AkzoNobel N.V. published results for Q1 2023 today and here are the highlights of the same.

 

Highlights Q1 2023 (compared with Q1 2022)

• Revenue up 5% and up 8% in constant currencies1

• Pricing up 7%, more than offsetting increase of raw material and freight costs

• Volumes 3% lower; Europe showing resilience, China rebounding

• Operating income at €182 million (2022: €232 million); adjusted operating income2 at €218 million (2022: €230 million); ROS3 at 8.2% (2022: 9.1%)

• Net cash from operating activities negative €50 million (2022: negative €102 million)

• Intended acquisition of Chinese Decorative Paints business from Sherwin-Williams announced in April 2023; completion expected in the second half of 2023

 

AkzoNobel CEO, Greg Poux-Guillaume, commented, "In the first quarter of 2023, our key markets proved to be resilient despite unfavorable macroeconomic conditions. We delivered higher volumes than expected with healthy pricing dynamics, leading to further margin expansion.

 

“We were able to achieve a strong sequential improvement in profitability based on solid margin management, better than anticipated volumes in Europe and rebound in China, benefiting both Paints and Coatings. We also announced our intention to acquire a small but complementary decorative paints business in China, which will further strengthen our number two retail position in this important and profitable market.”

 

AkzoNobel expects the ongoing macro-economic uncertainties to continue and weigh on organic volume growth. The company will focus on margin management, cost reduction, working capital normalization and de-leveraging.

 

Cost reduction programs are expected to mitigate the ongoing pressure from inflation in operating expenses for 2023. AkzoNobel expects declining raw material costs to have a favorable impact on profitability.

 

Based on current market conditions, AkzoNobel targets to deliver €1.2 to €1.5 billion adjusted EBITDA.

 

The company aims to lower its leverage ratio to less than 3.4 times net debt/EBITDA, including the impact of the Kansai Paint Africa acquisition, by the end of 2023 and return to around 2 times post-2023.