydrogen peroxide joint venture, were acquired. Hydrogen peroxide is a key component of AkzoNobel’s bleaching chemicals product portfolio
  • In Q1 2016, the intended acquisition of BASF’s Industrial Coatings business was announced. The planned transaction is expected to be completed in the second half of 2016

EBIT and Operating income

EBIT increased 9 percent to €334 million in Q1, reflecting continuous improvement initiatives and lower costs, partly offset by adverse currency effects. Operating income increased 17 percent to €357 million.

  • In Decorative Paints, EBIT and operating income increased 4 percent due to positive volumes and lower costs, partly offset by unfavorable currency developments
  • In Performance Coatings, EBIT and operating income increased 9 percent, due to higher volumes, management delayering, continuous improvement initiatives and lower costs
  • In Specialty Chemicals, EBIT and operating income increased 1 percent due to operational efficiencies and lower costs offsetting the effects of price deflation and adverse currencies
  • In Other activities and eliminations, EBIT improved due to lower costs, in particular insurance related costs, and operating income was positively impacted by an incidental gain on sale of assets of €23 million

Raw material prices were lower, although in certain regions foreign currency effects adversely impacted raw material costs in local currencies.

EBIT (operating income excluding incidental items)

First quarter

 

 

 

in € millions

2015

2016

∆%

Decorative Paints

50

52

4

Performance Coatings

170

186

9

Specialty Chemicals

163

164

1

Other activities/eliminations

(77)

(68)

 

Total

306

334

9

Operating income

First quarter

 

 

 

in € millions

2015

2016

∆%

Decorative Paints

50

52

4

Performance Coatings

170

186

9

Specialty Chemicals

163

164

1

Other activities/eliminations

(77)

(45)

 

Total

306

357

17

Operating income to net income

First quarter

 

 

in € millions

2015

2016

Operating income

306

357

Net financing expenses

(41)

(27)

Results from associates and joint ventures

(2)

20

Profit before tax

263

350

Income tax

(82)

(86)

Profit from continuing operations

181

264

Profit from discontinued operations

(3)

(1)

Profit for the period

178

263

Non-controlling interests

(18)

(23)

Net income

160

240

Net financing expenses

Net financing expenses decreased mainly as a result of reduced external interest expenses following the repayment of a high interest bond in Q1 2015.

Tax

In Q1 2016, the effective tax rate was 25 percent (2015: 31 percent). The tax rate was positively impacted by non-taxable gains and an adjustment to previous years.

Net income

Net income attributable to shareholders was up 50 percent at €240 million (2015: €160 million).