Tuesday, Dutch paints, coatings, and specialty chemicals group AkzoNobel N.V. (AKZOY.PK, AKZOF.PK) reported that it slipped to a loss in the fourth quarter, hurt mainly by impairment charges and the absence of prior year's huge divestment gains. On an adjusted basis, income from continuing operations grew from last year, but pro forma adjusted income from continuing operations fell 38%. The Amsterdam, Netherlands-based company also maintained its full-year dividend, and said it sees a very challenging fiscal 2009.
Fourth-quarter net loss was 1.51 billion euros, compared to profit of 8.54 billion euros last year. Net loss attributable to shareholders of the company was 1.52 billion euros or 6.54 euros per share, compared to a profit of 8.53 billion euros or 32.30 euros per share in the year-ago quarter.
On a pro forma basis, i.e., allowing the hypothetical situation that the company acquired ICI on January 1, 2007, prior year's net income was 74 million euros, and net income attributable to shareholders of the company was 56 million euros or 0.21 euros per share.
The latest quarter results included loss from discontinued operations of 36 million euros or 0.16 euros per share, compared to prior year's income from discontinued operations of 8.52 billion euros or 32.24 euros per share, reflecting the results related to the on-sale to Henkel of the former ICI's Adhesives and Electronic Material businesses.
On a continuing operations basis, loss was 1.47 billion euros or 6.38 euros per share, in comparison with a profit of 21 million euros or 0.06 euros per share in the prior year quarter.
The 2008-fourth quarter loss reflected non-cash impairment charges of 1.2 billion euros on ICI intangibles related to the Decorative Paints businesses and the re-classification of National Starch, and incidental charges of 600 million euros.
Excluding charges, net income from continuing operations was 121 million euros or 0.52 euros per share, up from 0.47 euros per share in the previous year. On a pro forma adjusted basis, net income from continuing operations fell 38% from 196 million euros or 0.74 euros per share a year ago.
Revenue climbed to 3.56 billion euros from 2.43 billion euros last year. On a pro forma basis, quarterly revenues dropped 3% from last year's 3.66 billion euros. Volume in the quarter dropped 10%, while prices grew 9% from last year.
Commenting on the results, Chief Executive Officer Hans Wijers said, "Our fourth quarter results reflect the impact of the economic climate in many of our businesses. The fact that we have implemented a significant level of restructuring is a clear indicator that action is being taken across the company to mitigate the effects of the current global crisis."
For the fiscal year 2008, AkzoNobel's net loss was 1.02 billion euros, compared to profit of 9.36 billion euros last year. Net loss attributable to shareholders of the company was 1.09 billion euros or 4.36 euros per share, compared to a profit of 9.33 billion euros or 33.55 euros per share in the year-ago quarter. On a pro forma basis, prior year's net income was 664 million euros, and net income attributable to shareholders of the company was 595 million euros or 2.14 euros per share.
Full-year loss from continuing operations was 1.04 billion euros or 4.45 euros per share, in comparison with a profit of 441 million euros or 1.47 euros per share in the prior year quarter.
Excluding charges, net income from continuing operations was 742 million euros or 2.98 euros per share, up from 2.09 euros per share in the previous year. On a pro forma adjusted basis, net income from continuing operations fell 14% from 859 million euros or 3.09 euros per share a year ago.
Annual revenue grew to 15.42 billion euros from 10.22 billion euros last year. On a pro forma basis, revenues edged up 1% from 15.26 billion euros.
Further, AkzoNobel proposed to pay a final dividend of 1.40 euros per share, resulting in a total dividend for 2008 of 1.80 euros per share, the same as last year.
Looking ahead, Wijers stated, "We are acutely aware that global market conditions and lack of visibility do not allow for any certainty. The harsh trading conditions experienced towards the end of the fourth quarter have continued into 2009 and, as a result, we expect this year to be very challenging. Nevertheless, we remain focused on achieving our medium-term target of an EBITDA margin of 14% by the end of 2011; on continuing to deliver the €340 million ICI synergies; on driving margin management programs across the company; and on rigorous cost management."
AkzoNobel said it is confident that it will complete its 2009 refinancing needs. The company also said it will not complete its share buyback program in view of the unprecedented uncertainties across the world.
AKZOY.PK closed Monday's regular trading at $33.35, down $1.90, or 5.39%, on a volume of 54 thousand shares.
AKZOF.PK settled at $35.15 on Monday, down $1.80 or 4.87% from previous close.
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