Financial highlights

  • Further improved operational profitability and cash generation
  • Focus on growth is delivering, with volumes up and acquisition of BASF’s Industrial Coatings business

Return on sales
In %

AkzoNobel – Revenue development Q3 2016 (bar chart)AkzoNobel – Revenue development Q3 2016 (bar chart)

Return on investment
In %

Summary of financial outcomes

Fourth quarter

 

January-December

2015

2016

∆%

in € millions

2015

2016

∆%

*

ROS% = EBIT/Revenue. Moving average ROI (in %) = 12 months EBIT/12 months average invested capital

3,559

3,456

(3)

Revenue

14,859

14,197

(4)

268

235

(12)

EBIT

1,462

1,502

3

345

217

(37)

Operating income

1,573

1,519

(3)

7.5

6.8

 

ROS% *

9.8

10.6

 

9.7

6.3

 

OPI margin%

10.6

10.7

 

 

 

 

 

 

 

 

 

 

 

Average invested capital

10,475

10,045

 

 

 

 

Moving average ROI (in %) *

14.0

15.0

 

 

 

 

 

 

 

 

228

231

 

Capital expenditures

651

634

 

768

580

 

Net cash from operating activities

1,136

1,297

 

 

 

 

Net debt

1,226

1,252

 

 

 

 

 

 

 

 

194

134

(31)

Net income from
continuing operations

973

972

9

(1)

 

Net income from
discontinued operations

6

(2)

 

203

133

(34)

Net income attributable to shareholders

979

970

(1)

0.82

0.53

 

Earnings per share from
total operations (in €)

3.95

3.87

 

0.72

0.66

(8)

Adjusted earnings per share (in €)

4.02

4.15

3

 

 

 

Number of employees

45,600

46,000

 

Full-year volumes were 1% higher; up 3% for Decorative Paints, up 1% for Specialty Chemicals and flat for Performance Coatings. Revenue was down 4%, due to unfavorable currency and price/mix effects. EBIT was up 3% at €1,502 million, reflecting the positive effects of volume growth, continuous improvement and lower costs. Profitability increased, with record levels of ROS at 10.6% (2015: 9.8%) and ROI at 15.0% (2015: 14.0%)

Revenue

Full-year:

  • In Decorative Paints, volumes were up 3% overall with positive developments in Asia and EMEA, while volumes in Latin America were down. Positive volumes were more than offset by unfavorable currency effects and adverse price/mix. Revenue was down 4%
  • In Performance Coatings, volume growth in some segments was offset by adverse conditions in the marine and oil and gas industries. Demand trends differed per segment and region. Revenue was down 5%, driven by adverse currencies and price/mix
  • In Specialty Chemicals, volumes were up 1% with positive developments, mainly driven by Asia and Europe. Revenue was down 4% with positive volume developments more than offset by price deflation in several markets

Q4:

  • In Decorative Paints, positive volume developments in Asia were more than offset by unfavorable currency effects and adverse price/mix. Revenue was down 4%
  • In Performance Coatings, volumes increased for Automotive and Specialty Coatings, as well as Industrial and Powder Coatings. Revenue decreased 6% due to adverse currencies, price/mix and reduced demand in the marine and oil and gas industries
  • In Specialty Chemicals, volumes were up 4% mainly driven by Asia and Europe and improved manufacturing availability. Revenue was flat with increased volume offset by price/mix effects
Revenue

Fourth quarter

 

January-December

2015

2016

∆%

in € millions

2015

2016

∆%

931

898

(4)

Decorative Paints

4,007

3,835

(4)

1,482

1,398

(6)

Performance Coatings

5,955

5,665

(5)

1,167

1,169

Specialty Chemicals

4,988

4,783

(4)

(21)

(9)

 

Other activities/eliminations

(91)

(86)

 

3,559

3,456

(3)

Total

14,859

14,197

(4)

in % versus 2015

Volume

Price/mix

Acquisitions/divestments

Exchange rates

Total

Decorative Paints

3

(1)

(6)

(4)

Performance Coatings

(2)

(3)

(5)

Specialty Chemicals

1

(3)

(1)

(1)

(4)

Total

1

(2)

(3)

(4)

in % versus Q4 2015

Volume

Price/mix

Acquisitions/divestments

Exchange rates

Total

Decorative Paints

2

(2)

(4)

(4)

Performance Coatings

(1)

(3)

(2)

(6)

Specialty Chemicals

4

(4)

Total

2

(3)

(2)

(3)

Volume development per quarter (year-on-year)

Q4 15

Q1 16

Q2 16

Q3 16

Q4 16

Decorative Paints

1

6

1

3

2

Performance Coatings

2

2

(2)

(1)

Specialty Chemicals

1

1

4

Total

2

1

2

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

Q4 15

Q1 16

Q2 16

Q3 16

Q4 16

Decorative Paints

(2)

(1)

(1)

(2)

Performance Coatings

1

(1)

(2)

(2)

(3)

Specialty Chemicals

(2)

(4)

(3)

(3)

(4)

Total

(1)

(2)

(2)

(2)

(3)

Revenue development full-year 2016

Revenue development Q4 2016

EBIT

Full-year EBIT increased 3% to €1,502 million, reflecting the positive effects of volume growth, continuous improvement and lower costs.

  • In Decorative Paints, EBIT increased 3% as a result of volume growth, continuous improvement and cost discipline, partly offset by currency impacts
  • In Performance Coatings, EBIT decreased 4% driven by adverse currencies and price/mix effects and weakness in the marine and oil and gas industries, partly offset by continuous improvement
  • In Specialty Chemicals, EBIT increased by 9% due to improved volumes and operational efficiencies
  • EBIT in Other activities improved due to lower costs, driven by improvement programs and the implementation of the Global Business Services model, and favorable one-time adjustments on legacy provisions, partly offset by higher restructuring expenses

In Q4, EBIT was at €235 million (2015: €268 million) due to adverse price/mix effects and higher restructuring expenses partly offset by volume growth and continuous improvement. EBIT in other activities was impacted by restructuring expenses related to several functions.

Total restructuring expenses in 2016 amounted to €62 million (2015: €74 million), with more than half recognized in Q4.

Raw material prices were lower at the beginning of the year compared to the same period in 2015. In Q4, raw material costs were roughly flat versus the previous year, due to increases throughout the year. In most regions foreign currency effects adversely impacted raw material costs in local currencies.

EBIT (operating income excluding incidental items)

Fourth quarter

 

January-December

2015

2016

∆%

in € millions

2015

2016

∆%

46

51

11

Decorative Paints

345

357

3

192

152

(21)

Performance Coatings

792

759

(4)

90

118

31

Specialty Chemicals

578

629

9

(60)

(86)

 

Other activities/eliminations

(253)

(243)

 

268

235

(12)

Total

1,462

1,502

3

Operating income

Full-year operating income was positively impacted by €17 million of incidental items, including adjustments to post-retirement provisions, asset impairments and acquisition-related costs. The incidental items impacted operating income of Decorative Paints, Performance Coatings and the operating income in Other activities.

In Q4, operating income was negatively impacted by incidental items, including acquisition and integration related costs of the acquisition of BASF’s Industrial Coatings business, and asset impairments. In 2015, operating income was positively impacted by €77 million of incidental items.

Operating income

Fourth quarter

 

January-December

2015

2016

∆%

in € millions

2015

2016

∆%

46

51

11

Decorative Paints

345

366

6

192

135

(30)

Performance Coatings

792

735

(7)

91

118

30

Specialty Chemicals

609

629

3

16

(87)

 

Other activities/eliminations

(173)

(211)

 

345

217

(37)

Total

1,573

1,519

(3)

Net financing expenses

For the full-year, the net financing expenses were in line with the previous year, as reduced external interest expenses were offset by lower discount rates on provisions.

In Q4, net financing expenses increased as reduced external interest expenses were more than offset by lower discount rates on provisions.

Tax

The full-year effective tax rate was 27% (2015: 28%), impacted by non-taxable gains, adjustments to previous years, mainly in Q4, and geographical mix.

Net income

Full-year net income attributable to shareholders was €970 million (2015: €979 million), mainly due to lower incidental items compared to 2015. The majority of the incidental items were recognized in Q4 of the previous year.

Operating income to net income

Fourth quarter

 

January-December

2015

2016

in € millions

2015

2016

345

217

Operating income

1,573

1,519

(18)

(32)

Net financing expenses

(114)

(114)

5

5

Results from associates and joint ventures

17

43

332

190

Profit before tax

1,476

1,448

(112)

(39)

Income tax

(416)

(394)

220

151

Profit from continuing operations

1,060

1,054

9

(1)

Profit from discontinued operations

6

(2)

229

150

Profit for the period

1,066

1,052

(26)

(17)

Non-controlling interests

(87)

(82)

203

133

Net income

979

970