Akzo Nobel Shares Gain on Revenue Outlook
Dutch chemical group Akzo Nobel said on Thursday it expected 2007 revenues of 10.2 billion euros ($15.10 billion), reassuring investors about its coatings unit performance and lifting its shares.
In an update ahead of the publication of its annual results on March 6, Akzo said it was comfortable with the median analyst forecast of 897 million euros for 2007 earnings before interest and taxes (EBIT), excluding extraordinary items.
The outlook is excluding the contribution of Imperial Chemical Industries, which Akzo acquired as of Jan. 2 for 8 billion pounds ($15.9 billion).
Akzo Nobel shares were up 6.8 percent at the close, outperforming the DJ Stoxx European chemical index.
Analysts had been worried about Akzo's decorative coatings unit after it failed to match their growth expectations in the third quarter pressured by the U.S. housing market crisis.
"With this update we wanted to show that coatings is doing fine," an Akzo Nobel spokesman said.
Akzo said fourth quarter revenues of the unit were unchanged compared to last year, but added that bottom line performance improved significantly due to a better product mix.
Coatings showed volume growth of 3 percent in the fourth quarter, Akzo said.
Petercam analyst Jan van den Bossche, who rates the shares "hold," welcomed the announcement: "Following the absence of volume growth in coatings in the third quarter, Akzo recovered this in the year-end quarter."
Akzo said fourth quarter revenues totalled 2.4 billion euros, up 2 percent from last year, and up 6 percent excluding currency effects and acquisitions and disposals.
"Results from ICI's decorative business increased substantially during the last quarter of 2007, particularly in North America compared with the fourth quarter in 2006," Akzo said.
Preliminary full year 2007 revenues for all ICI businesses were 4.9 billion pounds ($9.73 billion), 1 percent ahead of 2006, reflecting autonomous growth of 5 percent.
"In the fourth quarter the business delivered continued strong underlying sales growth compared with the same period in 2006, with autonomous growth up 6 percent to 1.2 billion pounds," Akzo Nobel said.