* EBITDA 437 mln euros vs forecast 416 mln
* Sales up 16 pct to 3.76 bln euros vs forecast 3.56 bln
* Says confident can pass on higher raw materials costs
* Shares up 4.5 pct, hit near 3-yr high
(Adds results of PPG, Sherwin-Williams, updates shares)
By Aaron Gray-Block
AMSTERDAM, April 21 Paints and chemicals group
AkzoNobel NV's (AKZO.AS) first-quarter core profit rose 10
percent and it pledged more price rises to offset higher costs,
boosting its shares to their highest in nearly three years.
"We do have pricing power and are able to use our brands and
market positions to do this," Keith Nichols, chief financial
officer of the Dutch company, whose brands include DuLux,
Sikkens, Glidden and Flexa, told reporters.
Global paints companies have battled rising costs for input
materials such as titanium dioxide, used as a paint pigment, and
have looked to raise prices to sustain margins.
Nichols said raw materials prices were up a more than
expected 15 percent year-on-year and he did not see costs easing
in the near term, adding the company would continue to cut
AkzoNobel, the world's largest paint company, had said in
February it expected at least a mid-single digit rise in raw
materials prices in 2011, and Nichols told analysts this was
still on the cards. However, he said restructuring efforts in
mature markets could achieve between 50 million euros and 150
million of savings in any year.
Measures this year include capacity expansion to boost
efficiency and synergies from the firm's November 2009
acquisition of Dow Chemical's (DOW.N) powder coatings business.
ABN AMRO analyst Mark van der Geest said AkzoNobel's results
were "very strong", backed by volume growth in decorative paints
in Europe and the company's new contract to supply U.S. retail
group Wal-Mart Stores Inc (WMT.N).
"Fasten your seatbelts, AkzoNobel has lift off," Van der
Geest said, pointing also to higher-than-expected volumes at
AkzoNobel's specialty chemicals unit.
Shares in AkzoNobel were up 4.5 percent to 52.70 euros by
1343 GMT, having risen as high as 52.98 euros, their highest
since early June 2008, outperforming a 1.4 percent rise in the
STOXX Europe 600 chemicals index .SX4P.
U.S. rivals PPG (PPG.N) and Sherwin-Williams (SHW.N) also
reported strong quarterly results on improved demand and price
hikes, but Sherwin-Williams, the No. 1 U.S. paints maker,
forecast a weak second quarter. [ID:nN20161125] [ID:nL3E7FL2QP]
Dutch peer DSM (DSMN.AS), which supplies resins to
AkzoNobel, is also looking to raise prices due to higher energy
costs and will report its results next week. [ID:nLDE71M050]
AkzoNobel had 2.2 billion euros in cash on March 31, down
from 2.85 billion at year-end due to payments made to cut its
pension deficit, and has the firepower to make acquisitions.
Asked whether AkzoNobel would beef up its specialty
chemicals unit after Belgian rival Solvay (SOLB.BR) agreed to
buy French firm Rhodia RHA.PA this month, Nichols said bolt-on
or growth-type deals were possible in all three business units.
AkzoNobel had earnings before interest, tax, depreciation
and amortisation (EBITDA) excluding one-offs of 437 million
euros, up 10 percent, on sales up 16 percent at 3.76 billion
euros. Volumes grew 7 percent, while prices rose 4 percent.
Both EBITDA and revenue growth beat analysts' estimates and
the firm's full-year target of 5 percent. Margins were down year
on year but up quarter on quarter.
Nichols said the decorative paints business in the Americas
was on track to become EBITDA positive this year as efforts to
rebrand the Glidden brand pay off and the Wal-Mart contract
boosted revenue by more than 50 million euros.
"Wal-Mart will underpin profitability. We've got some good
news in the U.S.," he said.
(Editing by Sara Webb and Will Waterman)