Akzo Nobel NV’s first-quarter earnings beat analyst estimates following stronger demand in China with price adjustments helping to offset inflationary pressures and rising costs.
(Bloomberg) — Akzo Nobel NV’s first-quarter earnings beat analyst estimates following stronger demand in China with price adjustments helping to offset inflationary pressures and rising costs.
The Dutch paintmaker’s adjusted earnings before interest, taxes, depreciation and amortization declined slightly to €305 million ($337 million), the company said Tuesday, higher than the €275 million projected by analysts.
Akzo Nobel has been battling surging costs of raw materials and cost inflation. Passing on those pricing pressures helped boost the company’s revenue in the first quarter even as volumes fell 3% compared to last year. The firm also benefited from the easing of Covid-19 restrictions in China.
The year started with some “volatility,” said Akzo Nobel Chief Executive Gregoire Poux-Guillaume, adding that business volumes in April were “disappointing.”
“There’s a little bit of a raw material question for the second half of the year,” he said in an interview with Bloomberg. “This is the reflection of the Chinese economy accelerating.”
Akzo Nobel, which has 15% of its business in China, expects double digit growth in the country this year, up from a previous prediction of mid-to-high single digit growth. The company recently expanded its position in China with an agreement to acquire Sherwin-Williams Co.’s Chinese Decorative Paints business.
“Lower volumes in Europe were partly offset by higher volumes due to China rebounding,” said ING analyst Stijn Demeester. The company’s net debt of €4.27 billion indicates a weaker free cash flow, Demeester said.
The owner of the Dulux paint brand reiterated its financial outlook for the year and said it’s still targeting adjusted Ebitda of €1.2 billion to €1.5 billion this year.
(Updates with CEO comments)
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