Akzo Nobel N : Quarterly report - Q1 (report q1 2025 akzonobel)

AkzoNobel | Report for the first quarter 2025 2

Our results at a glance

Highlights Q1 2025 (compared with Q1 2024)

• Organic sales flat; revenue down 1%
• Operating income €192 million (2024: €261 million), mainly impacted by restructuring costs
• Efficiency actions ahead of schedule
• Adjusted EBITDA €357 million (adjusted EBITDA margin: 13.7%), flat at constant currencies
• Higher prices and strong cost reduction compensating for lower volumes and inflation
• Net cash from operating activities negative €112 million (2024: negative €170 million)

Outlook*

Subject to ongoing market uncertainties and assuming constant currencies, AkzoNobel expects to deliver 2025 adjusted EBITDA above €1.55 billion.

For the mid-term, AkzoNobel aims to expand profitability to deliver an adjusted EBITDA margin of above 16% and a return on investment between 16% and 19%, underpinned by organic growth and industrial excellence.

The company targets leverage below 2.5 times net debt/adjusted EBITDA by the end of 2025 and around 2 times in the mid-term, while remaining committed to retaining a strong investment grade credit rating.

• Outlook represents current company expectations based on organic volumes, subject to ongoing market uncertainties and assuming constant currencies.

Alternative performance measures (APM)

AkzoNobel uses APM adjustments to IFRS measures to provide supplementary information on the reporting of the underlying developments of the business. A reconciliation of the alternative performance measures to the most directly comparable IFRS measures can be found in the Notes to the condensed consolidated financial statements, paragraph "Alternative performance measures."

Summary of financial results

First quarter		January-March
in € millions/%	2024	2025	∆%
Revenue	2,640	2,613	(1%)
Operating income	261	192	(26%)
Identified items*	(13)	(72)
Adjusted operating income*	274	264	(4%)
Adjusted EBITDA*	363	357	(2%)
Adjusted EBITDA margin (%)*	13.8	13.7
Average invested capital*	8,182	8,393	3%
ROI (%)*	13.8	13.1
Capital expenditures*	41	71
Net debt*	4,031	4,115
Leverage ratio	2.7	2.8
Net cash from operating activities	(170)	(112)
Free cash flow*	(211)	(183)
Number of employees (FTEs)	35,500	34,100
Net income attributable to shareholders	181	107
Weighted average number of shares (in millions)	170.6	170.8
Earnings per share from total operations (in €)	1.06	0.63
Adjusted earnings per share from continuing operations (in €)*	1.12	0.94

• Alternative performance measure: For more details on these measures, including reconciliation to the most directly comparable IFRS measures and explanation of their use, refer to the Notes to the condensed consolidated financial statements, APM paragraph.

AkzoNobel | Report for the first quarter 2025 3

Financial highlights

Q1 2025

Revenue

Organic sales flat, with an increase in price/mix offset by lower volumes. Price/mix was up 2%, mainly due to positive pricing. Lower volumes include the in-year commercial rebalancing in Türkiye, as well as the impact of macro-economic uncertainties, particularly in North America.

Adverse currencies impacted revenue by 1%, resulting in 1% lower revenue.

Revenue

First quarter		h
				∆%
in € millions	2024	2025	∆%	Organic*
Decorative Paints	1,056	1,030	(2%)	(1%)
Performance Coatings	1,584	1,583	-%	1%
Total	2,640	2,613	(1%)	-%

• Alternative performance measure: For more details on these measures, including explanation of their use, refer to the Notes to the condensed consolidated financial statements, APM paragraph.

Revenue development Q1 2025

10
5		2%	-%	-%	-%
0
	-2%		-1%	-1%
-5
-10		Volume Price/mix	Organic	Acq./div. FX	Other Revenue
			sales

in % versus		Price/	Organic	Acq./
Q1 2024	Volume	mix	sales	div	FX	Other Revenue
Decorative
Paints	(3)	2		(1)	-	(1)	-	(2)
Performance
Coatings	(1)	2		1	-	(1)	-	-
Total	(2)	2		-	-	(1)	-	(1)
Volume development per
quarter (year-on-year) in %		Q1 24	Q2 24	Q3 24	Q4 24	Q1 25
Decorative Paints				1	(1)	-	(2)	(3)
Performance Coatings			2	2	2	1	(1)
Total				2	1	1	-	(2)
Price/mix development per
quarter (year-on-year) in %		Q1	24	Q2 24	Q3 24	Q4 24	Q1 25
Decorative Paints				2	-	1	2	2
Performance Coatings			-	2	-	1	2
Total				-	1	-	1	2
Organic sales development per
quarter (year-on-year) in %		Q1 24		Q2 24	Q3 24	Q4 24	Q1 25
Decorative Paints			3		(1)	1	-	(1)
Performance Coatings		2		4	2	2	1
Total			2		2	1	1	-

Collaborative robot learns how to paint

Colleagues at our Sikkens Wood Coatings business have been working with Nordbo Robotics to develop a fast robot programming solution. Trained by humans, it copies the movements of expert craftsmen to carry out intricate wood coating applications. It will help address skilled labor shortages and its compact size means operators can safely work alongside, using it as they would any tool.

Revenue development per
quarter (year-on-year) in %	Q1 24	Q2 24	Q3 24	Q4 24	Q1 25
Decorative Paints	1	(1)	(3)	3	(2)
Performance Coatings	(2)	3	(3)	4	-
Total	(1)	2	(3)	4	(1)

AkzoNobel | Report for the first quarter 2025 4

Financial highlights

Q1 2025

Operating income

Operating income at €192 million (2024: €261 million) was impacted by identified items of negative €72 million (2024: negative €13 million), mainly related to restructuring costs from our industrial excellence and SG&A programs.

Adjusted EBITDA

Adjusted EBITDA at €357 million (2024: €363 million). An increase in gross margins and cost mitigating measures enabled us to absorb the majority of the impact of lower revenues. Operating expenses back at 2024 level, despite wage and general inflation. Adjusted EBITDA margin at 13.7% (2024: 13.8%).

Financing income and expenses

Financing income and expenses amounted to negative €30 million (2024: negative €16 million). The €14 million increase in expenses is mainly due to hyperinflation accounting, partly offset by less negative exchange rate results. Prior year comparatives also contained the positive interest impact related to the release of a provision for an uncertain tax position.

Income tax

The effective tax rate was 28.4% (2024: 22.6%). The lower tax rate in the prior year was primarily due to the release of a provision for an uncertain tax position.

Net income

Net income attributable to shareholders was €107 million (2024: €181 million). Earnings per share from total operations was €0.63 (2024: €1.06).

Adjusted EBITDA*

First quarter	January-March
in € millions	2024	2025	∆%
Decorative Paints	156	147	(6%)
Performance Coatings	221	231	5%
Other activities	(14)	(21)
Total	363	357	(2%)

• Alternative performance measure: For more details on these measures, including reconciliation to the most directly comparable IFRS measures and explanation of their use, refer to the Notes to the condensed consolidated financial statements, APM paragraph.

Operating income

First quarter	January-March
in € millions	2024	2025	∆%
Decorative Paints	116	77	(34%)
Performance Coatings	176	171	(3%)
Other activities	(31)	(56)
Total	261	192	(26%)
Operating income to net income		January-
First quarter
	March
in € millions		2024	2025
Operating income		261	192
Financing income and expenses		(16)	(30)
Results from associates		7	7
Profit before tax		252	169
Income tax		(57)	(48)
Profit from continuing operations		195	121
Profit from discontinued operations		(1)	-
Profit for the period		194	121
Non-controlling interests		(13)	(14)
Net income		181	107

AkzoNobel | Report for the first quarter 2025 5

Decorative Paints

Highlights Q1 2025

• Organic sales down 1%, revenue down 2%
• Adjusted EBITDA margin at 14.3% (2024: 14.8%)

Q1 2025

Organic sales down 1%, with an increase in price/mix more than offset by lower volumes. Deco EMEA volumes were impacted by in- year commercial rebalancing in Türkiye. Volumes in China were down, although sequentially better.

Price/mix up 2%, driven by positive pricing in Deco EMEA and Deco

LATAM.

Currencies negatively impacted revenue by 1%, resulting in 2% lower revenue.

Operating income at €77 million (2024: €116 million) was impacted

by identified items of negative €32 million (2024: negative €4 million), mainly due to restructuring programs.

Excluding identified items, operating income was impacted by lower revenue, with flat gross margins and operating expenses.

Adjusted EBITDA at €147 million (2024: €156 million). Adjusted

EBITDA margin at 14.3% (2024: 14.8%).

Europe, Middle East and Africa

Q1 organic sales and revenue down 1%. An increase in price/mix was offset by lower volumes. The majority of the volume decline was caused by in-year commercial rebalancing in Türkiye. Volumes were higher in Central and Eastern Europe. Trends in the Professional segment improved.

Latin America

Q1 organic sales up 5% due to positive pricing more than offsetting lower volumes; revenue down 7%. Pricing was positive, also when excluding inflationary pricing in Argentina. Volumes were lower, driven by Brazil and Colombia. In Brazil, volumes were impacted by the timing of our price increases, while the market in Colombia showed signs of recovery during the quarter.

Asia

Q1 organic sales were down 5% and revenue down 3%. Price/mix continued to be down, while pricing stabilized in China. Volumes were down in China but improved sequentially. In SESA, volumes were lower in Indonesia and India, with India outperforming a soft market.

Revenue development Q1 2025

10
5		2%	-%
0
	-1%	-1%	-%	-2%
-5
	-3%
-10		Volume Price/mix Organic	Acq./div. FX	Other	Revenue
		sales

Revenue

First quarter		January-March
				∆%
in € millions	2024	2025	∆%	Organic*
Decorative Paints EMEA	612	607	(1%)	(1%)
Decorative Paints Latin America	183	171	(7%)	5%
Decorative Paints Asia	261	252	(3%)	(5%)
Total	1,056	1,030	(2%)	(1%)

• Alternative performance measure: For more details on these measures, including explanation of their use, refer to the Notes to the condensed consolidated financial statements, APM paragraph.

Key financial figures

First quarter	January-March
in € millions/%	2024	2025	∆%
Operating income	116	77	(34%)
Identified items1	(4)	(32)
Depreciation and amortization,2	(36)	(38)
Adjusted EBITDA1	156	147	(6%)
Adjusted EBITDA margin (%)1	14.8	14.3
Average invested capital1	3,735	3,901	4%
ROI (%)1	13.9	12.2

• Alternative performance measure: For more details on these measures, including reconciliation to the most directly comparable IFRS measures and explanation of their use, refer to the Notes to the condensed consolidated financial statements, APM paragraph.
  2 Excluding identified items.

AkzoNobel | Report for the first quarter 2025 6

Performance Coatings

Highlights Q1 2025

• Organic sales up 1%; revenue flat
• Adjusted EBITDA margin increased to 14.6% (2024: 14.0%)

Q1 2025

Organic sales up 1%, driven by positive pricing in all businesses, partly offset by lower volumes. Double digit volume growth in Marine and Protective Coatings was more than offset by macro-economic uncertainties impacting volumes, particularly in North America.

Currencies negatively impacted revenue by 1%, resulting in revenue being flat.

Operating income at €171 million (2024: €176 million), impacted by

identified items of negative €14 million (2024: negative €1 million), mainly due to restructuring programs.

Excluding identified items, operating income increased due to a combination of higher revenue, a slight increase in gross margins and lower operating expenses.

Automotive and Specialty Coatings

Q1 organic sales and revenue down 5%. Lower volumes reflected continued weak demand within automotive and vehicle refinishes in North America and Europe, while price/mix was positive. Aerospace volumes were impacted by OEM challenges in North America, while volumes were higher in Europe.

Industrial Coatings

Q1 organic sales down 1%, revenue down 3%. Volumes in coil and packaging were down, while wood adhesives and wood finishes were slightly up. Packaging volumes were lower due to strong prior year comparatives.

Revenue development Q1 2025

10

5		2%	1%	-%	-%	-%
0
	-1%		-1%
-5
-10		Volume Price/mix	Organic	Acq./div. FX	Other	Revenue
			sales

Revenue

First quarter		January-March
				∆%
in € millions	2024	2025	∆%	Organic*
Powder Coatings	341	328	(4%)	(3%)
Marine and Protective Coatings	359	403	12%	13%
Automotive and Specialty Coatings	372	354	(5%)	(5%)
Industrial Coatings	512	498	(3%)	(1%)
Total	1,584	1,583	-%	1%

• Alternative performance measure: For more details on these measures, including explanation of their use, refer to the Notes to the condensed consolidated financial statements, APM paragraph.

Key financial figures

First quarter	January-March
in € millions / %	2024	2025	∆%
Operating income	176	171	(3%)
Identified items1	(1)	(14)
Depreciation and amortization2	(44)	(46)
Adjusted EBITDA1	221	231	5%
Adjusted EBITDA margin (%)1	14.0	14.6
Average invested capital1	3,805	3,733	(2%)

Adjusted EBITDA increased to €231 million (2024: €221 million).

Adjusted EBITDA margin increased to 14.6% (2024: 14.0%).

Powder Coatings

Q1 organic sales down 3% and revenue down 4%. Higher volumes in the industrial & consumer segments were more than offset by lower volumes in automotive and architectural segments.

Marine and Protective Coatings

ROI (%)1

18.8

19.9

• Alternative performance measure: For more details on these measures, including reconciliation to the most directly comparable IFRS measures and explanation of their use, refer to the Notes to the condensed consolidated financial statements, APM paragraph.
  2 Excluding identified items.

Q1 organic sales up 13% and revenue up 12%, with continued strong growth in marine new-build and notable improvement in protective, both delivering double digit growth.

AkzoNobel | Report for the first quarter 2025 7

Condensed consolidated financial statements

Condensed consolidated statement of income

First quarter	March
in € millions	2024	2025
Continuing operations
Revenue	2,640	2,613
Cost of sales	(1,553)	(1,565)
Gross profit	1,087	1,048
SG&A costs	(825)	(855)
Other results	(1)	(1)
Operating income	261	192
Financing income and expenses	(16)	(30)
Results from associates	7	7
Profit before tax	252	169
Income tax	(57)	(48)
Profit for the period from continuing operations	195	121
Discontinued operations
Profit/(loss) for the period from discontinued operations	(1)	-
Profit for the period	194	121
Attributable to
Shareholders of the company	181	107
Non-controlling interests	13	14
Profit for the period	194	121

Condensed consolidated statement of comprehensive income

First quarter	March
in € millions	2024	2025
Profit for the period	194	121
Other comprehensive income
Exchange differences arising on translation of foreign operations	96	(84)
Post-retirement benefits	(33)	12
Tax relating to components of	8	(3)
other comprehensive income
Other comprehensive income for the period (net of tax)	71	(75)
Comprehensive income for the period	265	46
Comprehensive income for the period attributable to
Shareholders of the company	248	43
Non-controlling interests	17	3
Comprehensive income for the period	265	46

Condensed consolidated balance sheet

	December 31,	March 31, 2025
in € millions	2024
Assets
Non-current assets
Intangible assets	4,049	3,991
Property, plant and equipment	2,122	2,109
Right-of-use assets	318	317
Other non-current assets	1,924	1,907
Total non-current assets	8,413	8,324
Current assets
Inventories	1,721	1,777
Trade and other receivables	2,498	2,809
Current tax assets	150	168
Short-term investments	165	173
Cash and cash equivalents	1,302	1,599
Total current assets	5,836	6,526
Total assets	14,249	14,850
Equity and liabilities
Group equity	4,816	4,862
Non-current liabilities
Provisions and deferred tax liabilities	1,032	1,025
Long-term borrowings	3,671	4,170
Total non-current liabilities	4,703	5,195
Current liabilities
Short-term borrowings	1,697	1,717
Trade and other payables	2,740	2,787
Current tax liabilities	120	114
Current portion of provisions	173	175
Total current liabilities	4,730	4,793
Total equity and liabilities	14,249	14,850

AkzoNobel | Report for the first quarter 2025 8

Cash flows

Net cash from operating activities in Q1 was an outflow of €112 million (2024: outflow of €170 million). The improvement compared to Q1 2024 is mainly due to a lower outflow from changes in working capital.

Net cash from investing activities in Q1 was an outflow of €63 million (2024: inflow of €219 million). Q1 2024 contained a high net inflow from short-term investments.

Net cash from financing activities in Q1 was an inflow of €471 million (2024: outflow of €581 million), mainly due to proceeds from a €500 million bond issuance in the quarter.

Net debt

At March 31, 2025, net debt was €4,115 million (December 31, 2024: €3,901 million). The increase was mainly due to seasonal build up of working capital and cash outflow related to our restructuring programs. Net debt/adjusted EBITDA at March 31, 2025, was 2.8 (December 31: 2024: 2.6).

Net debt

	March 31,	December 31,	March 31,
in € millions	2024	2024	2025
Short-term investments	(29)	(165)	(173)
Cash and cash equivalents	(1,069)	(1,302)	(1,599)
Long-term borrowings	3,183	3,671	4,170
Short-term borrowings	1,946	1,697	1,717
Total	4,031	3,901	4,115

Consolidated statements of cash flows

January-

First quarter	March
in € millions	2024	2025
Net cash and cash equivalents at beginning of period	1,453	1,273
Profit for the period from continuing operations	195	121
Amortization and depreciation	89	94
Impairment losses	-	3
Financing income and expenses	16	30
Results from associates	(7)	(7)
Pre-tax result on acquisitions and divestments	1	1
Income tax	57	48
Changes in working capital	(418)	(336)
Changes in post-retirement benefit provisions	(4)	(1)
Changes in other provisions	(12)	10
Interest paid	(48)	(41)
Income tax paid	(48)	(44)
Other changes	9	10
Net cash generated from/(used for) operating activities	(170)	(112)
Capital expenditures	(41)	(71)
Acquisitions and divestments net of cash acquired/divested	7	-
Investments in short-term investments	-	(8)
Repayments of short-term investments	238	1
Other changes	15	15
Net cash generated from/(used for) investing activities	219	(63)
Changes from borrowings	(573)	477
Dividends paid	(8)	(6)
Net cash generated from/(used for) financing activities	(581)	471
Net cash generated from/(used for) continuing operations	(532)	296
Cash flows from discontinued operations	(3)	(1)
Net change in cash and cash equivalents total operations	(535)	295
Effect of exchange rate changes on cash and cash equivalents	(3)	(7)
Net cash and cash equivalents at March 31	915	1,561

Free cash flow

The free cash flow in Q1 2025 improved compared with Q1 2024, mainly due to a lower outflow from changes in working capital, partly offset by higher cash out for our industrial excellence and SG&A restructuring programs, and higher capital expenditures.

Consolidated statement of free cash flows

January-

First quarter	March
in € millions	2024	2025
EBITDA	350	286
Impairment losses	-	3
Pre-tax results on acquisitions and divestments	1	1
Changes in working capital	(418)	(336)
Other changes in provisions	(16)	9
Interest paid	(48)	(41)
Income tax paid	(48)	(44)
Other changes	9	10
Net cash generated from/(used for) operating activities	(170)	(112)
Capital expenditures	(41)	(71)
Free cash flow	(211)	(183)

AkzoNobel | Report for the first quarter 2025 9

Shareholders' equity

Shareholders' equity amounted to €4.6 billion at March 31, 2025, compared with €4.6 billion at year-end 2024. The main movements in 2025 related to profit for the period of €107 million and negative currency effects of €73 million (net of taxes).

Dividend

The dividend policy remains unchanged and is to pay a stable to rising dividend.

In 2024, an interim dividend of €0.44 per share was paid (2023: €0.44). A final 2024 dividend of €1.54 (2023: €1.54) per common share is proposed for approval at the AGM on April 25, 2025.

Outstanding share capital

The outstanding share capital was 170.9 million common shares at the end of March 2025. The weighted average number of shares in Q1 2025 was 170.8 million shares.

Consolidated statement of changes in equity

				Other (legal)
			Cumulative	reserves and	Share-	Non-
	Subscribed	Cash flow	translation	undistributed	holders'	controlling
in € millions	share capital	hedge reserve	reserves	profit	equity	interests	Group equity
Balance at December 31, 2023	85	-	(711)	4,948	4,322	224	4,546
Profit for the period	-	-	-	181	181	13	194
Other comprehensive income/(expense)	-	-	92	(33)	59	4	63
Tax on other comprehensive income	-	-	-	8	8	-	8
Comprehensive income for the period	-	-	92	156	248	17	265
Dividend	-	-	-	-	-	(8)	(8)
Equity-settled transactions	-	-	-	6	6	-	6
Balance at March 31, 2024	85	-	(619)	5,110	4,576	233	4,809
Balance at December 31, 2024	85	-	(579)	5,068	4,574	242	4,816
Profit for the period	-	-	-	107	107	14	121
Other comprehensive income/(expense)	-	-	(73)	12	(61)	(11)	(72)
Tax on other comprehensive income	-	-	-	(3)	(3)	-	(3)
Comprehensive income for the period	-	-	(73)	116	43	3	46
Dividend	-	-	-	-	-	(7)	(7)
Equity-settled transactions	-	-	-	7	7	-	7
Balance at March 31, 2025	85	-	(652)	5,191	4,624	238	4,862

AkzoNobel | Report for the first quarter 2025 10

Invested capital

Invested capital* at March 31, 2025, totaled €8.5 billion, up €0.2 billion from year-end 2024. This increase was mainly caused by normal seasonality resulting in higher trade receivables and inventories.

Invested capital

	March 31,	December 31,	March 31,
in € millions	2024	2024	2025
Trade receivables	2,457	2,144	2,414
Inventories	1,779	1,721	1,777
Trade payables	(2,331)	(2,220)	(2,310)
Trade working capital	1,905	1,645	1,881
Other working capital items	(273)	(137)	(28)
Non-current assets	8,479	8,413	8,324
Less investments in associates	(223)	(227)	(234)
Less pension assets	(1,026)	(929)	(931)
Deferred tax liabilities	(519)	(491)	(501)
Invested capital	8,343	8,274	8,511

Trade working capital

Trade working capital* was €1.9 billion at March 31, 2025 (March 31, 2024: €1.9 billion). Trade working capital as a percentage of revenue was 18.0% in Q1 2025, which is the same as in Q1 2024.

Trade working capital

As % of revenue

18.0	17.3	17.7	18.0
			15.7

Q1 24

Q2 24

Q3 24

Q4 24

Q1 25

• Alternative performance measures: For more details on these measures, refer to the Notes to the condensed consolidated financial statements, APM paragraph.

Embracing circularity by reusing industrial residue to make paint

Industrial residue is being used by AkzoNobel in Brazil as a more sustainable raw material for making paint. Nearly a third of the total residue generated during industrial effluent treatment at the Mauá plant in São Paulo goes into the manufacture of Coral Pinta Piso floor paint. As well as helping to eliminate landfill disposal, it's also contributing to the preservation of natural resources.