Your Source for Up-To-Date News and Research on the Collision Repair Industry 

 

click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email

SUBSCRIBERS-ONLY
Today's News
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor

Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide

Management/
Technical Info
Market Watch Rates
INSIGHT Inside this month's issue...

Feedback
Letter to the Editor

Akzo Nobel's Q2 Net Income 2% Lower; Cuts Back on Plan to Double Coatings Sales

Akzo Nobel has announced its second quarter earnings.

Fritz Froehlich, Akzo Nobel's CFO, said, "Second quarter net results for the Company were two percent lower than last year. Coatings had a top quarter with strong sales and a 15 percent better operating income. Chemicals was able to equalize last year, a solid performance in difficult business conditions. In these sectors we are clearly beginning to see the results of our aggressive restructuring efforts that began last year. Pharma had a mixed performance. Sales were up five percent, but earnings declined eight percent. Animal healthcare Intervet had a substantially lower second quarter due to the weak economy in Latin America and significant one-off charges. On the other hand, human healthcare Organon again scored strong autonomous sales growth: up nine percent. Operating income was only somewhat higher due to additional expenditures for future growth. During the last few weeks of the quarter in particular we had to deal with the increasing influence of declining key currencies. We are also experiencing a slower than expected pick-up of the economy in our most important markets. Based on these recent facts, we now expect a net income for 2002 that is slightly below 2001."

Commenting on the turnaround in the Coatings business Froehlich said: "Coatings earnings were up 15 percent, mainly as a result of our aggressive restructuring efforts and lower raw material prices. We can clearly see the benefits of restructuring coming through. Our Decorative Coatings business had a top quarter and demonstrated a good performance, Marine & Protective Coatings and Car Refinishes showed strong results and our industrial activities are doing better despite tough business conditions."

In order to further strengthen its world leading positions in Coatings, Akzo Nobel invested in high-growth regions by opening new facilities in Russia and China, and made a number of strategic bolt-on acquisitions.

The restructuring programs continue to be implemented in Coatings and Chemicals. As a result of these measures in the first half-year, the workforce in the two groups was reduced by some 900 jobs. On balance, however, the Company increased its workforce by 1,100 jobs, from acquisitions and to support the high-growth Pharma business. The company is back-pedaling from its ambitious plan to double coatings sales at this point.

Earlier this year, the Company expected that net income would exceed record year 2000 (EUR 956 million), assuming that the economy would resume growth in the second half of this year and that there would be no major changes in currency exchange rates.

Froehlich commented, "Going forward, we now expect to achieve a net income for 2002 that is slightly below 2001's result of EUR 930 million. This new outlook is caused by the fast weakening of a number of our key currencies and the slower than expected pick up of the economy in our important markets."

©2002 Collision Repair Industry INSIGHT
All Rights Reserved

FEATURED
LINKS:

INSIGHT Supports the NABC!
Do You?