Dutch specialty chemicals firm Akzo Nobel NV (AKZOY, AKZOY.PK) Thursday said third-quarter profit declined from the prior-year period, amid tough market conditions, higher input costs and soft volume development. Further, the company announced the launch of a major performance improvement program to deliver 500 million euros in EBITDA in 2014.
Profit attributable to shareholders of the company declined to 149 million euros ($204.17 million) from last year's 238 million euros. Net income from continuing operations decreased to 148 million euros from 217 million euros. Adjusted earnings per share dropped to 0.91 euros from 1.19 euros in the prior year.
Pre-tax profit for the quarter fell to 240 million euros from 320 million euros in the previous year, while EBITDA decreased 12 percent to 507 million euros.
Revenue increased 5 pecrent to 4.05 billion euros from 3.87 billion euros in the prior year, driven by pricing actions to offset raw material cost inflation.
In Decorative Paints, revenue grew 5 percent to 1.435 billion euros, but EBITDA dropped 25 percent to 198 million euros. The company noted that market conditions became tougher since the second quarter, impacting results, particularly in Decorative Paints.
Performance Coatings generated 1.3 billion euros in revenue, up 5 percent from last year, but EBITDA slipped 5 percent to 166 million euros.
In Specialty Chemicals, revenues improved 6 percent to 1.35 billion euros, but EBITDA slid 6 percent.
Cost of sales increased to 2.51 billion euros from 2.28 billion euros in the prior year.
The company also announced interim dividend of 0.33 euros per share, up 3 percent from last year.
Commenting on the results, the company's CEO Hans Wijers said, "Although our top-line revenue growth throughout the quarter was relatively strong, we have seen the macroeconomic situation worsen which has impacted our third quarter results. We have also not yet fully offset the unprecedented raw material cost increases."
The paint maker does not expect the macroeconomic situation to improve quickly and has launched a performance improvement program to deliver 500 million euros EBITDA in 2014.
According to the company the program will strengthen its competiveness and reduce its cost base, among others. The program will also restructure underperforming parts of the portfolio. About 40 percent of the expected benefits will come from the Supply Chain and Sourcing programs, and another 50 percent from margin management, Research and Development initiatives, and business restructuring programs.
The benefits expected in 2012 total 200 million euros, with a similar level of incidental costs in the year. The total costs to deliver the program are estimated to be 425 million euros.
"This program will ensure that our growth ambitions are delivered at or above the mid-point of our 13-15 percent EBITDA margin guidance. Our strong fundamentals, commitment to deliver and this program give us confidence in the future," Hans Wijers added.
The stock closed in Amsterdam on Wednesday at 34.89 euros, down 1.10 percent, on 1.24 million shares.
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