(The following statement was released by the rating agency)
Oct 10 - =============================================================================== Summary analysis -- Akzo Nobel N.V. ------------------------------- 10-Oct-2012 =============================================================================== CREDIT RATING: BBB+/Stable/A-2 Country: Netherlands Primary SIC: Chemical preparations, nec Mult. CUSIP6: 010199 =============================================================================== Credit Rating History: Local currency Foreign currency 25-Feb-2009 BBB+/A-2 BBB+/A-2 28-Jun-2000 A-/A-2 A-/A-2 =============================================================================== Rationale
The ratings on Netherlands-based coatings and chemicals producer Akzo Nobel N.V. (Akzo) reflect what Standard & Poor's Ratings Services views as the company's "strong" business risk profile and "intermediate" financial risk profile.
We believe Akzo's strong business profile stems from its favorable business position and significantly lower cyclicality, relative to other chemicals companies. Akzo is a global leader in decorative paints and performance coatings, which together account for about two-thirds of company sales, complemented by its midsize specialty chemical activities. Akzo's paints and coatings segments enjoy low capital intensity with a portfolio of major brands, while demand has historically correlated with GDP. In addition, the company generates about 40% of total sales from high-growth markets, of which 22% was from Asia. We therefore view the company as being well positioned, in particular in China, where it aims to double sales to EUR3 billion over the medium term. Relative weaknesses, however, are the company's exposure to the global economic environment and volatile input costs.
However, we view the company's financial risk profile as "intermediate", which somewhat constrains the ratings. Underpinning this financial risk is the sensitivity of Akzo's sizable postretirement obligations to actuarial assumptions.