AkzoNobel has increased revenue by 19 per cent (14 per cent in constant currencies) in the third quarter of 2022 due to strong pricing, despite increased macro-economic headwinds impacting the results. Pricing rose 13 per cent, offsetting the increase of raw material and other variable costs.
Volumes were five per cent lower, mainly due to destocking in the distribution channels in Decorative Paints in Europe and in Performance Coatings, as well as lower market demand in China.
Operating income was €168 million (2021: €226 million), including €16 million negative impact from identified items (2021: €15 million) and €17 million negative from the retrospective hyperinflation impact of the first half-year of 2022. OPI margin was reported at 5.9 per cent, while adjusted operating income was €184 million (2021: €241 million) excluding the retrospective impact of hyperinflation accounting at €201 million.
Net cash from operating activities decreased to an inflow of €126 million (2021: €290 million).
“Our €201 million adjusted operating income, excluding the retrospective impact of hyperinflation accounting, brings our Q3 results in line with the market update issued at the end of September,” said Thierry Vanlancker, AkzoNobel CEO.
“Sharply increased macro-economic uncertainties negatively impacted consumer confidence. This resulted in destocking across several distribution channels in decorative paints Europe and performance coatings, while the market in China was impacted by the ongoing zero COVID-19 policy.
“Thanks to the strong commitment of our teams, we continue to offset the impact of raw material and freight cost inflation with pricing. We’ve now delivered cumulative pricing of 22 per cent over the last two years. The macro-economic turbulence is expected to continue well into next year. We’ve therefore decided to suspend our targets for 2023 and will provide further guidance when announcing our full-year 2022 results. In the meantime, we will continue to focus on our margin management and cost reduction initiatives.”
AkzoNobel says it anticipates Q4 2022 adjusted operating income to be below €150 million and expects declining raw material cost to have a favourable margin impact for 2023. The company added that margin management and cost reduction programmes have been introduced to mitigate the current challenges.