(Refiles to fix garble in headline)
* Shares drop more than 6 pct
* Hedging "only buys you time", CFO says
By Thomas Escritt and Sara Ledwith
AMSTERDAM, April 17 Dutch paints and chemicals
maker AkzoNobel blamed adverse currency effects for lower than
expected earnings on Thursday, but said it was on course to meet
its 2015 targets in a fragile economic environment.
Sales volumes grew in all of the company's three main
product areas, but the currency effects dented sales. Much of
the problem was down to translating earnings into a stronger
euro, Chief Financial Officer Keith Nichols told Reuters.
"We're obviously in a very volatile patch," said Nichols,
referring not only to weaker currencies in emerging markets such
as China, Brazil and some Latin American countries but also to
the uncertain outlook for the Middle East, the Russian and
Chinese economies and jumpy global stock markets.
AkzoNobel shares were down more than 6 percent at 53.18
euros at 0935 GMT.
The company, which owns Dulux paints, makes performance
coatings for cars and aircraft and supplies specialty chemicals
for the pulp and paper industry, posted earnings before interest
and taxation (EBIT) down 0.5 percent at 216 million euros
($298.22 million) on sales down 2 percent at 3.38 billion euros.
AkzoNobel was expected to report a 6.5 percent increase in
EBIT on sales of 3.4 billion euros, according to the average
forecast from six analysts polled for Reuters.
AkzoNobel trades at 15.9 times forward earnings, according
to Reuters' calculations based on Smartmine estimates, in line
with the median of its European chemical industry peers.
"There were large currency moves across all segments due to
the depreciation of emerging market currencies," Jeremy
Redenius, senior analyst at Bernstein Research, said in a note.
But he rates AkzoNobel's shares "outperform", citing a
strong business, restructuring efforts, signs of volume recovery
in Europe and a relatively attractive valuation.
AkzoNobel is actively hedging its exposure to markets where
its costs in dollar or euro terms are also rising, Nichols said;
but "hedging only buys you time... If things are stable from
here, our comparables get better."
The firm said it was still on course to meet its 2015
targets. Those are a 9 percent return on sales, 14 percent
return on invested capital and a ratio of net debt to EBITDA of
less than 2.
"Despite higher restructuring charges, continued adverse
currency effects and ongoing weakness in Europe, our
year-on-year return on sales, both before and after higher
restructuring charges, improved for the third consecutive
quarter," Nichols said in the earnings statement.
The company generates 38 percent of sales in mature European
economies, a quarter in Asia Pacific and 15 percent in north
America, according to its 2013 annual report.
($1 = 0.7243 Euros)
(Reporting by Thomas Escritt and Sara Ledwith; editing by Tom