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

DUTCH paints and coatings maker Akzo Nobel’s first-quarter operating profit beat forecasts on Tuesday (Apr 25) helped by higher prices, better-than-expected demand in Europe and the reopening of China’s economy.

Paint makers passed a chunk of steep raw material costs on to customers last year through price increases, but had warned of waning sales volumes this year.

However, the 3 per cent decline seen in first-quarter volumes was “better than anticipated” thanks to European and Chinese demand, Akzo finance chief Maarten de Vries told analysts.

The group’s adjusted operating income fell 5 per cent to 218 million euros (S$321 million) in the quarter, but beat the 193 million euros expected by analysts in a company-provided consensus.

The results echoed US rival PPG Industries that last week exceeded profit expectations and forecast better-than-expected 2023 earnings driven by higher prices and sales volumes.

The maker of Dulux and Flexa paints reiterated its full year outlook, saying falling raw material costs should help its profitability.

Akzo, which had planned to keep hiking prices until April, does not plan to “significantly increase” prices in the next few months, CEO Grégoire Poux-Guillaume told Reuters in an interview.

But he added: “We have some countries in which there are some specific issues that will lead us to adjust pricing”.

Akzo’s shares were down 1.8 per cent at 1050 GMT, after rising 2.2 per cent in early trading.

The group saw mid-single-digit growth in China during the quarter and forecast double-digit percentage growth in Chinese retail-related volumes for the full year.

Poux-Guillaume said Akzo hoped to strengthen its position in China through its recent acquisition of Sherwin-Williams’ architectural paints business, expected to be completed in the second half of 2023.

Asia made up a fourth of Akzo’s decorative paints division’s total sales in the first quarter. REUTERS