ANSTERDAM – Wood coatings and finishing materials specialist AkzoNobel reported double-digit drops in revenues and income during the second quarter, due partly to lower market demand during the COVID-19 pandemic.
However, the company said that its strong cash management and strong balance sheet put it in a sound position to deal with uncertainties involving COVID-19 moving forward.
The company reported nearly €2 billion in revenue, down 19% from the nearly €2.5 billion reported in the second quarter of 2019. Adjusted operating income was €238 million, down 22% from the €305 million reported during last year’s second quarter.
The company said that during the quarter, Decorative Paints revenue was 10% lower and 6% lower in constant currencies, including significant currency devaluation in South America. Price/mix was up 4%, while volumes were 10% lower, mainly due to lower end market demand
Its Performance Coatings revenue was 24% lower and 23% lower in constant currencies. Volumes, it reported, were 23% lower, mainly due to the impact of COVID-19 on end market demand, especially for automotive and aerospace markets.
For the half year, the company said that revenue was 13% lower and 11% lower in constant currencies, while price/ mix was up 2% overall. Volumes, it said, were 12% lower, mainly due to the impact of COVID-19 on end market demand.
Revenue in the Decorative Paints segment was 10% lower and 7% lower in constant currencies, with 3% positive price/mix, more than offset by 10% lower volumes, mainly due to COVID-19.
Meanwhile Performance Coatings revenue was 14% lower and 13% lower in constant currencies. Revenue, the company said, was positively impacted by 2% price/mix, while volumes were 15% lower, mainly due to the impact of COVID-19 on end market demand.
Raw material and other variable costs in the second quarter of 2020 were €32 million lower compared with the second quarter of 2019. In the first half-year, raw material and other variable costs were €82 million lower vs. the first half-year 2019.
Despite the challenges, the company said that it has been able to continue serving customers around the world.
“The outbreak of COVID-19 has not only seen us continue to supply our products to critical industries around the world,” the company said. “Our businesses and employees have also made every effort to support local projects and community initiatives in an effort to help as many people as possible.”
Commenting on the results, company CEO Thierry Vanlancker added, “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.
“I’m extremely proud of our teams around the world, who have continued to focus on serving our customers and delivered this resilient performance while also helping many communities affected by the pandemic. …Our rigorous cash management and strong balance sheet put us in a sound position to deal with the ongoing uncertainty from COVID-19 as we strive to deliver powerful performance as a frontrunner in our industry.”