MOSCOW (MRC) -- AkzoNobel says that its net profit in the second quarter of 2020 dropped 44% year on year (YOY), to EUR129 million (USD149 million), said Chemweek.
Sales went down 19%, to €1.98 billion from EUR2.45 billion in the same period of the previous year. The fall in sales, which dragged profits down, is mainly due to the impact of COVID-19 on end-market demand that resulted in 18% lower volumes YOY, the company says. EBITDA fell 25% YOY, to EUR297 million, the company says. Margin-management and cost-saving programs were able partly to offset the negative effect of lower demand, the company says. AkzoNobel announced preliminary results last week.
"Despite lower end-market demand, our business return on sales increased 30 basis points to 14% for the second quarter as a result of continued focus on margin-management and cost-saving measures,” says Thierry Vanlancker, CEO at AkzoNobel. Total cost savings delivered EUR116 million, of which EUR38 million in structural savings related to transformation initiatives, the company says.
The company's performance coatings business was hurt most severely by the impact of COVID-19 on end-markets, especially the automotive and aerospace industries, recording a 24% YOY decline in sales, to €1.09 billion, AkzoNobel says. Sales of the company's decorative paints business went down 10% YOY, to EUR899 million, it says. Raw material and other variable costs in the second quarter were EUR32 million lower compared with the year-earlier quarter, the company says.
For the first half of 2020, the company’s net profit was 18% lower YOY at EUR243 million, AkzoNobel says. Sales were down 13%, to €4.04 billion compared with EUR4.63 billion in the first half of 2019. EBITDA decreased by 4%, to EUR574 million, the company says.
Earlier this year, AkzoNobel suspended its 2020 financial ambition in response to the significant market disruption resulting from the pandemic. Despite the easing of headwinds related to COVID-19 during the second quarter, with sales almost 30% lower in April and almost 5% lower in June, the economic environment will remain uncertain in the second half due to the pandemic, the company says. Raw material costs are expected to have a favorable impact, and continued margin-management and cost-saving programs are in place to address the current challenges, the company says.
As it was written before, AkzoNobel finalized the acquisition of BASF’s global Industrial Coatings business, which supplies a range of products for industries including construction, domestic appliances, wind energy and commercial transport, strengthening its position as the global number one supplier in coil coatings.
As MRC informed earlier, BASF would expand the capacity of ethylene oxide and ethylene oxide derivatives at its Verbund site in Antwerp, Belgium. The total investment adds about 400 000 tpy to BASF’s production capacity for the corresponding products with an expected investment amount exceeding EUR500 million.
Ethylene is a feedstock for producing polyethylene (PE).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 721,290 tonnes in the first four month of 2020, up by 4% year on year. Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) shipments grew partially because of the increased capacity utilisation at ZapSibNeftekhim.
Akzo Nobel N.V., trading as AkzoNobel, is a Dutch multinational, active in the fields of decorative paints, performance coatings and specialty chemicals. Headquartered in Amsterdam, the company has activities in more than 80 countries, and employs approximately 55,000 people. Established in 1992 and specializing in sustainable water-based and advanced eco-friendly products, Mapaero operates a production facility in France and has around 140 employees.