Akzo Nobel N.V.Akzo Nobel N.V. - Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Publication Date: 22-Jan-2015 Company Snapshot Company Overview Key Information Akzo Nobel N.V. (Akzo Nobel) manufactures and supplies specialty chemicals, paints, and performance coatings. The company's products portfolio comprises functional chemicals, industrial chemicals, pulp and paper chemicals, surface chemicals, vehicle refinishes, powder coatings, industrial coatings, wood finishes and adhesives, and marine and protective coatings. Akzo Nobel caters its products to markets such as buildings and infrastructure, industrial, consumer goods and transportation. Geographically, the company has presence in various countries across North America, Latin America, Europe and Asia-Pacific. Akzo Nobel is headquartered in Amsterdam, the Netherlands. Akzo Nobel N.V., Key Information Web Address www.akzonobel.com Financial year-end December Number of Employees 48,010 AMS AKZA Source : GlobalData Key Ratios Akzo Nobel N.V., Key Ratios P/E 25.23 Return on Equity (%) 12.94 Debt/Equity (%) 0.65 Operating profit margin (%) 6.57 Dividend Yield 0.02 Note: Above ratios are based on share price as of 20-Jan-2015 SWOT Analysis Akzo Nobel N.V., SWOT Analysis Strengths Diversified Business Operations Weaknesses Legal Proceedings Improved Operating Performance Source : GlobalData Share Data Global Presence Akzo Nobel N.V., Share Data Share Price (EUR) as on 20-Jan-2015 EPS (EUR) 61.50 2.44 Market Cap (million EUR) 15,093 Enterprise Value (million EUR) 17,377 Shares Outstanding (million) 245 Opportunities Threats Growing Paint and Coatings Industry Growing Competition Raw Material Price Risks Strategic Agreements Stringent Regulations Source : GlobalData Source : GlobalData Financial Performance Performance Chart Akzo Nobel N.V., Performance Chart (2009 - 2013) The company reported revenues of (Euro) EUR14,590 million for the fiscal year ended December 2013 (FY2013), a decrease of 5.2% over FY2012. The operating profit of the company was EUR958 million in FY2013, compared to an operating loss of EUR1,198 million in FY2012. The net profit of the company was EUR724 million in FY2013, compared to a net loss of EUR2,092 million in FY2012. The company reported revenues of EUR3,686.0 million for the third quarter ended September 2014, a decrease of 0.6% over the previous quarter. Source : GlobalData Akzo Nobel N.V.- Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 1 Akzo Nobel N.V. Akzo Nobel N.V. - Key Facts Akzo Nobel N.V., Key Facts Corporate Address Telephone Fax URL Industry Locations Strawinskylaan 2555, Amsterdam, Noord-Holland, 1077, Netherlands +31 20 5027555 +31 20 5027605 www.akzonobel.com Ticker Symbol, Stock Exchange AKZA [Euronext Amsterdam Stock Exchange] No. of Employees Fiscal Year End Revenue (in USD Million) Revenue (in EUR Million) 48,010 December 19368.11 Chemicals, Construction & Real 14590.00 Estate, Energy and Utilities Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, China, Croatia, Czech Republic, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, India, Indonesia, Ireland, Italy, Japan, Latvia, Lithuania, Malaysia, Mexico, Morocco, Netherlands, Norway, Panama, Philippines, Poland, Romania, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, Ukraine, United Kingdom, United States, Venezuela, Vietnam Source : GlobalData Akzo Nobel N.V.- Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 2 Akzo Nobel N.V. Akzo Nobel N.V. - Business Description Akzo Nobel N.V. (Akzo Nobel) manufactures and supplies specialty chemicals, paints, and performance coatings worldwide. Its product portfolio includes functional chemicals, industrial chemicals, pulp and paper chemicals, surface chemicals, powder coatings, vehicle refinishes, industrial coatings, wood finishes and adhesives, and marine and protective coatings. Akzo Nobel classified its operations into three segments, namely, Specialty Chemicals, Performance Coatings, and Decorative Paints. The company's Specialty Chemicals segment provides products that are used in paper, ice cream, cosmetics, plastics and glass. It is further sub-divided into five business units, namely, functional chemicals, industrial chemicals, pulp and paper chemicals and surface chemistry. It produces industrial chemicals such as, chlor-alkali products, salt, monochromatic acid, ethylene amines, cellulose specialties, salt specialties, ch-elates, sulfur products, and redispersible powder polymers. Its surfactant products include, cationic, anionic, and non-ionic. AkzoNobel provides personal care solutions, and aqueous solution polymers. It offers specialty chemicals such as polymer chemicals, polyester fibers, soda ash, emulsion polymers, carbon di-sulfides, pulp and paper chemicals such as sodium chlorate and hydrogen peroxide, wet and dry strength agents, and coating additives, and chemicals for use in the water treatment, pharmaceutical industries, and explosives. For the fiscal year ended December 2013, the Specialty Chemicals segment reported revenue of €4,949m, representing a decrease of 2.86% over that in 2012. This segment accounted for 33.68% of the company’s total revenue in 2013. AkzoNobel's Performance Coating segment offers industrial finishes, vehicle refinishes, marine and protective coatings, wood finishes and adhesives, coil and extrusion coatings, packaging coatings, and powder coatings. It provides technology and engineering services to its customers, and manages chlorine dioxide plants. For the fiscal year ended December 2013, the Performance Coating segment reported revenue of €5,571m, representing a decrease of 2.30% over that in 2012. The segment accounted for 37.91% of the company’s total revenue in 2013. The company's Decorative Paints segment offers a full range of interior and exterior decoration and protection products. Its key products include adhesives, lacquers and varnishes, decorative paints, and floor leveling compounds, specialty coating, concrete, and other building materials. It provides color concepts, mixing machines, and training courses for the building and renovation industry. The company markets its products under various brand names such as Dulux, Hammerite, Pinotech, Sico, Interpon, Cuprinol, Tintas Coral, Herbol, Sikkens, Casco, Sadolin, Taubmans, Levis, Glidden, Flood, Flora, Vivexrom, and Marshall. For the fiscal year ended December 2013, the Performance Coating segment reported revenue of €5,571m, representing a decrease of 2.30% over that in 2012. The segment accounted for 37.91% of the company’s total revenue in 2013. The company caters its products to markets such as Buildings and Infrastructure, Industrial, Consumer Goods and Transportation. For the fiscal year ended December 2013, Buildings and Infrastructure accounted for 44% of the company's total revenue, followed by Industrial with 24%, Transportation with 16% and Consumer Goods with 16% revenue. The company has 4,000 active scientists and technologists who conduct research, product and process development and provide technical support for customers and manufacturing operations. It operates 130 laboratories world-wide. For the fiscal year ended 2013, the company invested €384m on its R&D activities. Geographically, the company classified its operations into six regions, namely, Asia-Pacific, Emerging Europe, Mature Europe, North America, Latin America and Other Regions. For the fiscal year ended December 2013, Mature Europe accounted for 38% of the company's total revenue, followed by Asia-Pacific with 25%, North America with 15%, Latin America with 11%, Emerging Europe with 8% and Other Regions with 3%. Akzo Nobel N.V.- Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 3 V. . Akzo Nobel N.V. The company’s key products include the following: Akzo Nobel N.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 4 . Major Products and Services Products: Car Refinishes Chemicals manufactured in Pakistan Decorative Paints Functional Chemicals Industrial Chemicals Industrial Coatings Marine and Protective Coatings Powder Coatings Surface Chemistry Wood Finishes and Adhesives Brands: Akucell AkzoNobel Aerospace Coatings Alco Chemical Awlgrip Bermocoll Butanox Casco Adhesives Chartek Chemcraft Coral Corrostop Metalmaster Corrostop Ultra Crystalex & Maxithane Devoe Coatings Devoe Paint Dissolvine Dulux Eka Elotex Expancel Ferrazone Flexa Flood Glidden Akzo Nobel N.. and performance coatings worldwide..V.V.Akzo Nobel N. paints.Major Products and Services AkzoNobel manufactures and supplies specialty chemicals. Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 5 .V.. Glidden Professional Hammerite ICLA Interlux International Interpon Jozo Salt Kromasil Lesonal Levis Liquid Nails Marshall Mulco Ralph Lauren Paint Resicoat Sadolin Schönox Sico Sikkens Sikkens Car Refinishes Stickerfix The Freshaire Choice Tintas Coral Trimetal Wanda Zweihorn Source : GlobalData Akzo Nobel N.Akzo Nobel N.V. V. AkzoNobel will increase the use of Solvay’s bio-based epichlorohydrin. Akzo Nobel N. 2014 Corporate Changes/Expansions In March. 2013 Divestiture In April. the company sold its North American decorative paints business to US-based PPG Industries. Akzo Nobel N. 2013 Contracts/Agreements In October. Inc.Akzo Nobel N. the company signed a joint venture agreement with Omar Zawawi Establishment LLC for the manufacture and sale of decorative paints and performance coatings in Oman. 2014 Plans/Strategy The company will be adding a dedicated facility for the Performance Coatings businesses by June 2015. 2013 Corporate Changes/Expansions In September. 2014 Corporate Changes/Expansions The company opened new highly energy efficient membrane electrolysis plant in the Rhein-Main area. 2014 Plans/Strategy In July. According to the agreement. to develop a process for harnessing the power of the sun to make chemicals. Akzo Nobel has entered into an agreement eith Enerkem Inc... as well as a lower overall cost to AkzoNobel. 2013 Contracts/Agreements In June. has collaborated with Ernst & Young. Akzo Nobel N. Germany. the company extended its partnership with Solazyme to improve functional and environmental performance.V. 2014 Contracts/Agreements In July. AkzoNobel and Photanol partnered.V. the company announced its plan to invest €50m in China to build new manufacturing facilities for its Powder Coatings and Decorative Paints businesses. 2013 Corporate Changes/Expansions In October. the company announced its plan to divest Building Adhesives business including its manufacturing facilities in Rosendahl (Germany) and Damville (France) to Sika AG for €260m. 2014 Contracts/Agreements In May. to develop a project partnership to explore the development of waste-to-chemicals facilities in Europe.V. China. the company entered into three year agreement with Solvay. the company completed the expansion of its industrial coatings site in Songjiang. 2013 Divestiture In August. 2014 Contracts/Agreements In November.'s powder coatings plant at new Dubai commenced its operations. History 2014 Acquisitions/Mergers/Takeovers In July. Epicerol.History Akzo Nobel N. the company signed a definitive agreement with Kemira to acquire Akzo Nobel's global chemical division for EUR153 million.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 6 . .V.. the company strengthened its manufacturing footprint in India by opening a newdecorative paints plant in Gwalior with an annual capacity of 55 million liters. the company and Solvay SA. to produce potassium hydroxide solution and chlorine. 2014 Contracts/Agreements In September. 2014 Commercial Operation In November. the company and Evonik Industries plan to negotiate to a joint-venture for building a membrane electrolysis facility in Germany. to develop a tool to track the use of renewable raw materials in paints and coatings. the Netherlands.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 7 . Ltd. AkzoNobel Pakistan Limited. 2011 Plans/Strategy In April. AkzoNobel announced its plans to split ICI Pakistan into two listed entities. AkzoNobel opened new coatings plant in India.V. 2010 Acquisitions/Mergers/Takeovers Akzo Nobel acquired Changzhou Prime Automotive Paint Co. 2010 Contracts/Agreements The company entered into an agreement with Walmart for supplying paint in the US. 2009 Acquisitions/Mergers/Takeovers The company acquired the business and assets of the German-based Akzo Nobel N. the company plans to invest €80m in the construction of a new pulp Chemical Island facility in Brazil. 2012 Asset Disposal In July. comprising its paints business. AkzoNobel Pakistan Limited. 2010 Corporate Changes/Expansions Akzo Nobel rebranded its Imperial Chemical Industries Limited in India to Akzo Nobel India Limited. 2011 Management Changes In August. 2010 Other The company opened a new powder coatings manufacturing unit in China. 2011 Corporate Changes/Expansions In February. 2010 Corporate Changes/Expansions The company expanded its monochloroacetic acid (MCA) manufacturing plant in China.V. 2010 Acquisitions/Mergers/Takeovers Akzo Nobel acquired Dow Chemical company's powder coatings division. the company acquired Zeta Fraction technology from Integrated Botanical Technologies. the company announced its plans to invest in €65 million in China.V. 2012 Acquisitions/Mergers/Takeovers In February. the company undertook demerger of ICI Pakistan's paints and coatings businesses into the new listed company. 2010 Stake Sale A/S Det Ostasiatiske Kompagni completed the sale of its minority stake in Akzo Nobel Paints (Thailand) Ltd. the company appointed Mr.. namely. to a subsidiary of Akzo Nobel N. 2010 Corporate Changes/Expansions AkzoNobel completed the sale of its National Starch business to Corn Products International. and ICI Pakistan Limited comprising all other businesses of ICI Pakistan. 2012 Contracts/Agreements In September. Inc. Jonathan Atack as the corporate director investor relations. 2011 Research and Development In July. AkzoNobel opened a new research laboratory in Deventer. 2013 Plans/Strategy In March.3 billion. China’s leading specialty surfactant producer. 2010 Acquisitions/Mergers/Takeovers Akzo Nobel acquired Powder Coating division of The Dow company. the company signed expanded joint venture agreement with Yusuf Bin Ahmed Kanoo group of companies. for a consideration of €1.. 2012 Commercial Operation In February. 2012 Contracts/Agreements In November. The investment will boost the operational excellence of AkzoNobel’s Surface Chemistry manufacturing sites in Boxing and Ningbo.Akzo Nobel N. the company entered into an agreement to supply advanced paint technology to McLaren Automotive. the company completed acquisition of Boxing Oleochemicals. 2010 Stake Sale Akzo Nobel sold its National Starch business to Corn Products International. 2011 Corporate Changes/Expansions In May. 1968 Acquisitions/Mergers/Takeovers The UK man-made fiber company Courtaulds acquired International Paints. The acquired activities will be integrated into AkzoNobel Industrial Chemical. in 1984. to Henkel KGaA.Akzo Nobel N. KemaNobel will merge with Bofors to form Nobel Industries. Sweden. a specialist supplier of corrosion-resistant linings for the oil and gas industries.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 8 . 1918 New Products/Services Koninklijke Nederlandse Zoutindustrie (KZO) kick started the Dutch salt industry in response to salt shortages during World War I. in partnership with The Home Depot in North America. 1998 New Products/Services The company acquired a UK based company. 1994 Acquisitions/Mergers/Takeovers Akzo and Nobel Industries merged to form AkzoNobel. Source : GlobalData Akzo Nobel N. US-based company Whitford Worldwide. company LII Europe. 2008 Acquisitions/Mergers/Takeovers Akzo Nobel acquired Enviroline. 2009 Divestiture AkzoNobel entered into an agreement to divest its non-stick coatings business to privately-owned. More than a hundred years later. Their products include high-tech industrial coatings and man-made fibers such as Courtelle and Tencel. 1969 Acquisitions/Mergers/Takeovers Algemeene Kunstzijde Unie NV (AKU) merged with Koninklijke Zwanenberg Organon (KZO) to form AKZO.V. 1923 Corporate Changes/Expansions Saal van Zwanenberg established Organon to produce insulin from the pancreases of animals. Courtaulds. 1871 Other KemaNobel was established in Sweden. 2008 Other Akzo Nobel sold the Adhesives and Electronic Materials businesses. 2008 New Product Approvals Akzo Nobel won approval for Global Iveco showroom redesign. 1895 Incorporation/Establishment Alfred Nobel (the man behind the Nobel Prize) founded Elektrokemiska Aktiebolaget–known as Eka–in Bengtsfors. 2008 Acquisitions/Mergers/Takeovers The company acquired Imperial Chemical Industries plc (ICI). Ltd. Its aim was to make chlorine and alkali. has developed a new range of high quality paints under Martha Stewart Living brand. part of the former ICI’s National Starch business. which will in turn be acquired by Akzo in 1994. 2008 Other The company acquired two organic peroxides product lines from China’s Jiangsu QiangSheng to strengthen the company’s specialty chemical product portfolio. 2008 Acquisitions/Mergers/Takeovers The company acquired a 75/25 majority interest in its Kayaku Akzo Co. 2009 New Products/Services AkzoNobel.V. Today Eka Chemicals is AkzoNobel's Pulp & Paper Chemicals business.. (KAC) joint venture with Nippon Kayaku. 2008 Corporate Changes/Expansions The company opened a new protective coatings site and a production facility for its Elotex building material additives business in China. Improved Operating Performance The company exhibited a strong growth in its operating performance for the fiscal year ended December 2013. the company's net income increased to €593m. attaining economies of scale and recognition on a worldwide basis. The company strategic expansion initiatives along with acquisitions could provide opportunities for growth. For the fiscal year ended December 2013. Strength . The company is involved in several legal proceedings related to its ordinary course of business.Opportunities Opportunity . the company's operating expenses as a percentage of sales were 93. concrete and other building materials. Akzo Nobel classified its operations into three segments.78% in 2012.198m in the fiscal 2012.V. The company's operating income increased to €958m in 2013.43%. The company caters its products to markets such as Buildings and Infrastructure. the company classified its operations into six regions. and adhesives. Latin America with 11%. which supports the company's plans to expand into growing markets in a customized way.V. wood coatings and adhesives. Pulp and Paper Chemicals. could drain its financial resources.5m by the EU’s antitrust regulator for fixing the price of acrylic glass. Akzo Nobel N. Such growth in operating income has resulted in improvement of the company's net income. Thus.SWOT Analysis SWOT Analysis . For the fiscal year ended December 2013. Latin America and Other Regions. For the fiscal year ended December 2013. pre-deco products. . Geographically. Consumer Goods and Transportation. Functional Chemicals.. Industrial.V. and performance coatings.Overview Akzo Nobel N. Strength .Strengths Strength . aerospace coatings. The Specialty Chemicals business portfolio consists of five business units. as compared to 107. According to Akzo Nobel N.Growing Paint and Coatings Industry Paints and coating industry is recording substantial growth as a result of the growing infrastructure industry. The company's Performance Coating segment provides a wide range of quality products such as metal and plastic coatings.Legal Proceedings The company's involvement in legal proceedings. namely. vehicle refinishes. Nevertheless.V.56%. among others.Weaknesses Weakness . followed by Industrial with 24%. followed by Asia-Pacific with 25%.V. rejecting its arguments that the European Commission set the fine too high and should have reduced it because the company voluntarily submitted evidence to investigators. ICI was one of four chemical makers fined with €344. and coatings for packaging. the increased competition along with strict regulations many remain a threat to its operations. Akzo Nobel N. paints. Akzo Nobel N. The increase in operating margin indicates that the company's revenue increased at a higher rate than that of its expenses. . The company also showed an improvement in its operating margin.092m in the previous fiscal. North America with 15%. the company reported operating margin of 6. Specialty Chemicals. Akzo Nobel N.V. namely.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 9 . Emerging Europe with 8% and Other Regions with 3%. marine coatings. Buildings and Infrastructure accounted for 44% of the company's total revenue.Akzo Nobel N.4m European Union cartel fine. It has presence in more than 80 countries. Surface Chemistry.Diversified Business Operations The diversified business operations minimize the market specific risks and facilitate stable and sustained revenue growth. For the fiscal 2013. regardless of the outcome.Global Presence Wide geographical presence mitigate various risks associated with over dependence on a particular market and would eventually improve the profit margins. (Akzo Nobel) manufactures and supplies specialty chemicals. . powder coatings. North America. Industrial Chemicals. the company’s strong operational performance increases the investor’s confidence and provides a positive outlook for the future.V. In recent past. Performance Coatings. coil and extrusion coatings. The segment's product portfolio includes lacquers and varnishes. Emerging Europe. For the fiscal year ended December 2013. specialty coatings for metal. Asia-Pacific. as compared to negative net income of €2. and Decorative Paints. The company has business operations across various geographies. . namely. protective coatings. The company's wide geographical presence and strong operating performance provide edge on its competitors. Mature Europe accounted for 38% of the company's total revenue. The EU’s General Court dismissed the Akzo Nobel's appeal in a ruling. The Decorative Paints segment provides an extensive range of interior and exterior protection and decoration products for both the professional and do-it-yourself (DIY) customers. Mature Europe. the company’s Imperial Chemical Industries (ICI) lost a court challenge seeking to overturn a €91. as compared to negative operating margin of 7. Transportation with 16% and Consumer Goods with 16% revenue.78% in the previous year. as compared to negative operating income of €1. REACH directly applies to over 30. The prices for some key raw materials can be volatile and are affected by economic conditions. Such stringent environmental regulations are set to tighten in the coming years. but this is.Akzo Nobel N. It may also result in phasing out many existing chemicals from the market. REACH regulates the products manufactured and marketed in Europe. the company signed a joint venture agreement with Omar Zawawi Establishment LLC for the manufacture and sale of decorative paints and performance coatings in Oman. Threat . distribution and promotion. Hence. business interruption or product discontinuation at some of key suppliers. the worldwide demand for paint and coatings is expected to increase 5. Opportunity . In March 2014. The industrial coatings market is projected to be valued around $55 billion by 2020. Akzo Nobel N. REACH (Registration. The investment will boost the operational excellence of AkzoNobel’s Surface Chemistry manufacturing sites in Boxing and Ningbo.4% annually through 2015 to 45. to a large extent. which restricts the use of certain chemicals in the market. Evaluation. In June. the company divested its North American Decorative Paints business by selling it to US-based PPG Industries. 2013.Threats Threat . increases in cost and expenses for raw materials and energy. According to the agreement. Some of the competitors of the company include Solvay SA and The Dow Chemical Company. is an example of the stringent environmental regulations that impact chemical producers. including price. Authorisation and Restriction of Chemicals). The initiative will double the company's annual production capacity and will help it to better serve customers in the country. with a total value of approximately $140 billion. dependent on market conditions. The company operates in a highly competitive chemical industry.Growing Competition Increased competition could lead the company to reduce its prices. reputation. the company announced its plans to invest in €65 million in China. in Europe.. AkzoNobel will increase the use of Solvay’s bio-based epichlorohydrin. The US has already begun implementing similar regulations with the reform of Toxic Substances Control Act. 2013. as it could pressurize its margins. In the same month. Within the industry. The business is divested from North America because the company intends to focus its Decorative Paints Business in key markets of Europe.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 10 . industrial paints are expected to be the major segment as a result of rising infrastructure and industrial construction spending across the world. Akzo Nobel N. able to pass on higher input prices to customers. . 2013. Phased over a period of 11 years. industry estimates. affecting both existing and new products for the company. In October 2013. Akzo Nobel may also be impacted by inability to access sufficient raw materials. China. In September 2013. The company uses significant amounts of various raw materials in manufacturing of products. It is on some extent. The company competes in this evolving marketplace on the basis of many factors. the company plans to invest a total of more than €50m in China to build new manufacturing facilities for its Powder Coatings and Decorative Paints businesses. which could negatively affect its margins. In April.000 different chemical substances that are produced or sold in Europe and its implementation is expected to cost European chemical industry about $3 billion. Asia-Pacific is estimated to be the major market for paints and coatings. In March. the company strengthened its manufacturing footprint in India by opening a new decorative paints plant in Gwalior with an annual capacity of 55 million liters. the company completed the expansion of its industrial coatings site in Songjiang.V. and some with greater financial resources than the company. Technological advances by any player in the market could render its present or future products obsolete or uneconomical.5 million metric tons. which are regarded as toxic and hazardous.V.Stringent Regulations Akzo Nobel could be affected by the environmental regulations governing the global chemical industry. Such initiatives help the company to further strengthen its business in specialty chemical market. Epicerol. innovation. The existing market includes companies of varying sizes. Inc.Strategic Agreements Akzo Nobel strengthens its existing businesses with strategic initiatives. Other countries too are expected to model their regulations on the principles of REACH. Threat . the company entered into three year agreement with Solvay. Inability to access sufficient raw materials. quality. Epicerol is already used in many of the company’s resins for its coatings products. some more specialized than the company with respect to particular commodities. The company could gain from its building blocks and specialty surfactants. China has its own version: RoHS (Restriction of Hazardous Substances). the company should focus on launching new and competitive products to attract and retain existing and new customers. service. and changes in product mix may adversely affect future results and growth. This could be a challenge while launching new products as the process is time-consuming and expensive.Raw Material Price Risks The company faces the threat of rising raw material costs. the regulation mandates all companies to develop and submit dossiers containing datasets about their chemical products and detail their potential impact and risk on environment. which are used in delivering sustainable products.V. The company operates in a progressively complex and challenging chemical marketplace whose dynamics is ever-changing. Akzo Nobel N.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 11 . NOTE: * Sector average represents top companies within the specified sector The above strategic analysis is based on in-house research and reflects the publishers opinion only Akzo Nobel N.V.V.. du Pont de Nemours and Company Genesis Energy.V.Akzo Nobel N. L.V. E.Key Competitors Akzo Nobel N.V.. .Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 12 .V.P. Key Competitors Name Axalta Coating Systems. LLC BASF SE Benjamin Moore & Co. Solvay SA The Dow Chemical Company Headquarters United States Germany United States United States United States Belgium United States GlobalData Akzo Nobel N. Akzo Nobel N.. I. .Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 13 .V.V. Director Member of the Executive Committee Member of the Executive Committee Member of the Executive Committee Chairman Board of Management and the Executive Committee . Member of the Senior Management Executive Committee Source : GlobalData Akzo Nobel N. Akzo Nobel N.V. Key Employees Name Maelys Castella Marten Booisma Werner Fuhrmann Ruud Joosten Ton Buchner David Allen Conrad Keijzer Sven Dumoulin Job Title Chief Financial Officer.Akzo Nobel N. Chief Executive Officer Member of the Executive Committee Member of the Executive Committee Board Level Executive Board Since Age Senior Management Senior Management Senior Management Senior Management 2012 47 2011 43 Senior Management Senior Management General Counsel.V..Key Employees Akzo Nobel N.. he served as the president and chief executive officer of Sulzer Corporation.Akzo Nobel N. Source : GlobalData Akzo Nobel N.Key Employee Biographies Akzo Nobel N..Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 14 .V. Akzo Nobel N. From 2007. He also served as the divisional president of Sulzer Corporation.V. Ton Buchner has been the chief executive officer and the chairman of board of management of the company since 2012. Key Employee Biographies Ton Buchner Job Title: Chairman Board of Management and the Executive Committee ..V. He also served with Allseas Engineering in Europe and AkerKvaerner in South East Asia. . Chief Executive Officer Board Level: Senior Management Since: 2012 Age: 47 Mr.V. pulp bleaching and the plastics industries. such as the Primary Amides and Purate businesses. 2013.298 million).Akzo Nobel N. mainly due to the net effect of: • lower return on investments held in an escrow account • lower discount rates for pensions • higher discount rates for other provisions • higher capitalized interest Tax The year-to-date tax rate is 14 percent (2012: 31 percent excluding the goodwill impairment charge of €2. against a low base in 2012. the tax rate is 30 percent.106 million) due to a non-cash gain as a result of the recognition of previously unrecognized deferred tax assets and several non-taxable items. due to adverse currencies and overall flat volumes. we concluded smaller divestments. In addition to the general slowdown in demand. having stabilized during the year. and agreed to sell the German stores in Decorative Paints in 2014.Company Statement The following statement has been taken from company’s 2013 report. Revenue in Performance Coatings declined 2 percent compared with the previous year. Akzo Nobel N. Operating income was €958 million and included €61 million incidental results.106 million.V.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 15 . Volumes were up 3 percent for the year with increases in all regions except Europe. resulting in a gain of €198 million and cash inflows of €247 million. Decorative Paints' results include the gain of €198 million on the divestment of Building Adhesives.V. Margins improved due to margin management and lower raw material prices. In 2012. there was an one-off gain and in 2013 additional costs were incurred due to the de-risking of the pension liabilities in the US. Volumes were down at the start of the year compared with 2012 – reflecting the difficult trading conditions – but gradually improved. which was flat overall. The performance improvement program exceeded targets and has now successfully been completed. new plant start-ups and extended maintenance stops earlier in the year impacted production temporarily Divestments During 2013. This transaction accounts for the divestment impact in Q4 revenue in Decorative Paints In addition. Operating income in other activities Operating income in other activities was lower than the previous year due to pensions. Chemicals Pakistan was divested. The divestment resulted in a gain of €141 million and cash inflows of €779 million • The divestment of Building Adhesives was completed on October 1. impairments from the 2012 numbers are excluded from operating income to present comparable financial outcomes. but with continued variability between individual segments.V. operating income was €897 million (2012: €908 million). In 2012. This successfully completes the performance improvement program a year ahead of schedule. Net debt was €769 million lower at €1. Performance improvement program The performance improvement program announced in October 2011 has exceeded targets and achieved €545 million in EBITDA for the period 2011 through 2013. with Q4 volumes being up 2 percent • It was a year of continued soft demand for Specialty Chemicals. • Revenue in Decorative Paints declined 3 percent compared with 2012 due to adverse currency effects and divestments. with a comprehensive performance improvement program being implemented at Functional Chemicals Full-year average raw material costs were down. Operating income In 2012. An amount of €372 million was recorded for the Decorative Paints business in North America in results from discontinued operations. Restructuring charges were below the previous year • In Performance Coatings. reflecting the difficult trading conditions. margins were stable despite higher restructuring costs • Specialty Chemicals' results include a non-cash impairment charge of €139 million on a business held for sale. Excluding these effects. This business was reported as a discontinued operation. Volumes in Q4 were up in all regions. Akzo Nobel N. Q4 revenue was down 6 percent due to the divestment of Building Adhesives and adverse currency effects. In this report. Net financing expenses Net financing expenses for the year decreased by €5 million.. both for the full year and the fourth quarter. Full-year restructuring costs were €348 million (2012: €292 million) with €204 million in Q4 (2012: €115 million). one year ahead of schedule. Financial highlights: 2013 revenue was down 5 percent. with low activity being particularly evident in constructionrelated products. Excluding these. the ongoing businesses of Decorative Paints recorded a goodwill impairment of €2. several divestments were concluded: • The divestment of Decorative Paints North America. Performance improvement programs and restructuring measures have lowered the cost base. . from €205 million to €200 million. Further efficiency and cost reduction measures have been identified as part of continuous improvement initiatives which are integrated in the regular business activities.529 million (2012: €2. Focus on cost control and margin management was maintained in all businesses. mainly due to adverse currency effects and divestments. Akzo Nobel N.com Akzo Nobel Aerospace Coatings E Water St Waukegan IL Zip: 60085 United States Tel: +1 847 6234200 Akzo Nobel Car Refinishes A/S Baldersbuen 31 Hedehusene Zip: 2640 Advanced BioScience Laboratories. Akzo Nobel N. . Inc.com Akzo Nobel Coatings AG Taschmattstrasse 16 Lucerne Luzern Zip: 6015 Switzerland Tel: +41 41 2681414 Akzo Nobel Coatings. Ltd. 5th Floor 299 Tong Ren Road Shanghai SHA Zip: 200040 China Tel: +86 21 22163600 Akzo Nobel Surface Chemistry LLC 525 West Van Buren Street Chicago IL Zip: 60607 United States Tel: +1 312 5447000 Fax: +1 312 5447320 Url: www.com Akzo Nobel Farbe & Heimtex GmbH Rosenheimer Street 3 Hanseatic Bremen Zip: 28219 Germany Quest International 65 Parker Irvine CA Zip: 92618 United States Tel: +1 949 5819900 Fax: +1 949 5814011 Url: www. S. 9800 Medical Center Drive Building D Rockville Akzo Nobel N. Strawinskylaan 2555 Amsterdam Noord-Holland ZIP: 1077 Netherlands Tel: +31 20 5027555 Fax: +31 20 5027605 Other Locations & Subsidiaries Akzo Nobel N.akzonobel.Locations And Subsidiaries Head Office Akzo Nobel N..V.V.questinc. The Exchange.V.p.A. Strawinskylaan 2555 Amsterdam Noord-Holland Zip: 1077 ZZ Netherlands Tel: +31 20 5027555 Url: www.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 16 ..akzonobel.V..V. Via Carlo Goldoni 38/40 Trezzano sul Naviglio Milano Italy Akzo Nobel Chemicals International B.V. Subsidiaries Akzo Nobel (Asia) Co. Turkey Akzo Nobel Coatings AS Fløisbonnveien Sofiemyr 6 Kolbotn Zip: 1412 Norway Akzo Nobel Coatings GmbH Aubergstrasse 7 Salzburg Salzburg Zip: 5161 Akzo Nobel N. a.V.com Akcros Chemicals Ltd Lankro Way Eccles Manchester ENG Zip: M30 OLX United Kingdom Tel: +44 161 7851111 Fax: +44 161 7887886 Url: www.s.com Akzo Nobel Aerospace Coatings GmbH In de Tarpen 41 Norderstedt Schleswig-Holstein Zip: 22848 Germany Tel: +49 40 5268380 CPFilms Limited 13 Acorn Business Centre Northarbour Road Cosham.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 17 .com ICI Polska Sp. Denmark Tel: +45 46 564111 MD Zip: 20850 United States Tel: +1 301 8815600 Fax: +1 301 8165438 Url: www. Portsmouth.V. Podvihovska 304/12 Opava Zip: 747 70 Czech Republic Diosynth Biotechnology United States Url: www. Z o.com Akzo Nobel Sweden Finance AB Sweden International Paint Limited 26th Floor Portland House London ENG Zip: SW1E 5BG United Kingdom Tel: +44 20 79329900 Fax: +44 20 79329932 Url: www.diosynthbiotechnology.S.com Marshall Boya Ve Vernik Sanayii A.akcros. Poland Akcros Chemicals PO Box 1 Eccles Manchester Zip: M30 0BH United Kingdom Tel: +44 161 785 1111 Fax: +44 161 788 7886 Url: www.Akzo Nobel N.o. Hampshire PO6 3TH UK United Kingdom Tel: +44 2392 219112 Fax: +44 2392 219102 Akzo Nobel Coatings CZ.akcros.ablinc.international-marine.. . Billingham.Akzo Nobel N. DLF Plaza Tower DLF Qutab Enclave. Zip: TS23 1LB United Kingdom Tel: +44 1642 523303 Akzo Nobel Industrial Chemicals B.com/polymer ICI India Limited 10th floor .V. Phase . Source : GlobalData Akzo Nobel N.1 Gurgaon Haryana Zip: 122002 India Tel: +91 0124 2540400 Fax: +91 0124 2540849 Url: www.V.iciindia.com AN Dekor Ukraine LLC Obolonskaya naberezhnaya 7 Kiev Kiev Zip: 04211 Ukraine Tel: +380 44 5818592 Akzo Nobel Powder Coatings Z. Stationstraat 77 Amersfoort Zip: 3811 Netherlands Tel: +31 33 4676231 Akzo Nobel Coatings Oy Valimotie 22 Vantaa Finland Tel: +358 10 8419500 Akzo Nobel Lakokraska Ltd Sovkhoznaya street 38 Orekhovo-Zuevo Moscow Oblast Zip: 142603 Russia Tel: +7 495 4117350 Akzo Nobel Decorative Coatings BV Netherlands Akzo Nobel Polymer Chemicals LLC 525 West Van Buren Street Chicago IL Zip: 60607 United States Tel: +1 312 5447000 Fax: +1 312 5447408 Url: www. Tel: +47 66819400 Austria Tel: +43 662 489890 Akzo Nobel Chemicals Ltd 1 City Centre Drive Mississauga ON Zip: L5B 1M2 Canada Tel: +1 905 2735959 Akzo Nobel (Australia) Pty Ltd 2 Capelli Road Wingfield SA Zip: 5013 Australia Tel: +61 8 83594333 ICI Chemicals & Polymers Ltd Belasis Avenue Chilton Site PO Box 1.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 18 . de la Gaudree Dourdan Zip: 91416 France Tel: +33 1 60818181 Imperial Chemical Industries Ltd. Cleveland.V.I.akzonobel. .28 68.16 107.98.V.40 1.80 63.39 5.32 -11.36 27.Financial Ratios Financial Ratios .62 8.84 -7.76 9.43 Administration Costs (% of Sales) % 31.98.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 19 .22 7.55 0.34 -11.18 74.73 -18.90 29. Ratios based on current share price Key Ratios 20-Jan-2015 P/E (Price/Earnings) Ratio 25.08 Dividend Yield 0.35 -108.00 Profit Markup % 67.67 92.00 2.16 28.05 1.43 28.V.V.69 17.48 12.27 -6.26 5.79 Operating Costs (% of Sales) % 93.62 6.80 -62.97 8.54 60.41 8.37 -9.33 7.67 8.14 Enterprise Value/Total Assets 1.28 -36.97.44 91.Capital Market Ratios Akzo Nobel N.8 2.56 -36.02 1.35 7.09 0.65 Operating Margin % 6.20 Operating Income Growth % 42.V.86 56.90 -22.37 1.25 5.00 Book Value per Share EUR 33.97.22 40.70 Return on Assets % 1.48 37.33 Net Income Growth % 164.03.12 6.07 -204.86 Return on Working Capital % 50.73 4.49 Profitability Ratios Gross Margin % 40.42 Leverage Ratios Akzo Nobel N.47 38.34 0.59 4. Akzo Nobel N.74 -538.34 0.Annual Ratios Akzo Nobel N.29 12.Akzo Nobel N. Annual Ratios Key Ratios Unit/Currency 2009 2010 2011 2012 2013 Equity Ratios EPS (Earnings per Share) EUR 1.51 Return on Fixed Assets % 6.69 Sales Growth % -15.23 Dividend Cover Absolute 0.38 -5.66 1.44 Dividend per Share EUR 1.48 24.06 Cash Value per Share EUR 4.57 Net Profit Margin % 2.83 Working Capital Growth % 153.23 1.63 EBITDA Growth % 94.41 1.23 -202.87 -31. Depreciation and Amortization) 16.00 PBT Margin (Profit Before Tax) % 3.94 Return on Capital Employed % 5.00 5.81 38.33 64.07 9.81 Growth Ratios Cost Ratios Liquidity Ratios Current Ratio Absolute 1.27 -13.45 1.19 Enterprise Value/Operating Profit 18.51 3.37 1.57 EPS Growth % 120..00 1.85 73.57 -6.29 Return on Equity % 3..V.07 5.63 6.00 6.96.78 93.37 1.19 5.82 62.35 1.02 Note: Above ratios are based on share price as of 20-Jan-2015.57 -5.56 8.74 Enterprise Value/Sales 1.47 0. Taxes.98. the above ratios are absolute numbers Source : GlobalData Financial Ratios .55 30.75 2.07 0.08 2.23 EV/EBITDA (Enterprise Value/Earnings Before Interest.77 38.26 Quick Ratio Absolute 1.78 6.83 2..70 -9.00 Cash Ratio Absolute 0.47 38.15 3.37 -0.11 23. 96 66.73 3.76 Sep-2013 Dec-2013 Mar-2014 Jun-2014 Efficiency Ratios Source : GlobalData Financial Ratios .26 8.12 4.82 3.28 Interest Coverage Ratio Absolute 442.10 1.98 96.47 8.22 Revenue per Employee EUR 303.67 6.51 9.67 93.46 3.V.26 0.64 0.64 PBIT Margin (Profit Before Interest & Tax) PBT Margin (Profit Before Tax) % 7.69 0.33 0.37 4.33 3.94 32.42 0.72 1.33 Asset Turnover Absolute 0.080 Capex to Sales % 3.99 Operating Margin % 8. Debt to Equity Ratio 0.84 Debt to Equity Ratio % 0.33 Debt to Capital Ratio % 0.21 2..64 Current Ratio Absolute 1.17 4.53 20.35 0.65 0.53 22.42 Interest Costs (% of Sales) % 1.39 0.42 62.53 5.Interim Ratios Akzo Nobel N.19 6.64 1.91 % 6.30 Capital Employed Turnover Absolute 1.94 3.5 0.56 Profit Markup % 64.45 0.23 36.86 24.09 1.27 0.07 Inventory Turnover Absolute 5.09 Net Profit Margin % 4.11 1.V.07 11.92 4.63 39.42 0.91 Fixed Asset Turnover Absolute 3.64 0.28 0.21 0.67 2.62 2.70 0.55 58.81 5.28 Source : GlobalData Akzo Nobel N.Akzo Nobel N.77 8.25 0.95 39.98 0.86 0.97 2.62 90.16 Quick Ratio Absolute 0.43 31.68 1.51 2.94 4.32 0. Interim Ratios Key Ratios Interim EPS (Earnings per Share) EUR Dividend per Share EUR Book Value per Share EUR 23.V.74 0.75 4.91 Administration Costs (% of Sales) % 28.61 0.52 66.73 0.63 1.10 1.06 20.28 Current Asset Turnover Absolute 2.24 1.31 0.70 0.81 0.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 20 .41 Debt to Capital Ratio % 0..895 Net Income per Employee EUR 15.56 R&D to Sales % 2.26 1.38 9.23 0.84 Sep-2014 0.33 6.88 38.95 0.72 0.97 0.83 0.32 0.51 5.27 0.61 Working Capital Turnover Absolute 7.32 0.65 4.44 0.60 8.53 Net Debt to Equity Absolute 0.65 0.52 0.94 23.50 Gross Margin % 39.02 3.63 0.98 5.65 Net Debt to Equity % Absolute 0.75 6.37 0.43 32.00 Unit/Currency 0.49 90.14 0.80 0.20 2.34 30.22 Operating Costs (% of Sales) % 91.4 5. .V.V.. Ratio Charts EPS Operating Margin Return on Equity Return on Assets Debt to Equity Ratio Current Ratio Source : GlobalData Akzo Nobel N. Financial Ratios .Ratio Charts Akzo Nobel N.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 21 .Akzo Nobel N.V. Market conditions in Europe remained challenging. reported positive volume growth and. including being ranked first in our industry on the Dow Jones Sustainability Index for the third year running. She will Akzo Nobel N.V. Cost control measures continued in all businesses. with growth being offset by some planned outages in the chain. Revenue declined.6 percent (2013: 10. due to adverse currency developments and price pressure in some segments such as in caustic. OutlookAkzoNobel is on track to deliver on its 2015 targets despite the continued fragile economic environment. A French national. 2014 : AkzoNobel Q3 Results 2014 Akzo Nobel N. In addition.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 22 . while volumes were higher in Asia. Her previous posts there include Europe Chief Financial Officer and Group Corporate Finance and Treasury Director.." said Antony Burgmans. "Maelys is a high caliber professional with a wealth of experience in finance who brings key skills and capabilities to our company. We also developed coatings technology for the world's first fully recyclable and compostable paper cup. Coupled with the benefits from our ongoing operational efficiency programs. The new organizational structure has reduced the number of global management layers. our Human Cities initiative gathered momentum when we made a commitment to the Clinton Global Initiative and partnered with The Rockefeller Foundation through its 100 Resilient Cities program. as well as industrial action in Rotterdam. Performance Coatings: Volumes were up. reflecting the benefits of ongoing operational efficiency programs. Chairman of AkzoNobel's Supervisory Board. but we have a resilient strategy focused on stimulating organic and sustainable growth. for the fifth consecutive quarter. resulting in higher restructuring costs. with volume growth being offset by negative currency effects and divestments. ROS was 10. Operating income was higher than 2013 due to lower restructuring expenses. while operating income grew by 11 percent. Return on sales improved for the fifth consecutive quarter to 9. Net income attributable to shareholders was €205 million (2013: €155 million)." Decorative Paints: Volumes were flat compared with the previous year. due to the divestment of Building Adhesives and the adverse price/mix effect driven by the sale of the German stores. and we broke ground on a new Decorative Paints site in Chengdu. She started her career at the international ELF Oil & Gas Group. Jun 17.Akzo Nobel N. 2014 : AkzoNobel EGM Appoints Maelys Castella As Member Of The Board Of Management Shareholders of Akzo Nobel N.V. Recent Developments Oct 21. operating income declined on the previous year. Revenue declined compared with the previous year. an improvement in Return on sales (ROS) – from 8. As a result. held an Extraordinary General Meeting in Amsterdam and appointed new CFO Maelys Castella as a member of the Board of Management. as well as lower restructuring costs. profitability increased due to benefits from restructuring activities and cost savings.0 percent to 9. She succeeded Keith Nichols who left the company in June this year. Conditions continue to be challenging. China. due to higher operating income and lower finance expenses.1 percent. we are on track to deliver on our 2015 targets. Operating income grew 11 percent to €335 million (2013: €303 million). Maelys is already a member of the company's Executive Committee as Chief Financial Officer since September 15 and is based at AkzoNobel's head office in Amsterdam. "Q3 was also notable for several achievements.1 percent. most recently as Group Deputy CFO. although this was partially offset by new restructuring costs in Performance Coatings.0 percent). Maëlys previously worked at Air Liquide for 14 years.V. 2014 : Akzo Noble: Maelys Castella Appointed As CFO AkzoNobel has announced the appointment of Maelys Castella (47) as the company’s new Chief Financial Officer. Excluding restructuring costs of €55 million. Revenue for the third quarter declined 2 percent. Despite the economic slowdown. despite continued economic uncertainty. Specialty Chemicals: Volume for the quarter was in line with 2013. Oct 08.V. CEO Ton Büchner"AkzoNobel delivered a solid Q3 performance. while revenue was flat on 2013 as price/mix and adverse currencies offset higher volumes. Maelys Castella succeeds Keith Nichols. It is a company I much admire. In 2014. In response we accelerated our company-wide improvement actions and have brought our performance Akzo Nobel N." Maëlys Castella said: "I am looking forward to working for AkzoNobel with great enthusiasm. Feb 06. AkzoNobel CEO Ton Büchner said: "We're delighted to have appointed Maëlys as the company's CFO. where her positions included Financing and Capital Markets Manager.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 23 . After a thorough and international search and selection program that saw many talented candidates. where I believe I can make a major contribution to the management team in their focus on operational excellence. She brings a wealth of experience in finance and will add fresh impetus to our ongoing commitment to improve operational excellence and drive value creation. officially take up the position on September 15.45) •Performance improvement program completed one year ahead of scheduletarget exceeded with €545 million total savings achieved •On track to deliver 2015 targets despite expected continued fragile economic environment and volatile foreign currencies in 2014 Akzo Nobel N. continuing the trend from Q3 •Revenue for both Q4 and full year down 5 percent. Ton Büchner will take over CFO responsibilities in the brief transition period between Keith Nichols' departure and Maëlys Castella's commencement date.590 million. •Q4 volume development positive in all three Business Areas and ROS% excluding restructuring costs and incidentals increased. 2014. Maëlys is a high caliber professional who will bring key skills and capabilities to the company." Added Antony Burgmans. Chairman of AkzoNobel's Supervisory Board: "This is a very important appointment." A French national. Her previous posts there include Europe Chief Financial Officer and Corporate Finance and Treasury Director.V publishes Q4 and full-year 2013 results. who announced his intention to leave AkzoNobel on January 15. Commenting on the appointment. Maëlys Castella joined Air Liquide as Group Financing Manager in 2000.V. The company has successfully completed its multi-year performance improvement program a year ahead of schedule.529 million (2012: €2. CEO Ton Büchner "We indicated at the start of 2013 that trading conditions would continue to be challenging and that has proven to be the case. 2013 operating income excluding incidentals came in at €897 million (2012: €908 million excluding impairment). She has worked at Air Liquide for the last 14 years.45 (2012: €1.298 million) •Total dividend for 2013 proposed at €1. Revenue for the year totaled €14. the Netherlands. AkzoNobel will continue to significantly restructure to reduce costs further and anticipates related restructuring charges of at least €250 million.62 (2012: €2.529 million at the end of 2013. She will be nominated for appointment to AkzoNobel's Board of Management and will be based at the company's head office in Amsterdam.V. Net debt came down by a third to €1. we're very happy that Maëlys will be joining us as CFO. up from €386 million in 2012. Net income attributable to shareholders reached €724 million. 2014 : AkzoNobel publishes Q4 and full-year 2013 results Akzo Nobel N. most recently as Group Deputy CFO. (AkzoNobel) today announced its Q4 and full-year 2013 results. She previously worked for ELF Oil & Gas Group.55) •Net debt down €769 million at €1. exceeding its targets in doing so. due to adverse currency effects and divestments •2013 operating income at €958 million (excluding €61 million incidentals: €897 million2012: €908 million excluding impairment) •Net income attributable to shareholders €724 million (2012: €386 million excluding impairment) and adjusted EPS at €2. down 5 percent on 2012 as a consequence of adverse currency effects and divestments.V..Akzo Nobel N. AkzoNobel anticipates 2014 restructuring charges of at least €250 million. The divestments of both the Primary Amides and Purate businesses were completed in Q4. Margins were maintained despite higher restructuring costs. Full-year revenue at Performance Coatings declined 2 percent on flat volumes as adverse currency effects outweighed a positive price/mix development. Performance improvement program The performance improvement program (PIP) announced in October 2011 has exceeded the anticipated cumulative amount of €500 million in EBITDA for the period through 2013.V.V. although they did stabilize in the second half of the year and volumes in Q4 were up 3 percent versus Q4 2012. drove operating income above the previous year. before the divestment gain on Building Adhesives. The program has delivered a total of €545 million in benefits a year earlier than originally planned and has now been completed. Total restructuring costs for 2013 amounted to €348 million (2012: €292 million). improvement program to a successful conclusion a year ahead of schedule and above target. Building on its number one position in the Materials industry group on the Dow Jones Sustainability Indices (DJSI). Performance improvement and restructuring measures led to a lower cost base. combined with lower restructuring charges. of which €204 million in Q4." Business performanceDecorative Paints full-year revenue was down 3 percent as a result of adverse currency effects and divestments.45. While the first half of 2013 was impacted by weaker trading conditions and specific one-off events in Specialty Chemicals. Further efficiency and cost reduction measures have been identified as part of continuous improvement initiatives which are integrated in the regular business activities. which would make a total 2013 dividend of €1. AkzoNobel keeps intensifying its activities to implement the strategy which includes the following targets: • In 2020. Akzo Nobel N.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 24 . In combination with our restructuring actions this positive effect has been evident in our improving return on sales in the third and fourth quarters. In 2014. This is stable versus the total dividend per share paid out in 2012 of €1. which. Margins improved as a result of strong margin management and lower raw material prices. reduce our costs and drive organic growth. We will further restructure our business. with underlying improvements offset by higher restructuring charges as well as adverse currencies. with a comprehensive performance improvement program implemented at Functional Chemicals in the second half of the year. Lower volumes accounted for a further 2 percent revenue decline.Akzo Nobel N. which remained flat in a reflection of difficult trading conditions. Restructuring activities were accelerated in the fourth quarter. Global volumes for the year were up 3 percent. but also included a significant divestment effect from the sale in 2012 of Chemicals Pakistan. Full-year operating income was impacted by increased restructuring costs versus the previous year. Specialty Chemicals annual revenues not only reflected a year of continued soft demand. Proposed dividend Our dividend policy is to pay a stable to rising dividend. In 2013 this was 18% • Carbon emissions will be reduced by 25 to 30 percent per ton of product by 2020 (base 2012). Operating income for the year as a whole was down 3 percent. with the intended closure of seven sites world-wide being communicated. Full-year revenues were down 11 percent. and up 2 percent in Q4. AkzoNobel's eco-premium products with a downstream benefit will account for 20 percent of revenue.45 per share. with 6 percent attributable to divestments and 2 percent a consequence of adverse currency effects. Sustainability and innovation AkzoNobel's drive for operational excellence and performance improvement is supported by its 'Planet Possible' sustainability strategy focused at creating more value from fewer resources. I am confident that we are on track to deliver on our 2015 strategic goals. We will propose a 2013 final dividend of €1.. Raw materials Full-year average raw material costs stabilized during the year and were down versus 2012. despite foreign currency headwinds.12 per share. with increases in all regions except Europe. The pick-up in overall volumes was particularly noticeable in the second half of the yearQ3 and Q4 volumes were each up 5 percent compared with the prior year. Volumes gradually improved throughout the year to be flat overall. the second half has shown early signs of stabilization in several end markets. we will continue to improve our ability to leverage our strong brands and leading market positions. He became Chairman in 2009. Chief Financial Officer and member of the Board of Management." Akzo Nobel N. The full agenda for AkzoNobel N. having been a member of the Board of BP plc from 2000 to 2013.V. during which time he headed the petrochemicals business before becoming CFO. Chairman Karel Vuursteen commented: "On behalf of my colleagues I would like to thank Sir Peter for the valuable contribution he has made to the good governance and smooth running of the company over the last six years.. to be held in Amsterdam on April 29. Keith will remain Chief Financial Officer and retain his position on the Board until June 30. and is also a non-executive director at Anglo-American plc. Following the proposed changes.'s Annual General Meeting.V. today announced that Keith Nichols.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 25 . the Supervisory Board will have eight members instead of the current nine. I would like to thank Keith for the significant contribution he has made to the company and wish him every success in his new endeavours." In his place the Supervisory Board is putting forward Mr Byron Grote for appointment. since becoming CFO in 2008. The Annual Report over 2013 will be available online on the company's website and as an iOS app on the AppStore on February 26. most notably in the exit of our Pharmaceutical business and. 2014 : Chief Financial Officer Keith Nichols to step down at the end of June The Supervisory Board of Akzo Nobel N. Chief Executive Officer Ton Büchner: "We thank Keith for his dedication and commitment to AkzoNobel over the past eight years. has decided to step down at the end of June after eight highly successful years with the company. Following such re-appointment the Supervisory Board intends to elect Mr Burgmans as Chairman to succeed Mr Vuursteen. Mr Grote currently holds the role of non-executive director at Unilever. Current Chairman Karel Vuursteen will retire from the Supervisory Board having completed 3 terms of office since joining the Board in 2002. 2014. will be published on March 18. announced changes to its membership that will be proposed for adoption by the company's Annual General Meeting of Shareholders on April 29th. Mr Grote brings with him extensive experience of complex multinational environments as well as deep financial expertise.V.V. Jan 15. Chairman of the Supervisory Board. has made an outstanding contribution in driving financial discipline and functional excellence across the company. 2014." Karel Vuursteen. chairing the Audit Committee. said: "On behalf of all my Supervisory Board colleagues. 2014. We will miss Keith's valuable and insightful input as well as his hard work and I know that I speak on behalf of all my colleagues in wishing him well for the future.V. Louis Hughes will also reach the end of his second term this year and will be nominated for re-appointment. An international search for Keith's successor is being undertaken and an appointment will be made in due course. He has played a major role in the transformation of the company's portfolio. • Improve resource efficiency across the full value chain Feb 06. Sir Peter Ellwood will step down at the AGM after six years on the Board.Akzo Nobel N." Keith Nichols commented: "Making a decision like this is never easy but I leave the company well placed to deliver its 2015 financial targets. Antony Burgmans will be put forward for re-appointment after reaching the end of his second term at this year's AGM. 2014 : Akzo Nobel Supervisory Board changes The Supervisory Board of Akzo Nobel N. I would like to thank my colleagues throughout the company and wish them all the very best for the future. Akzo Nobel N. free of debt. Power. EV/Sales is seen as more accurate than Price/Sales because market capitalization does not take into account the amount of debt a company has. investment and deal making activity in your business. Calculation: (Market Cap + Debt + Preferred Stock . In the absence of any capital gains. Calculation: (Market Cap + Debt + Preferred Stock . Other items are from latest annual report. and shares outstanding last reported. Tax. Retail & Consumer Packaged Goods and Transport. Appendix The data and analysis within this report is driven by GlobalData.Cash & Cash Equivalents) / Sales Enterprise Value/Operating Profit Enterprise Value/Operating Profit measures the company's enterprise value to the operating profit. The key industries include Alternative Energy. Construction. and EPS is from latest annual report. Price per share is as of previous business close. Other items are from latest annual report. Healthcare. Calculation: (Market Cap + Debt + Preferred Stock .Cash & Cash Equivalents) / Operating Income Enterprise Value/Total Assets Enterprise Value/Total Assets measures the company's enterprise value to the total assets. The main advantage of EV/EBITDA over the PE ratio is that it is unaffected by a company's capital structure. Calculation: Annual Dividend per Share / Price per Share GlobalData Akzo Nobel N. to earnings before interest. Calculation: Price per Share / Earnings per Share Enterprise Value/Earnings before Interest. the P/E ratio. Calculation: (Market Cap + Debt + Preferred Stock . or as an alternative to. Depreciation & Amortization (EV/EBITDA) Enterprise Value/EBITDA (EV/EBITDA) is a valuation multiple that is often used in parallel with. which needs to be paid back at some point. Price per share is as of previous business close.Cash & Cash Equivalents) / (Net Income + Interest + Tax + Depreciation + Amortization) Enterprise Value/Sales Enterprise Value/Sales (EV/Sales) is a ratio that provides an idea of how much it costs to buy the company's sales.. and shares outstanding last reported. Technology and Telecommunication. and shares outstanding last reported. It is a financial ratio used for valuation: a higher P/E ratio means that investors are paying more for each unit of income.V. Price per share is as of previous business close. Price per share is as of previous business close. A high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. Other items are from latest annual report. Clean Technology. It compares the value of a business.V. Other items are from latest annual report. GlobalData gives you key information to drive sales. Financial Services. the dividend yield is the return on investment for a stock. Methodology GlobalData company reports are based on a core set of research techniques which ensure the best possible level of quality and accuracy of data. Oil & Gas.Cash & Cash Equivalents) / Total Assets Dividend Yield Dividend Yield shows how much a company pays out in dividends each year relative to its share price. so the stock is more expensive compared to one with lower P/E ratio. Price/Earnings Price/Earnings (P/E) ratio is a measure of the price paid for a share relative to the annual Ratio (P/E) income earned per share.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 26 . and shares outstanding last reported. The key sources used include: Company Websites Company Annual Reports SEC Filings Press Releases Proprietary Databases Currency Codes Currency Code EUR Currency Euro GlobalData Ratio Definitions Capital Market Ratios Capital Market Ratios measure investor response to owning a company's stock and also the cost of issuing stock. Price per share is as of previous business close. Calculation: Cash & equivalents / Outstanding Shares Book Value per Share Cash Value per Share GlobalData Profitability Ratios Profitability Ratios are used to assess a company's ability to generate earnings.V. after paying for Gross Margin direct-fixed and direct-variable unit costs. Calculation: Gross Income / Cost of Revenue Profit Before Interest & Tax Margin shows the profitability of the company before interest expense & taxation. ROCE should always be higher than the rate at which the company borrows. otherwise any increase in borrowing will reduce shareholders' earnings. to a class of its shareholders. Calculation: (Net Income / Shareholders Equity)*100 Return on Capital Employed is a ratio that indicates the efficiency and profitability of a company's capital investments.V. EPS serves as an indicator of a company's Share (EPS) profitability. Calculation: (Shareholders Equity .. Calculation: Net Income / Weighted Average Shares Dividend per Share Dividend is the distribution of a portion of a company's earnings. Calculation: {(Revenue-Cost of revenue) / Revenue}*100 Operating Margin is a ratio used to measure a company's pricing strategy and operating Operating efficiency. Calculation: {Income Before Tax / Revenues} *100 Return on Equity Return on Equity measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners.Akzo Nobel N. Earnings per share (EPS) is the portion of a company's profit allocated to each Earnings per outstanding share of common stock. Equity Ratios These ratios are based on per share value. Calculation: (Net Profit / Revenues) *100 Profit Markup measures the company's gross profitability. Margin Calculation: (Operating Income / Revenues) *100 Net Profit Margin Profit Markup PBIT Margin (Profit Before Interest & Tax) Net Profit Margin is the ratio of net profits to revenues for a company or business segment . Return on Capital Employed Return on Akzo Nobel N. Calculation: {(Net Profit+Interest+Tax) / Revenue} *100 PBT Margin (Profit Before Tax) Profit Before Tax Margin measures the pre-tax income over revenues.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 27 . the ratio measures how efficient management is at using its assets to generate earnings. based on revenues generated or resources used.Preferred Equity) / Outstanding Shares Cash Value per Share is a measure of a company's cash (cash & equivalents on the balance sheet) that is determined by dividing cash & equivalents by the total shares outstanding. as compared to the cost of revenue.that shows how much of each dollar earned by the company is translated into profits. Calculation: Earnings per share / Dividend per share Book Value per Share measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Dividend Cover Dividend cover is the ratio of company's earnings (net income) over the dividend paid to shareholders. decided by the board of directors. Gross margin is the amount of contribution to the business enterprise. For most of these ratios. Calculation: EBIT / (Total Assets – Current Liabilities)*100 Return on Assets is an indicator of how profitable a company is relative to its total assets. having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well. plant & equipment). Return on Working Capital Calculation: (Net Income / Working Capital) *100 GlobalData Akzo Nobel N.V.V.Akzo Nobel N.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 28 . Assets Calculation: (Net Income / Total Assets)*100 Return on Fixed Return on Fixed Assets measures the company's profitability to its fixed assets (property. Assets Calculation: (Net Income / Fixed Assets) *100 Return on Working Capital measures the company's profitability to its working capital.. Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 29 . the more debt the company has compared to its equity. A company with high debt-to-capital ratios. Calculation: {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)} GlobalData Leverage Ratios Leverage ratios are used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. or how it is financing its operations. equity. Bankruptcy analysts and mortgage originators frequently use the liquidity ratios to determine whether a company will be able to continue as a going concern. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. Generally. Calculation: (Administrative Expenses / Revenues) *100 Interest costs (% Interest costs as percentage of total revenues measures the interest expense that a company incurs compared to the revenues. The higher the current ratio.V. It Cash Ratio only looks at the most liquid short-term assets of the company. A company's ability to turn short-term assets into cash to cover debts is of the utmost importance when creditors are seeking payment. Calculation: {Total Debt / (Total assets . the more capable the company is of paying its obligations. which are those that can be most easily used to pay off current obligations. the larger the margin of safety that the company possesses to cover short-term debts. Ratio capital-intensive industries tend to have a higher debt-equity ratio. calculated as earnings before interest & tax by interest expense. The debt/equity ratio Debt to Equity also depends on the industry in which the company operates. the higher the value of the ratio. This indicates to investors whether a company is more prone to using debt financing or equity financing. Current Ratio measures a company's ability to pay its short-term obligations.Current Liabilities)} Interest Coverage Ratio is used to determine how easily a company can pay interest on Interest Coverage Ratio outstanding debt. as there are no assurances that these two accounts can be converted to cash in a timely matter to meet current liabilities. Calculation: Current Assets / Current Liabilities Quick ratio measures a company's ability to meet its short-term obligations with its most Quick Ratio liquid assets. There are several different ratios. It also ignores inventory and receivables. general and administrative expenses that a company incurs compared to the revenues. Operating costs Operating costs as percentage of total revenues measures the operating costs that a company incurs compared to the revenues. inventory.Inventories) / Current Liabilities Cash ratio is the most stringent and conservative of the three short-term liquidity ratio. may show weak financial strength because the cost of these debts may weigh on the company and increase its default risk. The ratio Current Ratio gives an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash. of Sales) Calculation: (Interest Expenses / Revenues) *100 GlobalData Liquidity Ratios Liquidity ratios are used to determine a company's ability to pay off its short-terms debts obligations. The higher the Ratio debt-to-capital ratio. Calculation: EBIT / Interest Expense GlobalData Akzo Nobel N.V. (% of Sales) Calculation: (Operating Expenses / Revenues) *100 Administration costs (% of Sales) Administration costs as percentage of total revenue measures the selling. compared to a general or industry average. but the main factors looked at include debt. along with some insight into its financial strength. Calculation: Total Liabilities / Shareholders Equity Debt to Capital Debt to capital ratio gives an idea of a company's financial structure. receivables).. For example.Akzo Nobel N. Calculation: (Current Assets . Debt to Equity Ratio is a measure of a company's financial leverage. Cost Ratios Cost ratios help to understand the costs the company is incurring as a percentage of sales. assets and interest expenses. A high ratio implies either strong sales or ineffective buying. Ideally. a company seeks the highest revenue per employee. Calculation: Net Sales / Shareholders Equity Capex to Sales ratio measures the company's expenditure (investments) on fixed and related assets' effectiveness when compared to the sales generated. Calculation: Cost of Goods Sold / Inventory Working Capital Turnover is a measurement to compare the depletion of working capital to the generation of sales. a company wants a higher profit per employee possible. Calculation: Revenue / No. Disclaimer All Rights Reserved No part of this publication may be reproduced. The data and analysis within this report is driven by GlobalData from its own primary and secondary research of public and proprietary sources and does not necessarily represent the views of the company profiled. excess inventory. A higher ratio indicates the business has less money tied up in fixed Turnover assets for each currency unit of sales revenue. Calculation: Net Sales / Fixed Assets Asset Turnover Asset turnover ratio measures the efficiency of a company's use of its assets in generating sales revenue to the company. Calculation: Net Sales / Total Assets Current Asset Turnover indicates how efficiently the business uses its current assets to Current Asset generate sales. equipment. This provides some useful information as to how effectively a company is using its working capital to generate sales. therefore. A low turnover implies poor sales and.. Calculation: Non-interest expense / Total Interest Income GlobalData Notes The financial and operational data reported for the company is as per the industry defined standards Revenue converted to USD at average annual conversion rate as of fiscal year end About GlobalData GlobalData is a premium business information brand specializing in industry and company analysis. Akzo Nobel N. or other fixed assets. Fixed Asset Turnover ratio indicates how well the business is using its fixed assets to Fixed Asset generate sales. essentially looking at maximizing its use of resources. GlobalData. as it denotes higher productivity. without the prior permission of the publisher. Generally. Turnover Calculation: Net Sales / Current Assets Inventory Turnover Working Capital Turnover Capital Employed Turnover Capex to sales Net income per Employee Revenue per Employee Efficiency Ratio Inventory Turnover ratio shows how many times a company's inventory is sold and replaced over a period. Calculation: (Capital Expenditure / Sales) *100 Net income per Employee looks at a company's net income in relation to the number of employees they have.Akzo Nobel N. If the efficiency ratio is getting lower. of Employees Efficiency Ratio is used to calculate a bank's efficiency. This ratio is most useful when compared against other companies in the same industry. of Employees Revenue per Employee measures the average revenue generated per employee of a company. electronic. A higher asset turnover ratio shows that the company has been more effective in using its assets to generate revenues. An increase means the company is losing a larger percentage of its income to expenses.V. it is good for the bank and its shareholders.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 30 . photocopying.V. A declining ratio may indicate that the business is over-invested in plant. Calculation: Net Sales / Working Capital Capital employed turnover ratio measures the efficiency of a company's use of its equity in generating sales revenue to the company. recording or otherwise. mechanical. Efficiency Ratios Efficiency ratios measure a company's effectiveness in various areas of its operations. Calculation: Net Income / No. stored in a retrieval system or transmitted in any form by any means. V. whose accuracy we are not always in a position to guarantee. As such GlobalData can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect. conclusions and recommendations that GlobalData delivers will be based on information gathered in good faith from both primary and secondary sources. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed.Financial and Strategic Analysis Review Reference Code: GDCH44319FSA Page 31 . Please note that the findings..V.Akzo Nobel N. Akzo Nobel N.