Dutch Paints and Coatings maker Akzo Nobel’s first-quarter operating profit beat forecasts; helped by higher prices, better-than- expected demand in Europe and the reopening of China’s economy. Paint makers passed a chunk of steep raw materials costs on to customers last year through price increases but had warned of wanning sales volumes this year.
However, the 3% decline seen in the first-quarter volumes was better than anticipated thanks to European and Chinese demand, Akzo finance Chief Maarten de Vries said.
The group’s adjusted operating income fell 5% to 218 million euros ($241 mn) in the quarter, but beat the 193 million euros expected by the analysts in a company-provided consensus.
The makers of Dulux and Flexa Paints reiterated its full year outlook saying falling raw material costs should help its profitability. “Akzo which had planned to keep hiking price until April, does not plan to significantly increase prices in the next few months”, CEO Gregoire Poux-Guillaume said. He added, “We have some countries in which there are some specific issues that will lead us to adjust pricing.”
The group saw mid-single digit growth in China during the quarter and the forecast double-digit percentage growth in Chinese retail- related volumes for the full year. Poux-Guillaume said Akzo hoped to strengthen its position in China through its recent acquisition of Sherwin-Williams’ architectural paints business, expected to be completed in the second half of 2023.
