AMSTERDAM, The Netherlands, Feb. 16, 2012 (Press Release) -
2011 revenue up 7 percent to €15.7 billion, driven mainly by pricing actions
Weaker end markets and cost inflation impacted results
2011 EBITDA 9 percent lower at €1.8 billion
Net income from continuing operations €469 million (2010: €664 million)
Adjusted EPS €2.91 (2010: €3.71)
Total dividend for 2011: increase to €1.45 proposed (2010: €1.40)
Performance improvement program on track
Economic environment and certain raw materials remain key sensitivities in 2012
CEO Hans Wijers
"2011 was a challenging year against the background of weaker global economic conditions and unprecedented raw material price inflation. The absolute impact of increased raw material prices for the year was approximately €1 billion. Despite this significant headwind, our reported pricing actions have now offset most of this, and for the year ahead we expect to see the full-year benefit of these increases. In addition, to further reduce our cost base and improve our competitiveness, we recently launched a performance improvement program, which is on track. Our strong fundamentals, geographical spread and commitment to deliver - in combination with the improvement program - give us confidence in the future."
Performance improvement program
AkzoNobel's performance improvement program, launched in October 2011, will strengthen competitiveness, enhance the company's ability to grow, simplify support structures and significantly reduce the cost base. This implies a significant change in the operating model and business culture. The comprehensive three-year plan - designed to improve performance and deliver €500 million EBITDA in 2014 - is already expected to deliver €200 million EBITDA in 2012. This implies higher restructuring costs for the coming year. Restructuring activities continue in Decorative Paints in Europe and the US.
The program is on track and the first update on progress and financial impact is due in the company's 2012 half-yearly report.
AkzoNobel has made significant progress on its strategic sustainability agenda. Once again, a number two position was achieved in the SAM benchmark in 2011.
Outlook for 2012 and medium-term ambitions
AkzoNobel aspires to be the world's leading coatings and specialty chemicals company. The medium-term ambitions are to grow to €20 billion in revenue, increase EBITDA each year while maintaining a 13 to 15 percent margin, reduce OWC percent of revenue year-on-year by 0.5 percent towards a 12 percent level, and pay a stable to rising dividend.
The sustainability ambitions are to remain a top three leader in our industry, to be top quartile in our peer group in terms of safety performance, diversity, employee engagement and development, and eco-efficiency improvement rates.
During 2011 the business faced many challenges, most notably the rapid price increases that affected most of our raw materials and the continuing economic headwinds in many of our major markets.
For the year ahead, the company expects to see the full-year benefit of the price rises that have been achieved so far, and which have now offset most of the raw material price increases. Currently, AkzoNobel is experiencing greater price stability in most raw materials, with the exception of TiO2, which is to continue to rise in price, and for which plans are in place to pass through further price rises in the future. In addition, the company is implementing its performance improvement program, which should bring significant benefits in 2012 and beyond, underpinning margins. As a result, close to 800 employees have been made redundant.
The major uncertainty remains the economic environment. The concerns are focused on the risk of recession in Europe, delayed recovery of the US property market and the potential for a slowdown in China. Each of these can have a significant impact on customers in these regions that would in turn impact AkzoNobel's sales volumes. These, together with certain raw materials, remain the key sensitivities in 2012.
AkzoNobel has a strong portfolio of complementary businesses, with many leading market positions and exposure to high growth markets. This, combined with ongoing management actions, means that the company is confident of delivering medium-term growth in line with its strategic ambitions.