February 12, 2020 / 7:06 AM / 2 months ago

Akzo Nobel reports worse than expected fourth-quarter earnings, demand weak

A worker checks empty Dulux paint cans as they wait to be filled on the production line inside AkzoNobel's new paint factory in Ashington, Britain September 12, 2017. REUTERS/Phil Noble/Files

AMSTERDAM (Reuters) - Akzo Nobel (AKZO.AS), the Dutch maker of paints and industrial coatings which owns the Flexa and Dulux brands, reported fourth quarter earnings on Wednesday that were lower than expected, as sales dipped amid weak demand, notably from car makers.

Earnings before interest, taxes, depreciation and amortization of goodwill (EBITDA) stood at 312 million euros ($340 million) for the three months ended Dec. 31, up 30% from 240 million euros in the corresponding period a year ago as the company cut costs.

Sales fell 3% to 2.24 billion euros, on a mix of 4% lower volumes but 1% higher prices.

Analysts polled by Refinitiv had on average forecast EBITDA of 324 million euros on sales of 2.34 billion euros.

CEO Thierry Vanlancker said the rise in core profit represented “good progress, despite higher raw material costs and softer end market demand.”

He said the company is on track to meet 2020 targets of 200 million euros in cost cuts since the start of 2019, and a 15% return on sales by the end of 2020. However, return on sales for the fourth quarter of 2019 was 9.9%.

The company said lower raw material costs would have “a moderately favourable impact” for the first half of 2020.

Akzo’s shares are up 24% over the past 12 months, and closed at 87.57 euros on Tuesday.

Reporting by Toby Sterling; Editing by Clarence Fernandez & Shri Navaratnam

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