Performance Coatings

Full-year:

  • Revenue up 2% (up 4% excluding currency impact), mainly due to the acquired Industrial Coatings business, partly offset by adverse currencies and lower volumes
  • Volumes 1% lower due to adverse conditions in the marine, and oil and gas industries offsetting growth in most segments and regions
  • EBIT at €669 million (2016: €759 million), 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
  • ROS at 11.6% (2016: 13.4%); ROI at 23.4% (2016: 29.4%)

Q4:

  • Revenue 2% lower (up 3% excluding currencies) due to lower volumes and adverse currencies, partly offset by the acquired Industrial Coatings business
  • Volumes 2% lower due to adverse conditions in the marine, and oil and gas industries, partly offset by growth in Automotive and Specialty Coatings, as well as Industrial and Powder Coatings
  • EBIT at €133 million (2016: €152 million), impacted by adverse currencies, higher raw material costs and lower volumes, partly compensated by continuous improvement and cost control

Strengthening our powder coatings market positions (Photo)

Strengthening our powder coatings market positions
AkzoNobel has strengthened its leading global market positions in powder coatings by acquiring the business of V.Powdertech Co. Ltd. business, the leading Thai manufacturer of powder coatings.

This brings new technologies and services to complement AkzoNobel’s global technology portfolio and business in market segments such as automotive and architectural coatings.

Powder coatings such as these are used on buildings like this car park at the Monas Medical Center in Melbourne, Australia.

Full-year:

Revenue was up 2% (up 4% excluding currency impact), mainly due to the acquired Industrial Coatings business, partly offset by adverse currencies. Volume growth in most segments and regions was more than offset by adverse conditions in the marine, and oil and gas industries.

EBIT was 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. Operating income in 2017 and 2016 was negatively impacted by identified items.

Q4:

Revenue was 2% lower (up 3% excluding currencies). Volumes increased for Industrial and Powder Coatings, as well as Automotive and Specialty Coatings. Adverse conditions persisted in the marine, and oil and gas industries.

EBIT was impacted by adverse currencies, higher raw material costs and lower volumes, partly compensated by continuous improvement and cost control. Operating income in 2017 and 2016 was negatively impacted by identified items.

Revenue

Fourth quarter

 

January-December

2016

2017

∆%

in € millions

2016

2017

∆%

*

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

342

285

(17)

Marine and Protective Coatings

1,458

1,299

(11)

385

390

1

Automotive and Specialty Coatings

1,512

1,551

3

679

714

5

Industrial and Powder Coatings

2,732

2,974

9

(8)

(17)

 

Other/intragroup eliminations

(37)

(49)

 

1,398

1,372

(2)

Total

5,665

5,775

2

 

 

 

 

 

 

 

152

133

(13)

EBIT

759

669

(12)

135

132

(2)

Operating income

735

668

(9)

10.9

9.7

 

ROS% *

13.4

11.6

 

 

 

 

 

 

 

 

 

 

 

Average invested capital

2,586

2,860

 

 

 

 

ROI (in %) *

29.4

23.4

 

 

 

 

 

 

 

 

53

42

 

Capital expenditures

159

129

 

 

 

 

Number of employees

19,700

19,900

 

Revenue development 2017

Performance Coatings – Revenue development 2017 (bar chart)Performance Coatings – Revenue development 2017 (bar chart)

Revenue development Q4 2017

Performance Coatings – Revenue development Q4 2017 (bar chart)Performance Coatings – Revenue development Q4 2017 (bar chart)

Marine and Protective Coatings

Volumes were lower due to adverse conditions in the marine, and oil and gas industries. Full-year revenue was impacted by lower volumes, unfavorable currencies and price/mix.

In Q4, revenue was impacted by lower volumes, adverse currencies and price/mix effects. Volumes in Marine Coatings continued to be effected by the slowdown of new build activity, despite some recovery in other segments. Protective Coatings volumes decreased due to fewer oil and gas projects. Improvement actions and cost control measures remain a key focus.

Automotive and Specialty Coatings

Volumes increased for Specialty Coatings in most regions. Full-year revenue was up, mainly due to positive price/mix effects, offset by adverse currencies. In Automotive Coatings, revenue was up for all regions.

In Q4, revenue was up 1% (up 6% excluding currency impact) due to higher volumes, partly offset by adverse currency and price/mix effects.

Industrial and Powder Coatings

Volumes for Powder Coatings were up. Demand for Industrial Coatings differed per region and segment. Full-year revenue increased due to the acquired Industrial Coatings business and volume growth, offset by adverse currencies.

In Q4, Powder Coatings volume continued to grow. Industrial Coatings demand differed per region and segment. Revenue was up 5% (up 10% excluding currency impact) due to the acquired Industrial Coatings business, volume growth and positive price/mix, offset by adverse currencies.

Acquisitions

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. These acquisitions will further strengthen AkzoNobel’s global leadership position in supplying innovative industrial coatings and aerospace and automotive coatings.

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 being visible in Industrial and Powder Coatings. During 2017 and 2018, production volume is being transferred to nearby AkzoNobel manufacturing facilities. Near full profitability of the acquisition will be realized by the end of 2018.

In Q4 2017, the purchase price allocation with respect to this acquisition was finalized.