Coatings World - March 2013

of $95 million, or 9 percent, versus the prior year. Strong volume growth continued in North America and emerging regions, Architectural Coatings – EMEA (Europe, Middle East and Africa) segment sales for the quarter were $465 million, an increase of $16 million, or 4 percent, versus the prior year. Sales volumes declined 2 percent and currency translation was negative, but these declines were countered by increased sales related to the Dyrup acquisition, which added about 4 percent to segment sales, and improved pricing. Segment earnings were $9 million, up $1 million, as lower costs, including restructuring cost benefits, were partly offset by the impact from lower sales volumes.

Commodity Chemicals segment sales for the quarter were $405 million, up $7 million versus the prior year. Selling prices were modestly lower year-over-year stemming from lower chlorine pricing, including chlorine price decreases realized earlier this year, which was more than offset by higher caustic pricing and increased volume.

Caustic pricing was higher both year-over-year and sequentially versus the third quarter 2012. Segment earnings in the quarter were negatively affected by $5 million, resulting from the impacts of lower sales, higher maintenance expenses and lower facility utilization stemming from two previously announced

unplanned production outages. Despite these negative impacts, segment earnings improved to $72 million, up $9 million versus the fourth quarter 2011, due to lower manufacturing costs from higher operating rates driven by increased customer demand.

One of the previously announced unplanned outages is expected to continue to impact PPG’s results for Commodity Chemicals in January 2013, with an estimated negative earnings impact for the month of January in the $5 million to $10 million range based on reduced sales, negative sales mix and lower operating rates. Based on currently available information, production is anticipated to return to near-normal levels toward the end of January.

PPG intends to report results for the Commodity Chemicals segment in discontinued operations in 2013, following the Commodity Chemicals business separation transaction that is currently anticipated to be completed at the end of January 2013.

AkzoNobel Publishes Q4 and
Full-Year 2012 Results

Akzo Nobel N.V. published its fourth quarter and full-year 2012 results. Revenue for the year was up 5 percent driven by favorable currencies and pricing, which was partially offset by a decline in volumes.

EBITDA for the year was 4 percent higher at €1,901 million (2011: €1,834 million) helped by the performance improvement program, which contributed €276 million to EBITDA. As a consequence of the impairment charge of €2,106 million in Q3 related to Decorative Paints, we recorded a full-year operating loss of €1,244 million. Excluding this impairment charge, operating income was €862 million positive (2011: €1,145 million).

“AkzoNobel delivered a strong set of results in difficult markets, underpinned by the performance improvement program which exceeded our intermediate targets,” said CEO Ton Büchner.

Commenting on the outlook Büchner said: “The economic environment remains challenging and we expect no

fundamental changes in the trends that we have seen recently in our businesses. We will continue to focus on performance improvements and operational efficiencies in order to benefit from our strong portfolio of businesses with many leading market positions and exposure to growth markets.” Business Performance Decorative Paints was impacted by weaker demand in the European markets. Specialty Chemicals delivered a robust performance, despite weaker demand in the second half of the year. Performance Coatings recorded a strong performance driven by margin management and operational efficiency actions, despite weaker volumes overall.

Portfolio Changes On December 14, 2012, AkzoNobel announced the sale of Decorative Paints North America to PPG. On December 28, 2012, the company completed the sale of Chemicals Pakistan, which was subsequently deconsolidated. In early 2012, AkzoNobel acquired Boxing Oleochemicals in Specialty Chemicals – the leading supplier of nitrile amines and derivatives in China and throughout Asia. The Schramm/SSCP acquisition accounted for the positive acquisition effect in Performance Coatings as these activities were consolidated from Q4 2011. Incidental Items AkzoNobel incurred higher restructuring costs, mainly in mature markets, as the company implemented its performance improvement program. Restructuring activities are ongoing across the businesses, with the restructuring being stepped up in the European Decorative Paints business in Q4.

Raw Materials On average, raw material costs were stable compared with the previous year, with the upward pressure on oil prices offsetting softer titanium dioxide prices. Proposed Dividend AkzoNobel will propose a total dividend for 2012 of €1.45. A final dividend will be paid in cash unless shareholders elect to receive a stock dividend.