Financial highlights

Revenue

Selling prices were up 3% overall and for all businesses. Volumes were 3% lower, mainly due to Marine and Protective Coatings. Revenue was impacted by adverse foreign currencies.

  • Decorative Paints revenue decreased 8%, mainly due to foreign currencies (down 1% excluding currency impact). Higher selling prices were offset by adverse mix effects
  • Performance Coatings revenue was 9% lower, mainly due to adverse currencies (down 1% excluding currencies). Volumes were 5% lower, mainly due to adverse conditions in the marine, and oil and gas industries
Revenue

First quarter

 

 

 

 

in € millions

2017 1

2018

∆%

∆% CC 2

1

Represented to present the Specialty Chemicals business as discontinued operations

2

Change excluding currency impact

Decorative Paints

922

846

(8)

(1)

Performance Coatings

1,471

1,342

(9)

(1)

Other activities/eliminations

(16)

(12)

 

 

Total

2,377

2,176

(8)

(1)

in % versus Q1 2017

Volume

Price/mix

Acquisitions/divestments

Exchange rates

Total

Decorative Paints

(1)

(7)

(8)

Performance Coatings

(5)

3

1

(8)

(9)

Total

(3)

2

(7)

(8)

Volume development per quarter in % (year-on-year)

Q1 17

Q2 17

Q3 17

Q4 17

Q1 18

Decorative Paints

9

3

5

12

(1)

Performance Coatings

(4)

1

(2)

(5)

Total

4

(1)

3

3

(3)

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

Q1 17

Q2 17

Q3 17

Q4 17

Q1 18

Decorative Paints

(3)

(3)

(3)

(5)

Performance Coatings

(1)

1

3

Total

(1)

(1)

(1)

(1)

2

Exchange rates development per quarter in % (year-on-year)

Q1 17

Q2 17

Q3 17

Q4 17

Q1 18

Decorative Paints

1

(1)

(3)

(4)

(7)

Performance Coatings

2

(4)

(5)

(8)

Total

2

(4)

(5)

(7)

Revenue development Q1 2018

AkzoNobel – Revenue development Q1 2018 (bar chart)AkzoNobel – Revenue development Q1 2018 (bar chart)

Raw material price development

Raw material prices in 2018 continue to be higher compared with the previous year. We are increasing selling prices to deal with these higher raw material costs. The continued inflationary environment means these measures are still expected to take several quarters before the necessary mitigating impact is fully realized.

Acquisitions

The impact of acquisitions on revenue was 1% for Performance Coatings, although limited for AkzoNobel overall. Acquistions impacting Q1 revenues were:

  • The business of V.Powdertech Co., Ltd., acquired in Q4 2017
  • Flexcrete Technologies Ltd and Disa Technology (Disatech) acquired in Q3 2017

Adjusted operating income

Adjusted operating income at €149 million (2017: €208 million), was impacted by adverse currencies, higher raw material costs and lower volumes, partly compensated by increased selling prices. Savings from
continuous improvement were €30 million and creating a fit-for-purpose organization delivered an initial €10 million of €110 million planned for 2018.

  • Decorative Paints was lower, mainly due to higher raw material costs and negative currency effects
  • Performance Coatings was lower, impacted by foreign currencies, higher raw material costs and lower volumes, mainly due to continued adverse conditions in the marine, and oil and gas industries
  • Other activities/eliminations increased by €15 million, mainly due to gains on disposals
Adjusted operating income

First quarter

 

 

 

in € millions

2017 *

2018

∆%

*

Represented to present the Specialty Chemicals business as discontinued operations

Decorative Paints

77

56

(27)

Performance Coatings

187

134

(28)

Other activities/eliminations

(56)

(41)

 

Total

208

149

(28)

Operating income

Operating income was negatively impacted by identified items totaling €41 million, mainly related to restructuring costs for the transformation of the Paints and Coatings organization.

Operating income

First quarter

 

 

 

in € millions

2017 *

2018

∆%

*

Represented to present the Specialty Chemicals business as discontinued operations

Decorative Paints

77

48

(38)

Performance Coatings

187

121

(35)

Other activities/eliminations

(56)

(61)

 

Total

208

108

(48)

Net financing income/(expenses)

Net financing expenses decreased by €36 million, mainly due to a one-off interest benefit on a tax settlement.

Tax

Regular income tax expenses were fully offset by re-recognition of certain deferred tax assets and a tax settlement.

Profit from discontinued operations

Profit from discontinued operations increased by €26 million. This was due to improved operational results and the ceasing of depreciation and amortization (as required per IFRS 5), partly offset by restructuring costs related to manufacturing network optimization.

In the Specialty Chemicals business, revenue was down 3% (up 4% excluding currency impact) with higher selling prices more than offset by adverse currencies. Adjusted operating income was lower, mainly due to restructuring costs of €32 million related to manufacturing network optimization.

Operating income was negatively impacted by identified items of €14 million related to the separation.

Net income

Net income attributable to shareholders in Q1 2018 was €253 million, of which €119 million was attributable to continuing operations and €134 million to discontinued operations.

Operating income to net income

First quarter

 

 

in € millions

2017 *

2018

*

Represented to present the Specialty Chemicals business as discontinued operations

Operating income

208

108

Net financing income/(expenses)

(17)

19

Results from associates and joint ventures

6

4

Profit before tax

197

131

Income tax

(52)

1

Profit from continuing operations

145

132

Profit from discontinued operations

116

142

Profit for the period

261

274

Non-controlling interests

(21)

(21)

Net income

240

253