Akzo Nobel NV (AKZOY,AKZOY.PK) on Thursday reported a decline in profit for the first quarter, hurt by higher raw material costs and weak end market demand. The paints giant also announced that its global performance improvement program is on track.
The company noted that raw material prices remain a challenge and it expects the higher oil and TiO2 (titanium oxide) prices on average to have an inflationary impact.
CEO Hans Wijers said, "Our global margin management efforts are also proving successful as we continue to mitigate the adverse effects of higher raw material costs. However, our volumes were down slightly, reflecting the volatile nature of the economic conditions."
Net income from continuing operations declined to 70 million euros from last year's 132 million euros. Earnings per share from continuing operations were 0.30 euros compared to 0.57 euros.
During the quarter, the company incurred a one-time pension charge and seasonal build-up of operating working capital. Adjusted for these items, earnings per share declined to 0.63 euros from last year's 0.72 euros.
EBITDA slipped 3 percent owing to weaker end markets and cost inflation.
The owner of Dulux brand said revenue grew 6 percent to 3.972 billion euros in the quarter, mainly driven by pricing actions to offset higher raw material costs.
In Decorative Paints segment, revenues rose 4 percent to 1.24 billion euros, primarily due to margin management in weak markets. Lower volumes impacted EBITDA, particularly in North America which benefited last year from a one-time positive customer load-in.
In Performance Coatings unit, revenues increased 11 percent to 1.37 billion euros. Within the segment, Industrial Coatings achieved the strongest growth boosted by acquisition activity.
Specialty Chemicals segment revenue grew 4 percent to 1.4 billion euros, mainly due to the Boxing Oleochemicals acquisition and a positive price/mix effect. EBITDA slipped, reflecting different trading conditions in certain businesses.
The stock closed in Amsterdam on Wednesday lower by 2.40 percent at 43.14 euros on a volume of 985981 shares.
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