Financial highlights

Q3 2018:

Revenue

Revenue was 4% lower, and flat in constant currencies. Price/mix was up 6% overall, driven by higher selling prices. Volumes were 6% lower, also due to focus on value over volume.

  • Decorative Paints revenue was flat in constant currencies. Price/ mix was up 5%. Higher selling prices were offset by lower volumes
  • Performance Coatings revenue was flat in constant currencies. Price/mix was up 7%, with higher selling prices, although volumes were lower, mainly for Marine and Protective Coatings
Revenue

Third quarter

 

January-September

2017 1

2018

∆%

∆% CC 2

in € millions

2017 1

2018

∆%

∆% CC 2

1

Represented to present the Specialty Chemicals business as discontinued operations

2

Change in constant currencies

1,007

951

(6%)

0%

Decorative Paints

2,975

2,803

(6%)

0%

1,428

1,388

(3%)

0%

Performance Coatings

4,403

4,184

(5%)

0%

(16)

(13)

 

 

Other activities/eliminations

(49)

(39)

 

 

2,419

2,326

(4%)

0%

Total

7,329

6,948

(5%)

0%

in % versus Q3 2017

Volume

Price/mix

Acquisitions/divestments

Exchange rates

Total

Decorative Paints

(5)

5

(6)

(6)

Performance Coatings

(7)

7

(3)

(3)

Total

(6)

6

(4)

(4)

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

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Decorative Paints

5

12

(1)

(2)

(5)

Performance Coatings

1

(2)

(5)

(3)

(7)

Total

3

3

(3)

(3)

(6)

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

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Decorative Paints

(3)

(5)

4

5

Performance Coatings

3

5

7

Total

(1)

(1)

2

5

6

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

Q3 17

Q4 17

Q1 18

Q2 18

Q3 18

Decorative Paints

(3)

(4)

(7)

(6)

(6)

Performance Coatings

(4)

(5)

(8)

(5)

(3)

Total

(4)

(5)

(7)

(5)

(4)

Revenue development Q3 2018

AkzoNobel – Revenue development Q3 2018 (bar chart)AkzoNobel – Revenue development Q3 2018 (bar chart)

Raw material price development

Raw material prices in 2018 continue to be higher compared with the previous year. Robust pricing initiatives are being implemented to deal with these higher raw material costs. Raw material inflation is projected to continue for the remainder of 2018, although at a slower rate than during the start of the year.

Acquisitions

The acquisition of Xylazel in Spain and Doves Decorating Supplies in the UK were announced and completed in September 2018.

The acquisition of Fabryo Corporation S.R.L., announced in June 2018, was completed on October 1, 2018.

Other recent acquisitions include:

  • 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 €243 million (2017: €225 million) was up, driven by pricing initiatives and cost saving programs, despite €10 million adverse impact from foreign currencies. Savings from continuous improvement were more than €30 million. Creating a fit-for-purpose organization delivered €35 million, on track to deliver the €110 million planned for 2018. ROS was up at 10.4% (2017: 9.3%).

  • Decorative Paints delivered a strong performance with higher prices and cost savings more than compensating for raw material costs, currency effects and lower volumes. ROS was up at 12.1% (2017: 9.4%)
  • Performance Coatings improved as a result of pricing initatives, positive impact from asset network optimization and cost savings more than offsetting higher raw material costs, adverse currencies and lower volumes. ROS was up at 12.2% (2017: 10.3%)
  • Other activities/eliminations was €25 million lower, as Q3 2017 was favorably impacted by one-off items, as well as lower pension and insurance related costs totaling €20 million
Adjusted operating income

Third quarter

 

January-September

2017 *

2018

∆%

in € millions

2017 *

2018

∆%

*

Represented to present the Specialty Chemicals business as discontinued operations

95

115

21%

Decorative Paints

293

294

147

170

16%

Performance Coatings

536

476

(11%)

(17)

(42)

 

Other activities/eliminations

(102)

(153)

 

225

243

8%

Total

727

617

(15%)

ROS%

Third quarter

 

January-September

2017 *

2018

in %'s

2017 *

2018

*

Represented to present the Specialty Chemicals business as discontinued operations

9.4%

12.1%

2.7%

Decorative Paints

9.8%

10.5%

0.7%

10.3%

12.2%

1.9%

Performance Coatings

12.2%

11.4%

(0.8%)

9.3%

10.4%

1.1%

Total

9.9%

8.9%

(1.0%)

Operating income

Operating income increased €22 million and was adversely impacted by identified items of €6 million, mainly related to the transformation.

Operating income

Third quarter

 

January-September

2017 *

2018

∆%

in € millions

2017 *

2018

∆%

*

Represented to present the Specialty Chemicals business as discontinued operations

95

112

18%

Decorative Paints

293

271

(8%)

147

164

12%

Performance Coatings

536

447

(17%)

(27)

(39)

 

Other activities/eliminations

(143)

(181)

 

215

237

10%

Total

686

537

(22%)

Net financing income/(expenses)

Net financing expenses decreased by €11 million, mainly due to lower interest on provisions driven by discount rate developments.

Tax

Income tax expenses increased by €9 million, mainly as a result of increased profit before tax.

Profit from discontinued operations

Profit from discontinued operations increased by €57 million, including the ceasing of depreciation and amortization (as required per IFRS 5).

In the Specialty Chemicals business, revenue was up 6%, and 9% higher in constant currencies, mainly driven by positive price/mix. Adjusted operating income was 7% lower, as strong pricing and productivity improvements, did not fully offset environmental costs and other one-off items (totaling €35 million) as well as adverse currencies.

Net income

Net income attributable to shareholders was €301 million, of which €149 million was attributable to continuing operations and €152 million to discontinued operations.

Operating income to net income

Third quarter

 

January-September

2017 *

2018

in € millions

2017 *

2018

*

Represented to present the Specialty Chemicals business as discontinued operations

215

237

Operating income

686

537

(31)

(20)

Net financing expenses

(63)

(29)

3

4

Results from associates and joint ventures

15

14

187

221

Profit before tax

638

522

(57)

(66)

Income tax

(172)

(112)

130

155

Profit from continuing operations

466

410

96

153

Profit from discontinued operations

346

460

226

308

Profit for the period

812

870

(10)

(7)

Non-controlling interests

(55)

(45)

216

301

Net income

757

825