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AkzoNobel profits grow on cost-saving programs, beats estimates

October 21/2020

MOSCOW (MRC) -- AkzoNobel says its net profit for the third quarter increased 36% year on year (YOY), to EUR220.0 million (USD260.8 million) driven by strong margin-management and cost-cutting programs, which delivered EUR49 million in savings, of which EUR27 million were structural savings related to the companys transformation initiative, said Chemweek.

Revenue was down 5% YOY, to EUR2.28 billion despite 3% growth in volumes driven mainly by strong demand for decorative paints, the company says. EBIT was 32% higher than in the same period of  2019, to EUR326 million, beating analysts consensus estimate by 4%.

The companys third-quarter performance reflects a 3.9% higher YOY return on sales (ROS), to 17.7%, and lower, by EUR38 million, costs of sales, which include raw materials and other variable costs. These results were made possible by the continued commitment of all AkzoNobel colleagues around the world, adapting to the challenges presented by COVID-19, says Thierry Vanlancker, CEO of AkzoNobel.

Decorative paints revenue was up 4% YOY, to EUR1 billion on 14% higher volumes, mainly due to strong end-market demand in Europe and South America, the company says. However, positive price developments were more than offset by unfavorable mix impacts due to geographical shifts, resulting in price/mix 4% lower, it says. Operating income increased 55% YOY, to EUR202 million and was negatively impacted by EUR6 million of identified items related to transformation costs, AkzoNobel says.

Performance coatings revenue was 10% lower YOY, at EUR1.27 billion on 5% lower volumes, especially for oil and gas related projects, as well as for the automotive and aerospace industries. Operating income was 15% higher YOY, to EUR179 million, adversely impacted by 16 million of identified items, mainly related to transformation costs.

AkzoNobel says COVID-19 headwinds eased in the third quarter, but that demand trends still differ by region and segment. As a result, the companys outlook for 2020, which was suspended earlier this year, remains suspended. AkzoNobel nevertheless expects raw material costs to have a favorable impact in the fourth quarter.

Margin-management and cost-saving programs are in place to address the current challenges caused by the uncertain macroeconomic environment, AkzoNobel says. The company has also announced a 300-million share buyback, to be completed in the first half of 2021.

As MRC informed earlier, BASF would expand the capacity of ethylene oxide and ethylene oxide derivatives at its Verbund site in Antwerp, Belgium. The total investment adds about 400 000 tpy to BASFs production capacity for the corresponding products with an expected investment amount exceeding EUR500 million.

We remind that Russia's output of chemical products rose in August 2020 by 5% year on year. At the same time, production of basic chemicals increased year on year by 5.3% in the first eight months of 2020, according to Rosstat's data. According to the Federal State Statistics Service of the Russian Federation, polymers in primary form accounted for the greatest increase in the January-July output. August production of benzene fell to 102,000 tonnes from 95,300 tonnes a month earlier due to scheduled shutdowns for maintenance at several producers. Overall output of this product reached 918,300 tonnes over the stated period, down by 0.9% year on year. At the same time, August production of primary polymers rose to 888,000 tonnes against 838,000 tonnes in July due to increased capacity utilisation at ZapSibNeftekhim, Stavrolen and Gazprom neftekhim Salavat. Overall output of polymers in primary form totalled 6,630,000 tonnes over the stated period, up by 15.2%  year on year.

Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people. Established in 1992 and specializing in sustainable water-based and advanced eco-friendly products, Mapaero operates a production facility in France and has around 140 employees.
Author:Anna Larionova
Tags:petroleum products, petrochemistry, Akzo Nobel Functional Chemicals BV.
Category:General News
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