AkzoNobel Q3 net income surges on margin rebound

AkzoNobel's net income surged to €189m in the third quarter, supported by a rebound in gross margins in both its core decorative paints and performance coatings businesses, said the company.

Q3 revenue 4% down on unfavorable exchange rates. Decorative paints Q3 revenue down 3%, operating income up by 53%. Performance coatings Q3 revenue down 5%, operating income more than doubles to €245m from €98m in the same period of last year.

Based on current market conditions, AkzoNobel aims to deliver around €1.45bn in adjusted EBITDA this year. "AkzoNobel expects the ongoing macro-economic uncertainties to continue and weigh on organic volume growth. The company will focus on margin management, cost reduction, working capital normalisation and de-leveraging," it said.

Cost reduction programs are expected to partly mitigate higher than expected inflationary pressure on operating expenses for this year. The company expects declining raw material costs to have a favorable impact on profitability.

We remind, AkzoNobel has completed the acquisition of the Chinese decorative paints business of US-based Sherwin-Williams for an undisclosed fee. The transaction includes the Huarun decorative paints brand, the company said in a statement. The business has an annual revenue of about €100m and employs around 300 people.

mrchub.com

US-based Axalta Coating Systems has inaugurated its new coating facility in northeast China’s Jilin city, Jilin province, according to a company news release.

The project can produce 15,800 tonnes of products annually. It will mainly make high-performance mobility coatings to meet the growing demand from China’s mobility sector.

Major products are waterborne primers and basecoats, as well as solvent primers, basecoats and clearcoats.

Construction of the project began in September 2021.

We remind, Axalta Coating Systems will be taking a pause before implementing it in other regions. The ERP implementation - launched on 1 May at 11 plants and many distribution centres in North America - resulted in “operational issues” and production constraints that were a factor in the 3.7% year-on-year volume decline Axalta saw during the quarter.

mrchub.com

Chevron Corp has agreed to acquire Hess Corp in an all-stock transaction valued at $53 bn, further diversifying the energy company's portfolio with the addition of Stabroek block interests offshore Guyana and adding Bakken acreage to the company's existing US shale position, said the company.

The deal is expected to increase Chevron’s estimated 5-year production and free cash flow growth rates and extend such growth into the next decade, the company said in a release Oct. 23.

This increased production growth and cash flow accretion—aided by $1 billion in expected run-rate synergies within a year of the deal’s closing—appears as motivation for the deal, TD Cowen analysts said in a note Monday.

We remind, Chevron Phillips Chemical, Technip Energies and LyondellBasell are collaborating on the design, construction and operation of a demonstration unit for Technip Energies’ electric steam cracking furnace technology, designed to reduce the greenhouse gas emissions associated with the olefins production process.

mrchub.com

Orbia's net income fell by 11.2% year on year in the third quarter, weighed by lower sales across most of its businesses amid poorer global demand, the Mexican vinyl producer said.

Net sales 1,976.0 2,291.0 -13.7 6,432.0 7,548.0 -14.8; EBITDA 320.0 381.0 -16.0 1,234.0 1,601.0 -22.9
Net income 95.0 107.0 -11.2 207.0 686.0 -69.8; - Q3 EBITDA margin fell about 46 basis points year on year to 16.2%; Q3 EBITDA weighed by lower volumes and lower prices in certain segments.

Financial costs fell by 21% year on year to $79m in the third quarter, supported by the depreciation of the Mexican Peso and other currencies.

"Third quarter results reflect the impact of global demand weakness," said Sameer Bharadwaj, CEO of Orbia. "We are seeing the impact of elevated interest rates and customers have become more cautious in placing orders."

We remind, Orbia's consolidated net income fell by 89% year on year in the second quarter as revenues were hit by a slowdown in demand from a strong prior-year period. Financial costs rose by 89% year on year to $135m in the second quarter, driven primarily by foreign exchange losses due to the appreciation of the Mexican peso and other currencies, as well as an increase in debt to support growth initiatives.

mrchub.com

Shell plc subsidiary Shell Gas BV and partners in the Oman LNG LLC venture signed an amended shareholders’ agreement for Oman LNG LLC extending the business beyond 2024.Oman LNG in turn signed various agreements to secure its gas supply until 2034, Shell said in a release Oct. 23, said the company.

Under these agreements, Shell Gas will remain the largest private shareholder in Oman LNG, with a 30% shareholding, and continues its role as technical adviser. In addition and based on previously signed term sheets, Shell International Trading Middle East FZE will purchase up to 1.6 million tonnes/year (tpy) of LNG from Oman LNG from 2025 to 2034, making Shell the largest LNG off-taker from Oman LNG.

Oman LNG operates a three-train plant with production capacity of 11.4 million tpy of LNG.

Shell in Oman holds interests in Petroleum Development Oman (34%), Oman LNG (30%) and Shell Oman Marketing Co. (49%). In January 2023, Shell started producing gas from Mabrouk field in Block 10, in which Shell holds 53.45% interest. From 2025, Shell is expected to become the largest buyer of LNG from Oman under contracts signed with Oman LNG.

We remind, Shell Upstream Overseas Services (I) Limited (“SUOS”), a subsidiary of Shell plc, has completed the
previously announced sale of its 35% participating interest in Indonesia’s Masela Production Sharing Contract (“Masela PSC”) to Indonesia’s PT Pertamina Hulu Energi and PETRONAS Masela Sdn. Bhd (“Petronas Masela”). The sale includes the Abadi gas project. Completion of the sale follows regulatory approval from Indonesia’s Ministry of Energy and Mineral Resources for the transfer of SUOS’ stake to PT Pertamina Hulu Energi Masela and Petronas Masela. This divestment is in line with Shell’s focus on disciplined capital allocation. Shell remains active in Indonesia’s downstream and low-carbon fuel sectors.

mrchub.com