AkzoNobel has updated its Q2 2022 financial outlook based on the impact of the evolving business environment, including the effect of China lockdowns and the slower start to the EMEA DIY season.
The company said overall demand for paints and coatings remain robust, with North America still constrained in raw material availability and logistics, but sequentially improving. In Europe in particular, macro-economic uncertainty related to consumer confidence has increased.
According to AkzoNobel, COVID-19 lockdowns in China during Q2 impacted both paints and coatings. The impact was mainly on the company’s coatings business, with paints able to almost offset the impact by progressing with geographical expansion initiatives. The country’s re-opening in June is showing a positive rebound, but is insufficient to regain the missed revenue, resulting in a negative operating income impact of approximately €40 million for the quarter, versus expectations entering Q2.
“The current business environment is complex and constantly evolving,” said AkzoNobel CEO Thierry Vanlancker. “Given the macro-economic uncertainties, we’re accelerating adjustments in our cost base for H2 [2022], as well as our working capital optimisation, while continuing to make progress on our Grow initiatives.
“Business trends in June are largely in line with earlier views, while pricing actions remain ahead of raw material and logistics inflation. We continue to focus on realising our Grow & Deliver ambition.”
AkzoNobel said it is working to achieve its €2 billion adjusted EBITDA target for 2023 despite the volatile market environment having a material impact on the company’s Q2 2022 financials.