Performance Coatings

  • Volumes up 1% with growth for Industrial and Powder Coatings, partly offset by adverse conditions in the marine and oil and gas industries
  • Revenue up 2%, due to volume growth and the acquired Industrial Coatings business, partly offset by currency effects
  • EBIT and operating income were adversely impacted by ongoing weakness in the marine and oil and gas industries, as well as increased costs of raw materials in the Paints and Coatings industry and adverse currency effects
  • ROS at 10.3% (2016: 14.2%); ROI at 24.8% (2016: 30.9%)
  • Measures being implemented to mitigate current market challenges
Facility in Dongguan (Photo)

China aerospace unit takes off
Our new aerospace coatings facility in Dongguan will offer faster service to customers in the region and significantly reduce delivery times.

Volumes were up 1%. Revenue was up 2%, driven by the acquired Industrial Coatings business, as well as positive volume development in Industrial and Powder Coatings, partly offset by adverse currency effects. Adverse conditions persisted in the marine and oil and gas industries.

EBIT was adversely impacted by ongoing weakness in the marine and oil and gas industries, as well as increased costs of raw materials in the Paints and Coatings industry and adverse currency effects. Measures being implemented to mitigate current industry specific headwinds include increased selling prices and additional cost control.

Revenue

Third quarter

 

January-September

2016

2017

∆%

in € millions

2016

2017

∆%

*

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

364

327

(10)

Marine and Protective Coatings

1,116

1,014

(9)

369

372

1

Automotive and Specialty Coatings

1,127

1,161

3

683

741

8

Industrial and Powder Coatings

2,053

2,260

10

(10)

(12)

 

Other/intragroup eliminations

(29)

(32)

 

1,406

1,428

2

Total

4,267

4,403

3

 

 

 

 

 

 

 

199

147

(26)

EBIT

607

536

(12)

192

147

(23)

Operating income

600

536

(11)

14.2

10.3

 

ROS% *

14.2

12.2

 

 

 

 

 

 

 

 

 

 

 

Average invested capital

2,586

2,781

 

 

 

 

Moving average ROI (in %) *

30.9

24.8

 

 

 

 

 

 

 

 

35

32

 

Capital expenditures

106

87

 

 

 

 

Number of employees

19,400

19,900

 

Revenue development Q3 2017

Performance Coatings – Revenue development Q3 2017 (bar chart)

Marine and Protective Coatings

Revenue was down 10% due to weak demand from the marine and oil and gas industries, as well as adverse currency effects. Volumes in Marine Coatings continued to be impacted by the slowdown of new build activity and an increasingly competitive pricing environment. Volumes in Protective Coatings were lower, mainly due to the conclusion of existing oil and gas projects. Volumes for Marine and Protective Coatings were also affected by Hurricane Harvey. Improvement actions and cost measures remain a focus of this segment.

Automotive and Specialty Coatings

Revenue was up 1%, mainly due to favorable price/mix effects, partly offset by adverse currencies. Growth was visible in most regions for Vehicle Refinishes and Specialty Coatings.

Industrial and Powder Coatings

Revenue was up 8%, driven by volume growth, the acquired Industrial Coatings business and positive price/mix effects more than offsetting adverse currencies. Volumes for Powder Coatings maintained growth momentum and volumes for Industrial Coatings grew across all regions.

Integration of the acquired Industrial Coatings business

We are integrating the respective parts of the acquired Industrial Coatings business into our Performance Coatings businesses. The acquired revenues impacted multiple reporting segments, the largest impact is visible in Industrial and Powder Coatings. During 2017 and 2018, a portion of the production volume will be transferred to existing nearby AkzoNobel manufacturing facilities. The full profitability of the acquisition will be realized by the end of 2018.