AkzoNobel Q1 Revenue of €2.613 Billion, Strong Performance in Marine and Protective Coatings, Discussing Tariff Impact

On April 23, AkzoNobel released its Q1 2025 performance report. The company achieved a Q1 sales revenue of €2.613 billion, a 1% year-over-year decline. Organic sales remained flat, with price/mix increases offset by lower volumes. Price/mix rose by 2%, mainly driven by active pricing strategies. The decline in volumes was attributed to Turkey's year-round commercial rebalancing and macroeconomic uncertainty, especially in North America. The negative impact of currency on sales revenue was 1%, resulting in a 1% decrease in sales.

Operating profit was €192 million, a 26.0% year-over-year decline, impacted by identified items (€72 million), primarily related to restructuring costs in industrial excellence and SG&A projects. Adjusted EBITDA was €357 million, a 2% decline compared to the previous year. The increase in gross margin and cost-reduction measures helped absorb much of the impact of declining sales revenue. Adjusted EBITDA margin was 13.7%, compared to 13.8% last year. Net profit attributable to the parent company was €107 million, a 40.88% year-over-year decrease.

AkzoNobel CEO Greg Poux-Guillaume commented, “Thanks to our pricing strategy and strong cost-saving measures, our performance this quarter exceeded expectations. Our efficiency initiatives are paying off, enabling us to successfully offset the impact of market weakness and ongoing inflation. As we continue optimizing our operating model, organizational structure, and business layout, we expect further positive results in the future.”

“Despite the U.S. tariff policies exacerbating macroeconomic fluctuations, AkzoNobel’s 'local production' and 'sourcing risk reduction' strategies have shielded us from direct impacts on our base costs and delivery capabilities. However, with global trade reconfiguration and slowing economic growth, customer demand will become more cautious, and we anticipate potential indirect effects. As such, we will remain focused on internal optimization initiatives to ensure we meet our full-year targets and build a stronger AkzoNobel.”

Decorative Paints Division

The Decorative Paints division achieved €1 billion in sales for Q1 2025, a 2% year-over-year decline. Organic sales fell by 1%, with price/mix growth offset by lower volumes. Sales in the EMEA region were impacted by Turkey's year-round commercial rebalancing. Sales in China declined, though there was some improvement sequentially. Price/mix increased by 2%, driven by positive pricing in the EMEA and Latin America decorative paint markets. Currency effects had a 1% negative impact on revenues, leading to a 2% decline in sales. 

Operating profit for Decorative Paints was €77 million, a 34.0% year-over-year decline, mainly due to an identified item of -€32 million related to a restructuring plan. Excluding identified items, operating profit was affected by declining sales revenue, with gross margin and operating expenses remaining flat. Adjusted EBITDA was €147 million, a 6% year-over-year decline, with an adjusted EBITDA margin of 14.3%, down from 14.8% last year.

Regional Performance

• EMEA region: Organic sales decreased by 1% to €607 million. Price/mix increases were offset by a decline in volumes. The main reason for the decline in volumes was Turkey’s year-round commercial rebalancing. Sales in Central and Eastern Europe were higher. The PRO segment showed an improvement.
• Latin America: Organic sales grew by 5%, driven by active pricing, which offset a decline in volumes. Final sales revenue decreased by 7% to €171 million. Excluding inflationary price increases in Argentina, pricing remained positive. Sales volumes declined in Brazil and Colombia. In Brazil, sales were impacted by the timing of price increases, while the Colombian market showed signs of recovery in Q1.
• Asia: Organic sales decreased by 5%, with revenues declining by 3% to €252 million. Price/mix continued to decline, while prices in China stabilized. Volumes in China declined but improved sequentially. In Southeast Asia, sales in Indonesia and India were lower, with India performing better than the weak market.

Performance Coatings Division

The Performance Coatings division achieved €1.583 billion in sales, remaining largely flat compared to the previous year. Organic sales grew by 1%, driven by active pricing across all businesses, although partially offset by a decline in volumes. The marine and protective coatings saw double-digit volume growth, which was counterbalanced by macroeconomic uncertainty, particularly in North America. Currency effects negatively impacted sales by 1%, resulting in flat sales revenue. 

Operating profit was €171 million, a 3% year-over-year decline, mainly due to restructuring projects with identified items of -€14 million. Excluding identified items, operating profit increased due to higher revenues, slight improvement in gross margin, and lower operating expenses. Adjusted EBITDA increased by 5% to €231 million, with an adjusted EBITDA margin increasing to 14.6%, compared to 14.0% last year.

Segment Performance

• Powder Coatings: Organic sales fell by 3%, with sales revenue declining by 4% to €328 million. Volume growth in industrial and consumer segments was offset by declines in automotive and construction sectors.
• Marine and Protective Coatings: Organic sales grew by 13%, with sales revenue increasing by 12% to €403 million. Newbuild ship business continued to grow strongly, and industrial protective coatings showed significant improvement, both achieving double-digit revenue growth.
• Automotive and Specialty Coatings: Organic sales fell by 5%, with sales revenue declining by 5% to €354 million. Volume declines reflected continued weak demand for automotive and automotive refinish paints in North America and Europe, while price/mix remained positive. Aerospace volumes were impacted by challenges in North American OEMs, while European volumes were higher.
• Industrial Coatings: Organic sales declined by 1%, with sales revenue falling by 3% to €498 million. Volumes for coil and packaging coatings declined, while sales of wood adhesives and wood finishes slightly increased. Packaging coatings saw lower volumes due to a strong comparison last year.

Regional Sales

• Netherlands: Sales remained at €81 million, same as last year.
• Other EMEA countries: Sales decreased to €1.18 billion, compared to €1.20 billion last year.
• North Asia: Sales increased to €381 million, compared to €379 million last year, with decorative paints generating €108 million (down from €116 million) and performance coatings generating €273 million (up from €263 million).
• Southeast Asia: Sales increased to €330 million, compared to €320 million last year.
• North America: Sales decreased to €350 million, compared to €352 million last year.
• Latin America: Sales declined to €291 million, compared to €306 million last year.

Net cash outflow from operating activities in Q1 was €112 million, compared to €170 million in Q1 2024. The improvement compared to the first quarter of 2024 was mainly due to a reduction in outflows related to changes in working capital. Free cash flow in Q1 2025 improved compared to Q1 2024, mainly due to reduced outflows from working capital changes, partially offset by higher cash outflows related to our industrial excellence and SG&A restructuring programs and higher capital expenditures.

Based on the current market volatility and constant exchange rates, AkzoNobel expects adjusted EBITDA for 2025 to exceed €1.55 billion. For the medium-term, AkzoNobel aims to enhance profitability through organic growth and operational excellence, targeting an adjusted EBITDA margin of over 16%, with a return on investment between 16% and 19%. The company plans to reduce its net debt/adjusted EBITDA leverage ratio to below 2.5x by the end of 2025, with a medium-term target of around 2x, while maintaining a strong investment-grade credit rating.