Coatings World - March 2014

supported by its ‘Planet Possible’ sustainability strategy focused at creating more value from fewer resources. Building on its number one position in the Materials industry group on the Dow Jones Sustainability Indices (DJSI), AkzoNobel keeps intensifying its activities to implement the strategy which includes the following targets: In 2020, AkzoNobel’s eco-premium products with a downstream benefit will account for 20 percent of revenue. In 2013 this was 18%;

Carbon emissions will be reduced by 25 to 30 percent per ton of product by 2020 (base 2012).

Outlook

Although we have seen early signs of stabilization in the second half of 2013 in some of our businesses, the economic environment remains fragile and foreign currencies volatile. We will continue to significantly restructure our businesses in 2014 to reduce our cost base further to offset the expected continued soft demand. AkzoNobel is on track to deliver on its 2015 targets of ROS at 9.0 percent and ROI at 14.0 percent with a net debt/ EBITDA ratio lower than 2.0.

BASF Increases 2013 Sales
and Earnings

BASF increased sales and earnings in 2013 compared with the previous year. “2013 was again a demanding year, with a lot of headwind for our industry. Nevertheless, we achieved our goal: We sold more, worked more closely together with our customers and enhanced our portfolio,” said Kurt Bock, chairman of the Board of Executive Directors of BASF SE at the Annual Press Conference in Ludwigshafen.

Sales of BASF Group in the fourth
quarter of 2013 were € 18. 1 billion,
slightly above the same period of the
previous year. Volumes increased in all
segments. Sales prices were slightly lower
overall in the fourth quarter; negative
currency effects lowered sales in all divi-
sions. Acquisitions contributed to sales
growth, particularly in the Oil & Gas and
Agricultural Solutions segments.
Income from operations (EBIT) be-
fore special items improved in all oper-
ating segments in the fourth quarter and
increased by €223 million to € 1. 5 bil-
lion. EBIT rose by €584 million to € 1. 6
billion. This included special income of
€429 million from the reclassification of
GASCADE Gastransport GmbH. This
joint venture had previously been fully
consolidated. Since December 31, 2013,
GASCADE has been accounted for using
the equity method in the BASF Group fi-
nancial statements due to a change in the
voting rights in their supervisory board.
For the full year, sales rose by just
under three percent to reach € 74.0 bil-
lion. A considerable, mainly volumes-
driven sales increase in the Oil & Gas
and Agricultural Solutions segments was
largely responsible for this development.
Sales slightly declined in the chemicals
business, which includes the Chemicals,
Performance Products and Functional
Materials & Solutions segments, despite
higher sales volumes. This was mainly on
account of negative currency effects. EBIT
before special items in 2013 rose by €543
million to € 7. 2 billion. In addition to the
successful business with crop protection
products and a higher contribution from
the Functional Materials & Solutions seg-
ment, this increase was also due in large
part to the earnings improvement in Other.

Net income amounted to € 4. 8 billion, slightly above the previous year’s level. Earnings per share rose from € 5. 25 to € 5. 27. Adjusted earnings per share amounted to € 5. 37, €0.27 under the previous year.

Valspar Reports Fiscal 2014
First-Quarter Results

The Valspar Corporation reported first
quarter 2014 net sales of $956 mil-
lion, an increase of nine percent over
the prior year. Reported net income and
earnings per diluted share for the cur-
rent year includes nonrecurring items,
which are detailed in the “Reconciliation
of Non-GAAP Financial Measures” in-
cluded in this release. First quarter 2014
adjusted net income and earnings per
diluted share, excluding these nonrecur-
ring items, were $61 million and $0.70,
respectively. First quarter 2013 adjusted
net income and earnings per diluted share
were $55 million and $0.60, respectively.

“We are pleased to report a good start to our fiscal year with first quarter sales increasing nine percent over the previous year and diluted EPS (as adjusted) up 17 percent,” said Gary E. Hendrickson, chairman and chief executive officer. “We saw strong growth in both our Paints and Coatings segments, reflecting the benefits of new business wins, acquisitions and productivity improvements. We remain focused on executing our significant new business initiatives and productivity plans to drive growth in fiscal 2014.”

Net sales in the Paints segment increased 10 percent to $361 million in the first quarter of 2014, primarily driven by strong volume growth in the U.S., China and improving volume in Australia. Adjusted earnings before interest and taxes (EBIT) increased 50 percent to $34 million. Paints segment adjusted EBIT margins increased approximately 250 bps to 9. 4 percent. The growth in EBIT margins was primarily due to higher volume, improved mix and increased profitability in our international markets.

Net sales in the Coatings segment increased 10 percent to $549 million in the first quarter of 2014, primarily driven by acquisitions and the continued growth of our wood product line. Coatings segment adjusted EBIT increased six percent to $79 million. EBIT margins decreased in the quarter by approximately 60 bps to 14. 3 percent, driven primarily by the impact of acquisitions.