PHOTO COURTESY AKZONOBELAkzoNobel, whose brands include Interlux and Awlgrip coatings, closed the first quarter of fiscal 2023 with revenues up by 5% and an 8% increase in constant currencies. Operating income was €182 million ($199.7 million) compared with €232 million ($254.4 million) in the year-prior quarter. Adjusted operating income was €218 million ($239.2 million).
“AkzoNobel expects the ongoing macro-economic uncertainties to continue and weigh on an organic volume growth,” the company said in a statement. “The company will focus on margin management, cost reduction, working capital normalization and deleveraging.”
Cost reduction programs are expected to mitigate pressure from inflation in operating expenses for 2023. The company also hopes declining raw material costs have a favorable impact on profitability. Based on current market conditions, AkzoNobel is targeting €1.2 billion to €1.5 billion ($1.3 billion to $1.65 billion) adjusted EBITDA.
Marine and protective coatings revenue for the first quarter was up 22% and was 23% higher in constant currencies. The increase was driven by pricing initiatives and volume growth in the marine and protective segments in Asia and North America.
The company said the reduction in operating income in the first quarter was a result of lower volumes, cost inflation and restructuring costs. Pricing initiatives helped compensate for higher raw material and freight costs.
Net cash from operating activities in the quarter resulted in an outflow of €50 million ($55 milion), a decrease compared with the previous year. The drop-off was blamed on a lower increase in working capital requirements, partly offset by lower profit for the quarter.
