Decorative Paints

  • ROS up at 12.2% (2017: 11.6%); pricing initiatives and cost savings compensating for higher raw materials
  • Acquisition of Fabryo in Romania and enhanced network of Dulux Decorator Centres in the UK

Q2 2018:

  • Selling prices 5% higher overall and up in all regions
  • Revenue 4% lower, although up 2% in constant currencies
  • Adjusted operating income increased to €123 million (2017: €121 million) with higher selling prices and cost savings offsetting foreign currencies, higher raw material costs and lower volumes
  • ROS higher at 12.2% (2017: 11.6%); ROI at 11.8% (2017: 13.5%)

Half-year 2018:

  • Revenue 6% lower, although flat in constant currencies
  • Adjusted operating income of €179 million (2017: €198 million) was impacted by higher raw material costs and adverse currency effects, partly compensated by robust pricing initiatives and cost savings
  • ROS at 9.7% (2017: 10.1%)
Fabryo Corporation S.R.L. in Romania (Photo)

AkzoNobel to achieve number one position in Romania with acquisition of Fabryo
AkzoNobel has entered into an agreement to acquire 100% of the shares of Fabryo Corporation S.R.L. (Fabryo), becoming leading in the Romanian decorative paints market. The business generated revenue of around €45 million in 2017 and is the only player with both a leading product portfolio for consumers as well as professional segments in the Romanian market, including brands Savana, APLA and InnenWeiss.

Q2 2018:

Revenue was up 2% in constant currencies. Price realization is gaining momentum and selling prices were up 5% overall, offsetting raw material cost increases. Volumes were flat in EMEA, while volumes were lower in Latin America and Asia.

Adjusted operating income was higher due to improved pricing and cost control more than offsetting adverse currency effects and higher raw material costs, resulting in ROS up at 12.2% (2017: 11.6%).

Operating income was impacted by €12 million identified items relating to the transformation of the organization.

Half-year 2018:

Revenue was 6% lower, although flat in constant currencies. Price realization is gaining momentum and selling prices were up 4% overall. Volumes were up in EMEA, while volumes were lower in Latin America and Asia.

Adjusted operating income was lower, mainly due to currency effects and higher raw material costs, partly offset by higher selling prices and cost savings.

Operating income was impacted by €20 million identified items relating to the transformation of the organization.

Revenue

Second quarter

 

January-June

2017

2018

∆%

∆% CC *

in € millions

2017

2018

∆%

∆% CC *

*

Change in constant currencies

584

591

1

4

Decorative Paints Europe, Middle East and Africa

1,091

1,082

(1)

2

118

107

(9)

16

Decorative Paints Latin America

237

212

(11)

13

346

310

(10)

(5)

Decorative Paints Asia

643

561

(13)

(6)

(2)

(2)

 

 

Other/intragroup eliminations

(3)

(3)

 

 

1,046

1,006

(4)

2

Total

1,968

1,852

(6)

Revenue development Q2 2018

Decorative Paints – Revenue development Q2 2018 (bar chart)Decorative Paints – Revenue development Q2 2018 (bar chart)

Revenue development half-year 2018

Decorative Paints – Revenue development half-year 2018 (bar chart)Decorative Paints – Revenue development half-year 2018 (bar chart)
Key financial figures

Second quarter

 

January-June

2017

2018

∆%

in € millions

2017

2018

∆%

121

123

2

Adjusted operating income

198

179

(10)

121

111

(8)

Operating income

198

159

(20)

11.6

12.2

 

ROS%

10.1

9.7

 

 

 

 

 

 

 

 

 

 

 

Average invested capital

2,757

2,813

 

 

 

 

ROI%

13.5

11.8

 

Europe, Middle East and Africa

Revenue in Q2 increased 4% in constant currencies. Price increases are taking effect, while volumes were flat. Demand trends differed by country and uncertainty continued in some markets. Cost control measures and productivity programs remain a focus in the region.

Revenue in the first half year was 1% lower, although up 2% in constant currencies, driven by volume growth and positive price/mix effects. Adverse currency impacts were driven by the pound sterling.

The acquisition of Fabryo to become leading in the Romanian decorative paints market was announced. Two businesses were acquired in the UK to enhance the network of Dulux Decorator Centres and further improve the service and support offered to trade customers.

Latin America

Revenue in Q2 was up 16% in constant currencies, mainly driven by positive price/mix effects. Higher selling prices offset increased raw material costs. Cost control remains strong.

Revenue in the first half year was 11% lower, although up 13% in constant currencies. Currency impact was driven by the Brazilian real and the significant devaluation of the Argentinian peso.

Asia

Revenue in Q2 was 5% lower in constant currencies. Selling prices increased, as a result of continued focus on pricing initiatives. Volumes were lower in China and grew in India and Vietnam.

Revenue in the first half-year was 13% lower, although 6% lower in constant currencies. Adverse effects resulted from most Asian currencies. Volumes in China were lower, while growth continued in India, Malaysia and Vietnam.