Akzo Nobel Turns To Profit In Q3, Backs Outlook; Shares Up

(RTTNews) - Dutch paint maker Akzo Nobel NV (AKZOY, AKZOY.PK) reported Monday a profit in its third quarter, compared to last year's loss, in the absence of a year-ago hefty impairment charge. Revenues, meanwhile, declined mainly on negative currency effects and challenging market conditions. The company also announced a flat interim dividend, and said its performance improvement program is on track.

In Amsterdam, Akzo Nobel shares are currently trading at 50.97 euros, up 2.55 euros or 5.26 percent.

Looking ahead, Akzo Nobel said it continues to expect that the full-year operating income before incidental items is unlikely to exceed 908 million euros reported in 2012, citing expected higher restructuring charges and continued weak markets. The company expects to record restructuring charges of around 160 million euros in the fourth quarter.

Regarding its performance improvement program announced in October 2011, the company said the program is on track to deliver the full 500 million euros in EBITDA at the end of this year, a year early.

"The economic environment remains challenging and AkzoNobel does not expect an early improvement in the trends faced in its end-user market segments. The acceleration of the performance improvement program and the strategic priorities announced in February are the right focus to have in these markets," the company said in its statement.

For the third quarter, net income attributable to shareholders was 155 million euros, compared to last year's loss of 2.37 billion euros that included 2.1 billion euros of impairment charge. Excluding impairment, the prior year's profit was 110 million euros.

Adjusted earnings per share was 0.74 euros, flat with a year ago.

Revenues declined 5 percent to 3.78 billion euros from 3.97 billion euros last year, reflecting adverse currency effects and divestments.

Adjusted operating income grew 22 percent to 303 million euros with lower restructuring costs and higher volumes. Adjusted earnings before interest tax, depreciation and amortization or EBITDA increased 7 percent to 456 million euros.

Segment-wise, revenues from decorative paints were stable, with higher volumes offset by adverse currency effects. The company noted that conditions in Europe remained challenging in general.

Revenue at Performance Coatings declined 4 percent, attributable to adverse currency effects. Overall volumes grew 2 percent, while weak demand in Europe continued to impact all businesses.

In the Specialty Chemicals segment, revenues fell 10 percent, primarily as a result of the divestment of Chemicals Pakistan and negative currency effects. Overall volumes were flat in the quarter.

Chief Financial Officer Keith Nichols said, "The trading environment behind these results has not changed in that demand remains soft and on a comparative basis Q3 last year was particularly weak. Nevertheless, the actions we have taken to address the challenges our businesses are facing are starting to have a positive effect; the return on sales before restructuring charges has improved in all three Business Areas due largely to our performance improvement actions."

Further, the company said that it will pay out an interim dividend of 0.33 euros per share, same as last year, with the option to elect stock dividend.