AMSTERDAM (Reuters) - Dutch paints and coatings maker Akzo Nobel (AKZO.AS) on Tuesday reported a larger-than-expected 28 percent drop in first-quarter core profit as sales in the marine and oil industry continued to decline and raw material costs rose.
Akzo reported adjusted operating income of 149 million euros ($182 million) for the first three months of the year, while analysts polled by Reuters had expected 181 million euros.
Akzo attributed “continued adverse market conditions in the marine and oil and gas industries” to a 3 percent drop in overall sales volumes which was not fully offset by higher prices.
Together with adverse currency effects, this led to an 8 percent decline of total sales to 2.18 billion euros, considerably below the 2.3 billion level predicted by analysts.
The maker of Dulux paints last month said it expected rising raw material costs and currency effects to remain in 2018, but offset by price increases and cost cuts.
“We are ramping up our pricing initiatives and have implemented various cost discipline measures to deal with higher raw material prices”, Chief Executive Thierry Vanlancker said in a statement.
Vanlancker said Akzo was “on track” for delivering its target of a 15 percent return on sales by 2020. That figure stood at 6.8 percent in the first quarter, down 2 percentage points from a year earlier.
The results excluded Akzo’s speciality chemicals unit, which the company last month agreed to sell for 10.1 billion euros to a group of buyers led by Carlyle Group (CG.O).
($1 = 0.8185 euros)
Reporting by Bart Meijer; Editing by Biju Dwarakanath and Vyas Mohan