Financial highlights

Volumes were up 1 percent, driven by Decorative Paints and Performance Coatings. Revenue was down 6 percent, mainly due to adverse currencies. EBIT (operating income excluding incidental items) was up 9 percent at €491 million (2015: €452 million), reflecting continuous improvement initiatives and lower costs, partly offset by adverse currency effects. ROS improved to 13.2 percent (2015: 11.4 percent) and ROI improved to 15.1 percent (2015: 12.2 percent). ROS and ROI improved for all Business Areas. Net cash inflow from operating activities was €453 million, up 11 percent (2015: €407 million).

Revenue

Volumes were up 1 percent, while adverse currency effects and price/mix effects resulted in revenue down 6 percent.

  • In Decorative Paints volumes were up in Asia, continued to be down in Latin America and were slightly lower in Europe. Revenue was down 7 percent due to unfavorable currency effects
  • In Performance Coatings volumes were up 2 percent with positive developments in all reporting units. Demand trends differed per region. Revenue was down 5 percent due to adverse currencies
  • In Specialty Chemicals volumes were flat with positive developments in some segments offset by lower demand in oil related segments. Revenue was down 7 percent mainly due to adverse currency effects, divestments and price deflation in several markets
Revenue

Second quarter

 

January-June

2015

2016

∆%

in € millions

2015

2016

∆%

1,134

1,055

(7)

Decorative Paints

2,024

1,916

(5)

1,550

1,473

(5)

Performance Coatings

2,980

2,861

(4)

1,290

1,206

(7)

Specialty Chemicals

2,586

2,412

(7)

(25)

(23)

 

Other activities/eliminations

(50)

(48)

 

3,949

3,711

(6)

Total

7,540

7,141

(5)

in % versus Q2 2015

Volume

Price/mix

Divestments

Exchange rates

Total

Decorative Paints

1

(1)

(7)

(7)

Performance Coatings

2

(2)

(5)

(5)

Specialty Chemicals

(3)

(1)

(3)

(7)

Total

1

(2)

(5)

(6)

Volume development per quarter (year-on-year)

Q2 15

Q3 15

Q4 15

Q1 16

Q2 16

Decorative Paints

(1)

1

6

1

Performance Coatings

(3)

(2)

2

2

Specialty Chemicals

1

Total

(2)

(1)

2

1

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

Q2 15

Q3 15

Q4 15

Q1 16

Q2 16

Decorative Paints

(2)

(2)

(1)

Performance Coatings

2

1

(1)

(2)

Specialty Chemicals

(1)

(2)

(2)

(4)

(3)

Total

(1)

(2)

(2)

Revenue development Q2 2016

AkzoNobel – Revenue development Q2 2016 (bar chart)AkzoNobel – Revenue development Q2 2016 (bar chart)

Acquisitions and divestments

The divestment of the Paper Chemicals business was completed in Q2 2015.

EBIT and operating income

  • In Decorative Paints, EBIT and operating income were up 2 percent, mainly due to higher volumes and lower costs, partly offset by adverse currency effects
  • In Performance Coatings, EBIT and operating income were up 1 percent due to higher volumes, continuous improvement initiatives and lower costs offset by unfavorable currencies
  • In Specialty Chemicals, EBIT was up 10 percent due to operational efficiencies and lower costs, while price deflation and adverse currencies also affected the results. In Q2 2015 the divestment of the Paper Chemicals business was closed and resulted in a book profit net of related costs of €30 million reported in operating income
  • EBIT and operating income in other activities were impacted by favorable one-time adjustments on legacy provisions. Corporate and other costs were in line with the previous year

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

EBIT (operating income excluding incidental items)

Second quarter

 

January-June

2015

2016

∆%

in € millions

2015

2016

∆%

128

131

2

Decorative Paints

178

183

3

220

222

1

Performance Coatings

390

408

5

162

179

10

Specialty Chemicals

325

343

6

(58)

(41)

 

Other activities/eliminations

(135)

(109)

 

452

491

9

Total

758

825

9

Operating income

Second quarter

 

January-June

2015

2016

∆%

in € millions

2015

2016

∆%

128

131

2

Decorative Paints

178

183

3

220

222

1

Performance Coatings

390

408

5

192

179

(7)

Specialty Chemicals

355

343

(3)

(54)

(41)

 

Other activities/eliminations

(131)

(86)

 

486

491

1

Total

792

848

7

Operating income to net income

Second quarter

 

January-June

2015

2016

in € millions

2015

2016

486

491

Operating income

792

848

(27)

(22)

Net financing expenses

(68)

(49)

8

8

Results from associates and joint ventures

6

28

467

477

Profit before tax

730

827

(108)

(138)

Income tax

(190)

(224)

359

339

Profit from continuing operations

540

603

(1)

Profit from discontinued operations

(4)

(1)

358

339

Profit for the period

536

602

(27)

(27)

Non-controlling interests

(45)

(50)

331

312

Net income

491

552

Net financing expenses

Net financing expenses decreased as a result of reduced external interest expenses following the repayment of a high interest bond and the issuance of a low interest bond in Q2 2016.

Tax

The year-to-date effective tax rate was 27 percent (2015: 26 percent), impacted by non-taxable gains and adjustments to previous years.

Net income

Year-to-date net income attributable to shareholders was up 12 percent at €552 million (2015: €491 million). Net income attributable to shareholders in Q2 was at €312 million (2015: €331 million). Q2 2015 was positively impacted by an incidental item related to the divestment of the Paper Chemicals business and tax adjustments.