AkzoNobel publishes Q2 2015 results

July 21, 2015

AkzoNobel continues to improve performance

• Operating income up 38 percent at €486 million (2014: €353 million)

• Revenue up 6 percent to €3.9 billion, mainly driven by favorable currency effects

• Improved performance with return on sales at 12.3 percent (2014:9.5 percent); and
  return on investments at 11.7 percent (2014:10.1 percent)

• Net income attributable to shareholders up 61 percent at €331 million (2014: €205 million)

• Adjusted earnings per share (EPS) up 37 percent at €1.30 (2014: €0.95)

• Net cash inflow from operating activities at €407 million (2014: €393 million)

• Divestment of Paper Chemical business completed

• Triennial review ICI Pension Fund (UK) completed in July, 2015

• On track to deliver 2015 targets

Akzo Nobel N.V. (AKZA.AS; AKZOY) today reported a second quarter with positive developments in profitability of all three Business Areas despite a challenging market environment.

Second quarter operating income increased 38 percent to €486 million, reflecting the positive effects of efficiency programs, lower costs, reduced restructuring expenses, divestment results and favorable currency rates. Revenue of €3,949 million was up 6 percent compared with the same period last year due to favorable currency rates, offset by divestments and lower volumes in some areas. The divestment of Paper Chemicals was completed in line with the strategy of pruning the portfolio. The triennial review with the trustees of the ICI Pension Fund (UK) was completed in July, 2015. Market trends in North America continued to be positive with Europe not improving. Conditions remained challenging in many countries, including in Russia, Brazil and China. Return on sales improved to 12.3 percent and return on investments was up at 11.7 percent. AkzoNobel remains on track to deliver its 2015 targets.

CEO Ton Büchner:
"We continue to deliver on our aim to improve the performance of our company. This will position us well to make the most of future opportunities and growth. The second quarter continued to show the positive impact of our focus on profitability and leadership in sustainability. The global economy remains challenging and shows a very mixed picture with different dynamics per region and customer segments. We remain on track to deliver our 2015 targets."

Q2 2015 in € million

	Q2 2014	Q2 2015	delta %
Revenue	3,710	3,949	6
Operating income	353	486	38
Return on sales (ROS) %	9.5	12.3
EBITDA	509	610	20
Net income attributable to shareholders	205	331	61

H1 2015 in € million

	H1 2014	H1 2015	delta %
Revenue	7,093	7,540	6
Operating income	569	792	39
Return on sales (ROS) %	8.0	10.5
EBITDA	873	1,072	23
Net income attributable to shareholders	334	491	47

Decorative Paints achieved a solid growth in profitability, with operating income increased by 25 percent and revenue up 6 percent. Operating income showed improvement with an increase of 25 percent, due to the new operating model, lower costs, reduced restructuring expenses, strict cost containment and favorable currency developments. Revenue was up 6 percent, mainly driven by favorable currency effects. Volumes for the second quarter were up in Asia, while volumes were down for Europe and Latin America.

Performance Coatings benefited from cost reductions created through performance improvement initiatives, margin management activities, manufacturing productivity and favorable currencies which resulted in an increase of operating income of 24 percent. Revenue was up 8 percent across all reporting units, benefiting from favorable currencies and a higher demand for premium products. Volumes declined mainly due to lower capital and maintenance spending in the global oil and gas industry. Russia, Brazil and China remain challenging.

Specialty Chemicals operating income increased by 55 percent (31 percent excluding incidental items related to the divestment of Paper Chemicals business). The results were supported by the increase of production at the new Frankfurt plant, operational efficiencies throughout the business and favorable currency developments. Revenue was up 5 percent due to continued favorable currency effects, partly offset by the impact of the divested Paper Chemicals business. Volumes overall were flat. Growth in some segments compensated for lower demand in oil drilling segments. North America continued to show a positive trend while growth in Asia was subdued and demand remained weak in Europe and South America.

Outlook
Exchange rate movements, positive market trends in North America and no improvement for Europe overall, as well as lower growth rates in many countries, including Russia, Brazil and China, are determining the dynamics of 2015. Our significant actions taken in recent years form a sound basis for further improved performance. We are on track to deliver our targets for 2015*.

Business Area highlights in € million

Decorative Paints
Q2 2014	Q2 2015	delta %		H1 2014	H1 2015	delta %
1,074	1,134	6	Revenue	1,939	2,024	4
102	128	25	Operating income	119	178	50
9.5	11.3		ROS %	6.1	8.8
141	165	17	EBITDA	197	253	28
Performance Coatings
Q2 2014	Q2 2015	delta %		H1 2014	H1 2015	delta %
1,434	1,550	8	Revenue	2,753	2,980	8
178	220	24	Operating income	304	390	28
12.4	14.2		ROS %	11.0	13.1
212	257	21	EBITDA	375	463	23
Specialty Chemicals
Q2 2014	Q2 2015	delta %		H1 2014	H1 2015	delta %
1,228	1,290	5	Revenue	2,450	2,586	6
124	192	55	Operating income	259	355	37
10.1	14.9		ROS %	10.6	13.7
204	243	19	EBITDA	408	485	19

* Overall targets for the full year 2015 are 9.0 percent return on sales and 14.0 percent return on investment

The Q2 2015 report can be downloaded via the AkzoNobel Report iPad app http://bit.ly/obljrf or read online at www.akzonobel.com/quarterlyresults.
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AkzoNobel is a leading global paints and coatings company and a major producer of specialty chemicals. Calling on centuries of expertise, we supply industries and consumers worldwide with innovative products and sustainable technologies designed to meet the growing demands of our fast-changing planet. Headquartered in Amsterdam, the Netherlands, we have approximately 46,000 people in around 80 countries, while our portfolio includes well-known brands such as Dulux, Sikkens, International, Interpon and Eka. Consistently ranked as one of the leaders in the area of sustainability, we are committed to making life more liveable and our cities more human.

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Safe Harbor Statement
This press release contains statements which address key issues such as AkzoNobel`s growth strategy, future financial results, market positions, product development, products in the pipeline and product approvals. Such statements should be carefully considered, and it should be understood that many factors could cause forecasted and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information provided by specialized external agencies. For a more comprehensive discussion of the risk factors affecting our business please see our latest annual report, a copy of which can be found on our website www.akzonobel.com

Picture Ton Büchner, CEO AkzoNobel
Q2 2015 Report
Infographic (Q2 2015)
AkzoNobel Press Release Q2 2015 results

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Source: Akzo Nobel NV via GlobeNewswire
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