AkzoNobel Full-Year 2015 and Q4 results

10 February 2016
Full-year:

• We delivered our 2015 targets: ROS 10.6 percent (2014: 6.9 percent); ROI 15.0 percent (2014: 10.0 percent); Net debt/EBITDA 0.6 (2014: 1.0)
• Revenue up 4 percent, due to 6 percent favorable currency effects, partly offset by divestments and lower volumes
• Operating income up 59 percent at €1,573 million, as a result of process optimization, lower costs, reduced restructuring expenses, favorable currency development and incidental items
• Operating income excluding incidental items up 36 percent at €1,462 million (2014: €1,072 million)
• Adjusted EPS up 43 percent at €4.02 (2014: €2.81)
• Net income attributable to shareholders €979 million (2014: €546 million)
• Total dividend proposed for 2015 up 7 percent to €1.55 (2014: €1.45)
• Net cash inflow from operating activities up 40 percent at €1,136 million (2014: €811 million)
• Ranked top of our sector in the Dow Jones Sustainability Index for the fourth year running

       
For Q4:

• Revenue up 1 percent, with 3 percent favorable currency effects offset by the impact of divestments and adverse price/mix. Volumes were flat
• Operating income at €345 million (2014: €83 million) reflecting the impact of incidental items, process optimization, lower costs and reduced restructuring expenses
• Adjusted EPS €0.72 (2014: €0.33)

Outlook:

• We expect 2016 to be a challenging year. Difficult market conditions continue in Brazil, China and Russia. No significant improvement is anticipated in Europe, particularly in the Buildings and Infrastructure segment. Deflationary pressures continue and currency tailwinds are moderating.

Full-Year and Q4 2015 highlights

• Record ROS and ROI for AkzoNobel and free cash flow positive after dividend.
• Decorative Paints revenue was up 1 percent in Q4, due to positive volume developments in Europe and Asia. Full-year revenue was up 3 percent, with  volumes down 1 percent overall, however showing positive developments in Asia. Operating income increased by 39 percent as a result of the new operating model and lower costs.
• Performance Coatings revenue was up 5 percent in Q4, benefitting from favorable price/mix and positive currencies. Volumes were flat, with project strength in Marine and Protective Coatings businesses offset by lower demand in other segments. Full-year revenue was up 7 percent, driven by favorable price/mix and currencies. Volumes were down 2 percent, impacted by market developments in Brazil and ongoing spending declines in the global oil and gas industry. Operating income up 45 percent due to performance improvement initiatives.
• Specialty Chemicals revenue was down 2 percent in Q4. Volumes were affected by interruptions in the manufacturing and supply chain. Favorable currency effects were offset by divestments and increased price pressure. Full-year revenue was up 2 percent due to favorable currency effects, partly offset by divestments and adverse price effects. Overall volumes were flat. Operating income increased by 20 percent, due to savings from continuous improvement programs and incidental items.  
• Operating income in other activities in Q4 was impacted by incidental items, including a recovery related to the 2014 fraud case and several adjustments to provisions. Full-year operating income was impacted by insurance costs and higher pension costs as well as a book profit from the sale of the Paper Chemicals business in Q2 of €31 million, reported in Specialty Chemicals.
• Restructuring charges were €24 million in Q4 2015, compared to €109 million in Q4 2014. Full year restructuring charges were €74 million, (2014: €253 million), excluding restructuring charges of €24 million linked to the divestment of the Paper Chemicals business included in incidental items.
• Raw material prices were lower, although in certain regions foreign currency effects adversely impacted raw material costs in local currencies.
• Operating activities in 2015 resulted in higher cash inflows of €1,136 million (2014: €811 million), mainly due to higher profit for the period and improved working capital, partly offset by higher cash outflow from restructuring programs.
• Net debt at €1,226 million improved from €1,606 million at year-end 2014, mainly due to higher profit for the period.
• We will propose a 2015 final dividend of €1.20 per share which will make a total 2015 dividend of €1.55 (2014: €1.45) per share.

Restructuring charges by quarter

Revenue development Q4 2015

Revenue development full-year 2015