On January 29, AkzoNobel released its 2024 fiscal year operating performance report. The company achieved sales of €10.711 billion (approximately $11.618 billion or RMB 82.74 billion), which was nearly flat compared to the previous year. Organic sales grew by 2%, driven by a 1% increase in volume and a 1% increase in price/combination. The growth in coatings, including ship coatings, protective and powder coatings, continued, especially in China. Decorative paint volumes remained flat, with growth in LATAM and SESA offset by continued weakness in the Chinese market. The negative impact of currency on revenue was 1%. Adjusted EBITDA increased by 3% to €1.478 billion; operating profit was €917 million, a 10.88% decline, mainly due to restructuring costs. Net profit attributable to the parent company was €542 million (approximately $588 million), up 22.62% year-on-year.
"Looking ahead, we do not expect a significant market rebound in 2025. The self-help measures we are taking will increasingly contribute to profitability," said Greg Poux-Guillaume. "We are making AkzoNobel stronger, more vibrant, and more competitive. When our end markets begin to grow again, it will benefit us greatly, enabling us to achieve our medium-term goals."
Operating income was €41 million (2023: €99 million), mainly due to a negative impact from specific projects of -€33 million (2023: positive €17 million). Specific projects in 2024 mainly included restructuring-related costs, while 2023's projects included gains from asset divestitures. Excluding specific projects, operating income slightly declined due to lower gross margin. Adjusted EBITDA was €113 million (2023: €121 million), with an adjusted EBITDA margin of 11.1% (2023: 12.3%).
For the full year of 2024, the Decorative Paints division achieved fixed currency sales of €4.301 billion, flat compared to the previous year. Organic sales grew by 1% due to price/combination increases. Volumes were flat, with growth in SESA and LATAM offset by continued weakness in China. The acquisition of China’s China National Resources Group (CNRG) Decorative Paint added 1%, while adverse currency impact had a negative 1% effect, resulting in flat revenue.
Operating income was €405 million (2023: €500 million), mainly due to specific projects being negative €80 million (2023: €0). Specific projects in 2024 included restructuring costs, while 2023’s included gains from asset divestitures. Excluding specific projects, operating income expanded to some extent due to margin improvements offsetting operating cost inflation. Adjusted EBITDA was €635 million (2023: €645 million), with an adjusted EBITDA margin of 14.8% (2023: 15.0%).
In the fourth quarter, organic sales in EMEA decreased by 1%, with sales revenue increasing by 2%. The main reason for the decline in organic sales was lower volumes in Western and Central Europe, while pricing was positive. For the full year, organic sales increased by 2%, and sales revenue increased by 2% to €2.462 billion. Organic sales growth was driven by higher prices/combination, with sales increases in the Benelux and sub-Saharan Africa, offset by declines in Southeast Europe and France.
In the fourth quarter, organic sales in LATAM grew by 22%, and sales revenue increased by 29%, driven by higher volumes and positive pricing. The sales revenue benefited from a favorable comparison due to the full impact of the Argentine peso devaluation in December 2023. The main reason for volume growth was strong performance in the Brazilian market. Higher prices included inflation-based pricing in Argentina. For the full year, organic sales grew by 11%, and sales revenue increased by 6% to €825 million, driven by positive price/combination. Despite strong growth in Brazil, volume declines in Colombia and Argentina due to economic conditions offset some of this growth.
In the fourth quarter, organic sales in Asia declined by 14%, and sales revenue decreased by 13%, mainly due to reduced demand in China. Southeast Asia showed strong growth, with a rebound in Vietnam, but the Chinese market continued to face challenges. Pricing in China remained competitive and stable compared to Q3. For the full year, organic sales decreased by 9%, and sales revenue dropped by 8% to €1.014 billion. Volumes in China have been declining since Q2, but Southeast Asia (SESA) showed high single-digit growth, driven by strength in India and Vietnam.
In the fourth quarter of 2024, AkzoNobel's High-Performance Coatings division reported a 4% increase in fixed currency sales, reaching €1.602 billion. Organic sales grew by 2%, driven by growth in ship, protective, and powder coatings, offsetting weakness in industrial coatings and automotive and specialty coatings. Price/combination increased by 1%. Currency had a positive impact of 2%, resulting in a 4% sales revenue growth.
Operating income was €150 million (2023: €155 million), impacted by specific projects of -€34 million (2023: -€10 million). Specific projects in 2024 mainly included restructuring costs. Excluding specific projects, operating income increased due to higher revenues, stable operating expenses, and margins. Adjusted EBITDA increased to €230 million (2023: €208 million), with an adjusted EBITDA margin of 14.4% (2023: 13.5%).
The AkzoNobel Performance Coatings division achieved a 1% increase in sales revenue, reaching €6.41 billion for the full year, with organic sales growth of 2%, driven by sales increases in most businesses. The growth was largely fueled by strong demand in marine and protective coatings, as well as powder coatings, along with solid performance in most of the Chinese market. Prices/mix were stable. Adverse currency effects reduced sales revenue by 1%, resulting in an overall 1% increase in sales revenue. Operating income was €679 million (2023: €698 million), negatively impacted by a €56 million project related to restructuring costs (2023: €13 million positive due to asset disposals). Excluding the impact of specific projects, gross margin expanded, offsetting the increase in operating costs. Adjusted EBITDA rose to €913 million (2023: €854 million), with an increase in the adjusted EBITDA margin to 14.2% (2023: 13.4%).
Powder Coatings: In Q4, organic sales and revenue were flat, with growth in industrial and consumer segments offset by weaker automotive demand and negative mix effects. For the full year, organic sales grew by 1%, while revenue declined by 1% to €1.365 billion. Organic sales growth was driven by industrial, consumer, and construction sectors, with a slight decline in the automotive industry in the second half.
Marine and Protective Coatings: In Q4, organic sales grew by 13%, and revenue increased by 14%, driven by volume growth in all regions, sustained strong demand for new marine builds, and increased activity in protective coatings in North America. For the full year, organic sales grew by 8%, and revenue increased by 6% to €1.575 billion, with organic sales growth driven by increased offshore new builds, yacht coatings, and protective coatings in South Asia.
Automotive and Specialty Coatings: In Q4, organic sales remained flat, but revenue increased by 3%, as sales volumes declined due to weak automotive and automotive refinishing demand, offset by price/mix improvements. Aerospace volumes were affected by OEM challenges, but order intake remained strong. For the full year, organic sales grew by 2%, and revenue increased by 1% to €1.434 billion, with organic sales growth driven primarily by higher price/mix. Volume declines were seen in automotive refinishing and the automotive industry, while aerospace volumes remained stable.
Industrial Coatings: In Q4, organic sales declined by 3%, with sales revenue flat. Declines in all sectors were driven by lower sales volumes, while price/mix remained stable. For the full year, organic sales declined by 1%, and sales revenue decreased by 2% to €2.036 billion, with volume gains in packaging and wood adhesives during the first half of the year offset by lower price/mix effects.
Regional Sales:
Cash Flow: In Q4, net cash flow from operating activities was €398 million (2023: €574 million). The lower net cash inflow was mainly due to reduced accounts payable resulting from lower inventory. As of December 31, 2024, net debt increased to €3.901 billion (2023: €3.785 billion), driven by lower net cash flow from operating activities, primarily due to a decrease in accounts payable from lower inventory levels. As of December 31, 2024, the net debt/EBITDA ratio was 3.0, while the net debt/adjusted EBITDA ratio was 2.6.
Based on current market conditions and constant currency, AkzoNobel expects its adjusted EBITDA for 2025 to exceed €1.55 billion. In the medium term, AkzoNobel's goal is to expand profitability, aiming for an adjusted EBITDA margin of more than 16% and an investment return of 16% to 19%, with organic growth and industry excellence as the foundation. The company also aims to reduce its leverage to below 2.5x net debt/adjusted EBITDA by the end of 2025 (down from 2.9x net debt/EBITDA) and maintain a strong investment-grade credit rating.
