Akzo Nobel year loss 1.1 bln euros on ICI charge

AMSTERDAM - Dutch Akzo Nobel NV reported a full-year loss of 1.1 billion euros ($1.4 billion), hit by a non-cash impairment on its acquisition of ICI and warned of a very challenging year, sending its shares lower.

By (Reuters)

Published: Tue 24 Feb 2009, 3:51 PM

Last updated: Thu 2 Apr 2015, 3:57 AM

The chemicals group said it took a fourth-quarter impairment of 1.2 billion euros after tax mainly related to ICI goodwill and incidental charges of 600 million euros.

The full-year loss compares with a profit of 595 million euros a year earlier.

Akzo Nobel Chief Executive Hans Wijers vowed the company will take deeper and faster restructuring measures to cope with the financial crisis.

‘I would be surprised and disappointed if the extra savings would not be at least another 100 million euros,’ Wijers told a conference call, adding that the savings will involve job cuts and plant closures.

For 2009, Wijers warned of a tougher global environment, adding in a statement that 2009 will be very challenging.

Chemicals companies have been hard hit by the economic slowdown and the world No.1 paint maker saw its fourth-quarter earnings before interest and taxes (EBIT) from continuing operations, excluding exceptional items, fall 18 percent to 259 million euros.

But that beat an average estimate of 232 million euros, which included the National Starch business, in a poll supplied by the company. In the same period last year, Akzo Nobel reported pro forma EBIT of 317 million euros.

Shares in Akzo Nobel were down 1.7 percent at 26.50 euros at 0909 GMT, compared with a 1.8 percent decline in the DJ Stoxx European chemical index.

SNS Securities analyst Danny van Doesburg said Akzo Nobel’s underlying performance is in line with peer chemicals companies, adding that strong pricing has offset some of the volume declines related to destocking.

MATURING DEBT

Rival paint makers Sherwin Williams and PPG, have both warned of difficult times ahead as their earnings slumped 50 percent and 64 percent respectively.

Akzo Nobel said its Decorative Paints saw a slowdown in the fourth-quarter with price rises unable to offset a volume decline, while the 11 percent decline in volume at Specialty Chemicals was offset by price rises.

The Performance Coatings unit saw a significant weakening as volumes declined by 6 percent, with margins hit by currency effects.

Akzo Nobel said it was confident it will complete its 2009 refinancing needs, but it will not complete the remaining 1.6 billion euros of its share buyback due to market uncertainties.

The company has a 1 billion euro bond maturing in May 2009 and Chief Financial Officer Keith Nichols said credit markets have improved since the end of 2008, and the company is looking for opportunities to refinance.

Akzo Nobel kept its dividend unchanged at 1.80 euros and CEO Wijers said the company’s dividend policy remains unchanged.

In October, Akzo Nobel had reiterated its full-year target, expecting 2008 earnings before interest, taxes, depreciation and amortisation (EBITDA) in constant currencies close to 1.87 billion euros, and reported on Tuesday EBITDA of 1.84 billion.

Akzo also announced that Board Chairman Maarten van den Bergh will resign immediately due to illness from an accident, and will be replaced by Karel Vuursteen.