* Q1 sales volumes fall, results beat analysts' forecasts
* CFO warns of economic uncertainty, raw material costs
* Shares up 0.6 pct after initial gain of more than 3 pct
By Sara Webb
AMSTERDAM, April 19 AkzoNobel NV, the
world's largest paints maker and owner of the Dulux brand,
warned that economic uncertainty - even in some emerging markets
- as well as high raw materials prices posed challenges this
The Dutch firm reported better-than-expected first-quarter
results on Thursday but painted a cautious picture for the rest
of 2012, citing the weak state of the mature U.S. and European
economies, as well as slower growth in China and Southeast Asia.
The company didn't give a full-year profit forecast as a result.
"The macroeconomy is the biggest headwind," said Keith
Nichols, chief financial officer, noting that growth in emerging
markets, while still relatively strong, had "cooled somewhat."
AkzoNobel said demand has slowed in China, where the
government is taking steps to curb an overheated property
market, and in Southeast Asia as a result of economic
The firm, which also makes performance coatings for cars,
aircraft and ships, as well as specialty chemicals such as those
used in the pulp and paper industry, said sales volumes at all
three divisions fell in the first quarter, reflecting economic
uncertainty and the effect of higher prices.
AkzoNobel was able to pass on the rise in prices for raw
materials to its customers last year, and said it expects higher
prices for oil and titanium dioxide, a paint pigment, this year.
"The oil price has gone up, titanium dioxide is still going
up and expected to go up further," Nichols said.
The escalating cost of materials such as titanium dioxide
and oil-related resins and solvents was particularly painful
last year for paintmakers.
AkzoNobel said the cost of titanium dioxide, an essential
ingredient in some of its paints, doubled last year. It declined
to give a forecast for the cost increase this year, but ING
analyst Fabian Smeets said he expects the price to rise another
AkzoNobel shares were up 0.6 percent at 1050 GMT, after
rising more than 3 percent to an intraday high of 44.9 euros.
The stock has risen 15.5 percent over the year-to-date,
outperforming the underlying AEX index. Smeets has a "buy"
rating on the stock and a 48 euro price target.
First-quarter earnings before interest, tax and depreciation
(EBITDA) were 423 million euros, down 3 percent from a year ago.
Analysts polled by Reuters had forecast EBITDA of 385 million
euros, and have a full-year forecast of 1.894 billion euros.
The company reiterated its medium-term target for annual
revenue of 20 billion euros, as well as its ambition to increase
EBITDA each year while maintaining a 13 to 15 percent margin.
It reported a first-quarter net profit of 70 million euros
from continuing operations, and revenue of 3.97 billion euros
compared to forecasts from a poll commissioned by Reuters of
67.3 million euros net profit on revenue of 3.88 billion euros.
AkzoNobel's cautious note contrasts with the bullish
outlooks issued recently by its U.S. peers - chemical-maker PPG
Industries Inc and top U.S. paints maker
"AkzoNobel has a very weak position (in the U.S.) and it is
not so easy for it to increase prices there" because of its
contract to sell its products at Wal-Mart Stores, ING's
PPG Industries forecast first-quarter profit above Wall
Street expectations on April 5, although it said it would lay
off 2,000 workers, mostly in Europe, due to weak demand.
Sherwin-Williams on April 9 raised its earnings outlook for
the first quarter, helped mainly by strong sales at its retail