Akzo Nobel beats profit estimates as price rises offset higher raw-material costs
Akzo Nobel's Second-Quarter Performance and Strategic Developments
By Dimitri Rhodes
July 22 (Reuters) - Dulux paint maker Akzo Nobel reported 5% organic growth in second-quarter core profit on Wednesday, beating market expectations as previously announced price increases helped offset higher raw-material costs.
Financial Results Overview
Adjusted EBITDA rose to 398 million euros from 393 million euros a year earlier, above analyst expectations of 392 million euros.
Factors Influencing Profit Growth
CEO Greg Poux-Guillaume told Reuters the difference between the reported and organic rise was mainly due to the divestment of the company's business in India.
"This demonstrates that our plan is delivering value regardless of market conditions," Poux-Guillaume said in a press release.
Impact of Raw-Material Costs and Price Increases
The group said in April that previously announced price increases would offset higher raw-material costs stemming from turmoil in the Middle East.
Market Conditions and Price Fluctuations
"The basket did rise in the teens to mid-teens," Poux-Guillaume told Reuters, adding news of a ceasefire last month had temporarily eased prices in China.
"Right now, it's all kind of up in the air, but it's roughly in line with our assumptions," Poux-Guillaume said.
Akzo Nobel's Market Position
Product Range and Pricing Power
AkzoNobel sells branded products ranging from decorative paints to speciality coatings used on cargo ships and Formula 1 cars, allowing it to pass on price increases to customers more successfully than its commodity chemical counterparts.
Analyst Perspectives
"We believe Akzo’s (second-quarter) print justified its status as our top tactical long for the quarter," analysts at Bernstein said in a note to investors, adding the group has "underrated pricing power."
Strategic Merger Plans
Merger with Axalta Coating Systems
The group is also planning to merge with U.S. paint maker Axalta Coating Systems to create a combined company worth $25 billion.
Merger Timeline and Shareholder Vote
Poux-Guillaume told Reuters preparations for the merger were progressing well, with a shareholder vote scheduled for August 5 and closing expected in late 2026 or early 2027.
($1 = 0.8766 euros)
(Reporting by Dimitri Rhodes in Gdansk; Editing by Matt Scuffham)
