Paintmaker Akzo Nobel sees Q2 profit fall 1.8 per cent, repeats earnings guidance

AMSTERDAM - Akzo Nobel NV, the world's largest maker of paints and coatings, revealed Thursday that rising commodity costs, weak consumer demand, maintenance stops at its chemicals factories, and a strong euro combined to reduce second quarter earnings by 1.8 per cent from a year ago.

Net profit was €268 million ($381 million), down from €273 million in the same period a year earlier, even though revenues rose 4.9 per cent to €4.10 billion on the back of volume increases. However, the company's raw material costs spiked by 20 per cent from a year ago.

The company, which is Wal-Mart's paint supplier, and owns the Dulux brand among dozens of others, also repeated the outlook it gave in a June profit warning, that full year profits would be flat "assuming no further deterioration" in its business.

"I am not satisfied with our performance in the quarter, despite positive volume and pricing developments," chief executive Hans Wijers said. "The recent months have been challenging and it does take time for price increases to work through."

Akzo Nobel shares fell 1.4 per cent to €41.545 in early Amsterdam trading.

SNS Securities analyst Michel Veul said the results were not surprising following the June profit warning and was said he was more interested to get more details of a company plan to improve its performance.

He said the lack of good news in Thursday's report "reflects sustained tough market conditions."

Wijers retires next year and is due to be replaced by 45-year-old Ton Buchner, previously CEO of Swiss industrial conglomerate Sulzer AG.