AkzoNobel continued to rebound in Q3 2023, reporting that revenue in constant currencies was up five per cent on pricing compared to Q3 2022 despite flat volumes, while revenue was down four per cent on unfavourable exchange rates.
Operating income improved to €354 million (2022: €168 million), adjusted operating income was €324 million (2022: €184 million), return on sales was 11.8 per cent (2022: 6.4 per cent), and net cash from operating activities was €297 million (2022: €126 million). Net debt to EBITDA leverage ratio improved sequentially to 3.2 times.
“Our third quarter results show a solid rebound in profit and continued improvement of our margins, despite an adverse currency impact,” said Greg Poux-Guillaume, CEO of AkzoNobel. “While volumes were flat, we are increasingly benefitting from the easing of raw material costs. Higher profits and improving working capital management both contributed to a leverage ratio of 3.2, which keeps us on track to meet our year-end guidance.”
Looking ahead, AkzoNobel expects the ongoing macro-economic uncertainties to continue and weigh on organic volume growth, with the company to focus on margin management, cost reduction, working capital normalisation, and de-leveraging.
Cost reduction programmes are expected to partly mitigate higher than expected inflationary pressure on operating expenses for 2023. AkzoNobel expects declining raw material costs to have a favourable impact on profitability.
Based on current market conditions, the company aims to deliver around €1.45 billion adjusted EBITDA.
Leverage guidance remains unchanged at less than three times net debt / EBITDA by the end of 2023, excluding the Kansai Paint Africa acquisition which is not expected to close before year end.