Financial highlights (Paints and Coatings)

Revenue

Full-year:

  • Decorative Paints revenue was up 2% (up 4% excluding currency impact), driven by strong volume growth, partly offset by adverse currencies and price/mix effects. Volumes were up 7% overall, with growth in all regions
  • Performance Coatings revenue was up 2% (up 4% excluding currency impact), mainly due to the acquired Industrial Coatings business, partly offset by adverse currencies. Volume growth for most segments and regions was more than offset by lower volumes in the marine, and oil and gas industries

Q4:

  • Decorative Paints revenue increased 3% (up 7% excluding currency impact). Strong volume growth was partly offset by currency and price/mix effects. Positive developments continued, especially in China, while growth improved in Latin America
  • Performance Coatings revenue was 2% lower (up 3% excluding currencies). Volumes increased for Industrial and Powder Coatings, as well as Automotive and Specialty Coatings, while adverse conditions persisted in the marine, and oil and gas industries

Revenue

Fourth quarter

 

January-December

2016 1

2017

∆%

in € millions

2016 1

2017

∆%

898

923

3

Decorative Paints

3,835

3,898

2

1,398

1,372

(2)

Performance Coatings

5,665

5,775

2

(5)

(12)

 

Other activities/eliminations

(66)

(61)

 

2,291

2,283

Total

9,434

9,612

2

in % versus 2016

Volume

Price/mix

Acquisitions/divestments

Exchange rates

Total

Decorative Paints

7

(3)

(2)

2

Performance Coatings

(1)

5

(2)

2

Total

2

(1)

3

(2)

2

in % versus Q4 2016

Volume

Price/mix

Acquisitions/divestments

Exchange rates

Total

Decorative Paints

12

(5)

(4)

3

Performance Coatings

(2)

5

(5)

(2)

Total

3

(1)

3

(5)

Volume development per quarter (year-on-year)

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Decorative Paints

2

9

3

5

12

Performance Coatings

(1)

(4)

1

(2)

Total

1

4

(1)

3

3

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

Q4 16

Q1 17

Q2 17

Q3 17

Q4 17

Decorative Paints

(2)

(3)

(3)

(3)

(5)

Performance Coatings

(3)

(1)

1

Total

(3)

(1)

(1)

(1)

(1)

Revenue development 2017

AkzoNobel – Revenue development 2017 (bar chart)AkzoNobel – Revenue development 2017 (bar chart)

Revenue development Q4 2017

AkzoNobel – Revenue development Q4 2017 (bar chart)AkzoNobel – Revenue development Q4 2017 (bar chart)

Raw material price development

Raw material prices in 2017 were higher compared with the previous year, including during the fourth quarter. We are taking appropriate measures to deal with higher raw material prices in an inflationary environment. These measures are expected to take several quarters before the necessary mitigating impact is fully realized.

Acquistions

For the full-year and Q4, the impact of acquistions on revenue was 3% for AkzoNobel and 5% for Performance Coatings.

  • In Q4 2017, we completed the acquisition of the business of V.Powdertech Co., Ltd., the leading Thai manufacturer of powder coatings, supplying a range of products for domestic appliances, furniture and general industrial applications
  • In Q3 2017, the acquistions of Flexcrete Technologies Ltd and Disa Technology (Disatech) were completed
  • In Q4 2016, the acquisition of BASF’s Industrial Coatings business was completed

EBIT

Full-year EBIT at €905 million (2016: €928 million), was impacted by higher raw material costs, partly compensated by increased selling prices, continuous improvement and cost control.

  • Decorative Paints EBIT was 2% lower, due to adverse currency effects. Steep increases in raw material costs were offset by continuous improvement and cost control
  • Performance Coatings EBIT was 12% lower, impacted by higher raw material costs and lower volumes, mainly due to adverse conditions in the marine, and oil and gas industries, partly compensated by continuous improvement and cost control
  • EBIT in Other activities improved due to lower corporate costs, including one-off items, as well as lower pension and insurance related costs

In Q4, EBIT was up 19% at €178 million (2016: €149 million), with increased selling prices, continuous improvement and cost control, partly offset by higher raw material costs. EBIT in Other activities in 2016 was impacted by restructuring expenses related to several functions. EBIT in Other activities in 2017 was impacted by one-off items related to sale of assets and lower costs.

EBIT (operating income excluding incidental items)

Fourth quarter

 

January-December

2016 *

2017

∆%

in € millions

2016 *

2017

∆%

*

Represented to present the Specialty Chemicals business as discontinued operations

51

58

14

Decorative Paints

357

351

(2)

152

133

(13)

Performance Coatings

759

669

(12)

(54)

(13)

 

Other activities/eliminations

(188)

(115)

 

149

178

19

Total

928

905

(2)

Operating income

Full-year operating income was negatively impacted by identified items totaling €80 million, mainly related to the transformation of the Paints and Coatings organization and legal items. The identified items impacted operating income in Other activities, as well as Decorative Paints and Performance Coatings. An amount of €39 million was recognized as identified items in Q4.

In 2016, operating income was negatively impacted by identified items totaling €5 million, including acquisition and integration costs related to the Industrial Coatings business, asset impairments and adjustments to post-retirement provisions.

Operating income

Fourth quarter

 

January-December

2016 *

2017

∆%

in € millions

2016 *

2017

∆%

*

Represented to present the Specialty Chemicals business as discontinued operations

51

41

(20)

Decorative Paints

366

334

(9)

135

132

(2)

Performance Coatings

735

668

(9)

(54)

(34)

 

Other activities/eliminations

(178)

(177)

 

132

139

5

Total

923

825

(11)

Net financing expenses

For the full-year, net financing expenses decreased, mainly due to lower interest on provisions.

Tax

The full-year effective tax rate for continued operations was 33% (2016: 28%), impacted by the US tax reform, several adjustments to prior years and de-recognition of deferred tax assets as a consequence of the separation of the Specialty Chemicals business. Effective tax rate going forward is expected to be around 27%.

Net income

Full-year net income attributable to shareholders was €832 million (2016: €970 million).

Operating income to net income

Fourth quarter

 

January-December

2016 *

2017

in € millions

2016 *

2017

*

Represented to present the Specialty Chemicals business as discontinued operations

132

139

Operating income

923

825

(19)

(15)

Net financing expenses

(91)

(78)

3

2

Results from associates and joint ventures

18

17

116

126

Profit before tax

850

764

(18)

(81)

Income tax

(234)

(253)

98

45

Profit from continuing operations

616

511

52

47

Profit from discontinued operations

436

393

150

92

Profit for the period

1,052

904

(17)

(17)

Non-controlling interests

(82)

(72)

133

75

Net income

970

832

Profit from discontinued operations

Profit from discontinued operations of €393 million (2016: €436 million) is almost completely related to the Specialty Chemicals business. Profit in 2017 was negatively impacted by identified items related to the separation of Specialty Chemicals.

Specialty Chemicals volumes were up 3% with positive developments in all business units and regions. Revenue in Specialty Chemicals was up 4% (up 5% excluding currency impact) mainly due to positive volume and price/mix effects. EBIT of discontinued operations was up 8%, with higher volumes and cost control more than compensating for adverse currencies and raw material price inflation.