AMSTERDAM - Paint and coatings giant Akzo Nobel reported net income from continuing operations of €197 million ($232 million U.S.), down 21.5% from the same period last year.
The decline, tied to one-time restructuring charges, was softened by an 8% revenue gain. Akzo Nobel's Q2 sales hit €4.41 billion ($5.35 billion), mainly driven by product price increases tied to inflated material costs and favorable currency effects.
Akzo Nobel's Performance Coatings group, which includes Chemcraft and Sikkens wood finishes, achieved a revenue gain of 12%. The company's Decorative Paints and Specialty Chemicals groups each achieved 6% revenue gains in Q2.
The restructurig charges relate to Akzo Nobel's global performance improvement program announced last October which the company said "is making good progress." It consists of three main building blocks: operational professionalization, functional standardization and business unit specific adaptations.
Akzo Nobel said the combined cost of the program in the first half year was €90 million ($109.3 million). The company said benefits of the program included in the first half year results, both in contribution margin and in cost savings, equal €65 million ($78,9 million). Since the program was announced, approximately1,000 employees have left the company, including about 800 this year.
“The overall performance in our Q2 results is solid given the increasingly difficult economic environment," said CEO Tom Büchner. (Watch related video.) "In my first few months as CEO, I have spent a great deal of time with our customers, employees and shareholders, and have also visited many of our factories around the world. My initial observations are that we have solid businesses and many strong market positions."
In other company news, Akzo Nobel announced that it launched a €750 million ($910.8 million) with a 10-year maturity, at a coupon of 2.625%. Akzo Nobel said the bond issue will improve its overall debt profile, further reducing future refinancing risk and improving its maturity profile.
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