Akzo Nobel's Second-Quarter Profit Falls on Taxes, but Sales Improve
Akzo Nobel, the Dutch chemicals and industrial coatings maker, reported that net profit fell 25% to 270 million euros ($373 million) in the second quarter.
This was despite a 2.7% rise in sales and a 32% increase in operating profit, which rose to 251 million euros ($347 million) from 190 million euros in the same period last year.
The company's net profit fell due to higher taxes.
Akzo said that strengthening economies in Asia and Europe drove demand for its products, while a U.S. slowdown was worsening.
It said that price increases were "restoring margins that were affected by the raw material and energy cost rises of the past two years" even though raw materials prices are still rising slowly in some areas.
Akzo Nobel paid 48 million euros in income taxes in the quarter, compared with receiving 82 million euros in credits the same quarter a year ago after audits in "various countries" revealed the company had been paying too much in the past.
Among Akzo's main division, operating results at its coatings businesses improved 21% to 196 million euros, its pharmaceuticals arm also improved 21%, to 146 million euros, and its industrial chemicals arm improved and 29% to 89 million euros.
New Jersey-based Schering-Plough agreed in March to buy the pharmaceuticals arm for $14.4 billion in cash, but the deal isn't expected to close until late this year and its results are still included in Akzo's earnings.
"Assuming that no significant changes in the major economies of the world occur, Akzo Nobel believes that it is well placed to ... outgrow its markets and further improve the financial returns in Coatings and Chemicals compared with 2006," the company said in a statement.