Dulux maker Akzo Nobel lifts outlook on easing raw material costs

DUTCH paints and coatings maker Akzo Nobel raised its annual profit outlook on Tuesday (Jul 25), saying declining raw material costs should boost earnings in the second half.

It raised its outlook for adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) to 1.4-1.55 billion euros (S$2.1-S$2.3 billion), up from 1.2-1.5 billion euros.

The midpoint of the outlook is slightly above analysts’ forecast of 1.44 billion euros in a company-provided consensus.

The maker of Dulux and Flexa paints said it saw the first benefits of easing raw material costs in the second quarter.

“We saw raw materials starting to turn especially in the Coatings business, while in Decorative Paints they were still up,” finance chief Maarten de Vries said on a media call.

Paint makers passed on steep raw material costs to customers last year through price increases. Akzo’s prices in the second quarter were up 5 per cent from a year earlier, to offset wage and energy cost inflation, it said.

The group’s adjusted Ebitda rose 18 per cent to 397 million euros (S$583.3 million) in the quarter, slightly missing the 403 million euros expected by analysts.

“In Q2, we achieved year-on-year profit growth driven by resilient volumes, robust pricing and the first effects of raw material deflation,” CEO Grégoire Poux-Guillaume said in a statement.

The company’s shares were up 0.9 per cent at 74.9 euros in early trading.

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Dulux maker Akzo Nobel’s price hikes, resilient volumes boost profit

Akzo, which has warned of volume weakness due to the uncertain economic situation, said volumes were better than expected in the first half of the year, declining by 2 per cent.

It forecast low single-digit percentage volume growth in the second half due to easier year-ago comparisons, resulting in volumes in line with last year’s. REUTERS