Dulux paint maker AkzoNobel Q1 beats expectations, outlook underwhelms
Adds shares in paragraphs 2-4, CFO comment in 5th pargraph and details on legal case in paragraphs 14 and 15
By Stephanie Hamel
April 23 (Reuters) -AkzoNobel AKZO.AS reported a 19% rise in first-quarter core profit on Tuesday, beating analysts' expectations, as higher volumes and prices as well as lower restructuring costs helped the Dulux paint maker bolster margins.
Shares in the company fell more than 5% to their lowest since November though, as some investors had hoped management would raise its full-year outlook and after the company said it faced a lawsuit in Australia which could result in potential damages.
The Dutch paints and coatings maker reiterated guidance for adjusted earnings before interest, tax, depreciations and amortisation (EBITDA) of between 1.50 billion and 1.65 billion euros ($1.60 billion-$1.76 billion).
It posted adjusted EBITDA of 363 million euros, compared to 305 million euros a year ago, and above the 348 million expected by analysts in a company-provided consensus.
"We beat expectations in Q1 (...) and whenever you do that, people would like you to either raise your guidance for the year, but it's a bit early to have a more bullish view for Q2," said CFO Maarten de Vries in an interview with Reuters.
Cost-cutting as well as higher volumes and prices contributed to growth over the past six months, CEO Greg Poux-Guillaume said in a call with media.
"If we can hold pricing and increase volumes, then good things can happen," he said.
AkzoNobel has been recovering from a post-COVID slowdown in the last years, marked by rising raw material costs and destocking activity in its decorative do-it-yourself segment in Europe.
Over the past few years, soaring prices of everything from food to energy have also curbed consumer spending and forced households to tighten their budgets.
In October, the Dutch company unveiled a 150-million-euro investment plan through 2024-2026, aiming to save costs and improve supply chain efficiency.
Poux-Guillaume said the restructuring was focused on Europe and the United States.
"We will announce the first moves by the beginning of the summer. There will be closures involved," he said on a call with media.
Akzo said it faced a lawsuit claiming it was liable for degradation of the coating on parts of a large liquefied natural gas project in Australia, which local media have reported to be as high as $1.2 billion.
The company denies liability and contests the scale of alleged damages. The case will go to trial in federal court in June. A judgment is not expected before end-2025.
($1 = 0.9388 euros)
Reporting by Stéphanie Hamel;
Editing by Josephine Mason and Emelia Sithole-Matarise
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