Despite Cost Cuts, Akzo Nobel Profit Falls Short
Dutch chemical group Akzo Nobel said on Tuesday its third-quarter core profit rose 11 percent, supported by its chemical unit and cost cutting at its decorative coatings business.
Third-quarter earnings before interest and tax (EBIT) from continuing operations and excluding exceptional items was 244 million euros ($346.6 million), missing the average forecast of 251 million euros in a Reuters poll of 10 analysts.
Analyst estimates ranged from 240 million to 266 million euros.
Akzo Nobel is seeking shareholder approval for an 8 billion pound acquisition of Britain's ICI, and is selling its pharma unit Organon for 11 billion euros to U.S. pharmaceutical company Schering Plough .
Operating profit before incidentals at the coatings unit was up 8 percent at 174 million euros.
"The turnaround of decorative coatings has continued in the quarter with a strong bottom line performance. This improvement in earnings has largely resulted from the ongoing restructuring programmes that are being successfully implemented in mature markets," Akzo said in a statement.
Akzo's net profit, including Organon, fell 10 percent to 281 million euros, mainly on restructuring and impairment charges of 31 million euros.
Third-quarter revenue from continuing operations was up 2 percent at 2.6 billion euros.
Analysts expected average net profit of 285 million euros on revenues of 2.6 billion euros, with individual net profit forecasts ranging from 268 million to 312 million euros.
Akzo said its portfolio was well-positioned for profitable growth, adding it believed it is well placed to outgrow its markets and further improve the financial returns in coatings and chemicals compared with 2006.
Akzo shareholders will vote on the ICI acquisition on Nov. 5. Akzo Nobel shares have gained 28.5 percent since the announcement in March of the Organon sale, outperforming an 18.8 percent higher DJ Stoxx European chemical index.