Akzo Nobel fourth-quarter results beat expectations

By Harro ten Wolde

AMSTERDAM (Reuters) - Akzo Nobel NV, the world's biggest producer of paints, posted forecast-beating fourth-quarter results on Thursday, boosting its shares as its coatings business grew despite the U.S. housing market crisis.

Earnings before interest and taxes (EBIT) from continuing operations, excluding extraordinary items, was 174 million euros ($264.2 million) compared with an average analyst expectation of 157 million euros in a Reuters survey of seven analysts.

Akzo said it would increase its dividend to 1.80 euros per share from 1.20 euros and that it intends to pay out at least 45 percent of net income excluding incidentals from 2008.

The Dutch chemical group said it would return a previously announced 3 billion euros to shareholders through share buybacks, with a 1 billion euro buyback starting mid-March.

Akzo shares were up 5.5 percent at 50.46 euros by 4:35 a.m. EST after touching 51.05 euros earlier, beating a 0.4 percent rise in the DJ Stoxx European chemical index.

Akzo said ongoing pressure created by raw material prices, volatility in major currencies and a slowdown in overall growth in North America and Europe will make for a testing environment but it still expects to outgrow its markets.

Fourth quarter revenue at its coatings unit was up 2 percent, reassuring analysts who had been worried after the unit failed to match growth expectations in the third quarter, pressured by the U.S. housing market crisis.

Akzo said the integration of Imperial Chemical Industries Plc (ICI) was well on track and confirmed expected annual cost synergies of 280 million euros.