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Revenue and EBITDA


Revenue growth

In 2008, autonomous growth of five percent (volume and price) compensated for foreign currency translation effects. The volatile US dollar and the fall of the pound sterling limited revenue growth to 1 percent. In Decorative Paints, demand has been weaker across the mature economies of the US and UK in particular, but in the fourth quarter this weakness extended to the emerging markets, notably China. It proved to be a mixed year for our Performance Coatings business, which had to contend with volatile raw material pricing and currencies. Marine and Protective Coatings had a strong year, while Industrial Finishes was affected by soft demand throughout the year. The broad geographic spread and the range of industries served gave us some protection against the effects of individual market fluctuations. In Specialty Chemicals, revenue from Chemicals Pakistan was adversely impacted by the Pakistani rupee, as well as by tariff changes effective July 1, 2008. In other businesses within Specialty Chemicals, we counterbalanced increased raw material prices with higher sales prices, resulting in revenue being 5 percent higher.

Total revenue growth year 2008

Total revenue growth year 2008 (bar chart)

 

 

 

 

 

Download XLS

 

 

 

 

 

 

In % versus 2007 pro forma

Volume

Prices

Acquisitions/ Divestments

Exchange rates

Total

 

 

 

 

 

 

Decorative Paints

(3)

4

1

(5)

(3)

Performance Coatings

(1)

4

1

(5)

(1)

Specialty Chemicals

(1)

10

1

(5)

5

 

 

 

 

 

 

AkzoNobel

(1)

6

1

(5)

1

Acquisitions and divestments

Revenue increased 1 percent due to acquisitions. In Performance Coatings we acquired Enviroline, a specialist supplier of corrosion-resistant linings, predominantly for the oil and gas industries. We expanded our floor coatings portfolio through an acquisition from Lord Corporation. In Specialty Chemicals we acquired Levasil, a silica sol business. Some acquisitions were completed at the end of 2007, which positively affected 2008 revenue (such as an acquisition in South Africa in Decorative Paints). Furthermore, in early 2009, we acquired LII Europe, which we will consolidate as from January 2009 in Specialty Chemicals. In 2008, LII’s revenue amounted to €150 million. LII Europe is located near Frankfurt and is active in the chlorine and caustic market.

EBITDA

Including National Starch, EBITDA before incidentals totaled €1,878 million representing a decline of 7 percent. The EBITDA margin was also 1 percent lower at 12.2 percent compared with 2007.

EBITDA before incidentals in Decorative Paints was 6 percent lower than last year at €593 million and the EBITDA margin decreased by 0.3 percent to 11.6 percent. Pressure on margins, due to lower volumes and increased raw material costs, was mitigated by margin management across all regions. Higher than expected synergy benefits offset cost inflation, while respectable growth was booked in Asia.

EBITDA before incidentals in Performance Coatings was €546 milliion, 4 percent lower than the previous year. The EBITDA margin decreased to 12.2 percent (2007: 12.6 percent), a stable performance given the economic circumstances with volatile raw material prices and currencies.

In Specialty Chemicals, EBITDA before incidentals amounted to €891 million, 4 percent lower than in 2007, with EBITDA margin at 15.7 percent (2007: 17.2 percent), despite weakening demand, volatile feedstock costs and an increasingly nervous economic climate.

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