Performance Coatings

Full-year:

  • Volumes flat with improvements in some segments offset by adverse conditions in the marine and oil and gas industries
  • Revenue down 5% due to adverse currency and price/mix effects
  • EBIT down 4% to €759 million, driven by adverse currency and price/mix effects and weakness in marine and oil and gas industries
  • ROS increased to 13.4% (2015: 13.3%); ROI remained unchanged at 29.4% (2015: 29.4%)
  • The acquisition of BASF’s Industrial Coatings business was completed on December 14, 2016

Full-year:

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.

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. Operating income was negatively impacted by incidental items.

Q4:

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.

EBIT decreased 21%, mainly driven by adverse price/mix and lower volumes, due to weakness in the marine and oil and gas industries, partly offset by continuous improvement. Operating income was negatively impacted by incidental items.

Revenue

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

402

342

(15)

Marine and Protective Coatings

1,572

1,458

(7)

390

385

(1)

Automotive and Specialty Coatings

1,545

1,512

(2)

698

679

(3)

Industrial and Powder Coatings

2,867

2,732

(5)

(8)

(8)

 

Other/intragroup eliminations

(29)

(37)

 

1,482

1,398

(6)

Total

5,955

5,665

(5)

 

 

 

 

 

 

 

192

152

(21)

EBIT

792

759

(4)

192

135

(30)

Operating income

792

735

(7)

13.0

10.9

 

ROS% *

13.3

13.4

 

 

 

 

 

 

 

 

 

 

 

Average invested capital

2,692

2,586

 

 

 

 

Moving average ROI (in %) *

29.4


29.4

 

 

 

 

 

 

 

 

47

53

 

Capital expenditures

147

159

 

 

 

 

Number of employees

19,300

19,700

 

Revenue development full-year 2016

Revenue development Q4 2016

Marine and Protective Coatings

Volumes in Protective Coatings increased for the full-year, despite adverse conditions in the oil and gas industries. Volumes in Marine Coatings were increasingly impacted by the slowdown of new build activity, as well as dry docking and maintenance. Full-year revenue was down 7%, with increased volumes more than offset by adverse currency and price/mix effects.

In Q4, revenue reduced 15%, due to lower volumes, adverse currencies and price/mix. Volumes in Marine Coatings continued to be impacted by the slowdown of new build activity, as well as maintenance and dry docking. Protective Coatings volumes decreased, mainly due to the conclusion of existing oil and gas projects.

Marine Coatings has initiated restructuring activities in Korea, China and Malaysia, to adapt to lower shipbuilding activity in these countries, while Protective Coatings announced the closure of a site in Brazil in December.

Automotive and Specialty Coatings

Volumes increased for both Automotive Coatings and Specialty Coatings in most regions. Demand trends differed slightly per segment and region. Full-year revenue decreased 2% due to adverse currencies.

In Q4, revenue was down 1% with volume growth more than offset by adverse currencies and price/mix. Demand for Specialty Coatings increased. Automotive Coatings grew as well, particularly in Europe and the Americas.

Industrial and Powder Coatings

Volumes for Powder Coatings were up in all regions. Demand for Industrial Coatings was strong in Asia. Full-year revenue decreased 5% with volume growth more than offset by adverse currencies and price/mix.

In Q4, volumes grew, especially in Asia. Demand for Powder Coatings was strong in all regions. Revenue was down 3% due to unfavourable currencies and price/mix.

Acquisition of BASF’s Industrial Coatings business

In Q1 2016, the intended acquisition of BASF’s Industrial Coatings business was announced for a value of €475 million and sales of around €300 million. On December 14, 2016, the acquisition was completed for €425 million after closing adjustments and working capital requirements, with expected sales of €280 million in 2017. The transaction included two manufacturing plants, technologies, patents and trademarks. The business supplies products, including coil, furniture foil and panel coatings, wind energy and general industry and commercial transport. The acquisition strengthens our position in the important coil coatings market and fits well with our existing business, allowing us to offer essential solutions to our customers.

During the next two years, a portion of the BASF production volume will be transferred to existing nearby AkzoNobel manufacturing facilities. This will bring synergies and additional production efficiencies. The full profitability of the acquisition will be realized by the end of 2018, in line with the stated financial guidance for the Performance Coatings business.

Building on color expertise with digital innovation
Towards the end of 2016, our Vehicle Refinishes business launched its Colorvation digital technology, a unique system designed to increase speed and accuracy in color matching.