Text Bk D2 On track to deliver 2015 targets Text Bk L2 Color 1… · 2012 2013 2015 Return on sales...
Transcript of Text Bk D2 On track to deliver 2015 targets Text Bk L2 Color 1… · 2012 2013 2015 Return on sales...
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Capital Markets Day: On track to deliver 2015 targets
March 11, 2014
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
2 Capital Markets Day 2014
1. Introduction – Ton Büchner
2. Decorative Paints – Ruud Joosten
3. Performance Coatings – Conrad Keijzer
Coffee break
4. Specialty Chemicals – Werner Fuhrmann
5. Financial Topics – Keith Nichols
6. Conclusion – Ton Büchner
Questions
Agenda
3 Capital Markets Day 2014
Introduction Ton Büchner
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Our proposition: Leading market
positions delivering leading performance
4 Capital Markets Day 2014
AkzoNobel has gone through a significant amount of
strategic change over the past five years
Today, the company has
• Excellent portfolio of businesses
• Good long term growth potential on the basis of end-user segment growth
• Strong positions in high growth markets (44% of revenue)
• Leadership positions in many markets
• Clear leader in sustainability
• Track record of delivering sustainable innovations and products
• Strong brands, both in consumer and industrial markets
Clear focus to deliver on our significant potential
• Improved returns and cash flow
• Leveraging scale
• Simplification and standardization
• Continued innovation
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
8.9 9.6
14.0
0
4
8
12
16
2012 2013 2015
Return on sales
(Operating income/revenue)
%
5
Return on investment
(Operating income/average
12 months invested capital)
%
Capital Markets Day 2014
Net debt/EBITDA
x
Realistic 2015 financial targets focused on quality of earnings and value creation
On track to achieve 2015 targets
* 2012 excluding impairment (€2.1 billion) and after IAS19
5.9 6.6
9.0
0
4
8
12
2012 2013 2015
1.4 1.0
2.0
0
1
2
3
2012 2013 2015
* * <
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
6 Capital Markets Day 2014
AkzoNobel strategy introduced in 2013
• Organic growth
• Operational excellence
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Capital Markets Day 2014
Strategy on a page
Strategic focus areas
• Care for the customer
• Reduction of product
and process complexity
• Cash and return on
investment
• Embedded safety
and sustainability
• Diverse and inclusive
talent development
Processes
• People, process and
product safety
• Operational
control cycle
• Continuous
improvement
• Innovation
• Procurement
• Talent management
Actions
• Deliver dependably
• Grow organically
• Innovate
• Simplify
• Standardize
• Continuously
improve
End-user segments
• Buildings and
Infrastructure
• Transportation
• Consumer Goods
• Industrial
7
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Capital Markets Day 2014
AkzoNobel today
8
• Revenue €14.6 billion
• 49,560 employees
• 44% of revenue from high growth markets
• Major producer of Paints, Coatings and
Specialty Chemicals
• Leadership positions in many markets
24%
28%
36%
12% PerformanceCoatings
DecorativePaints
SpecialtyChemicals
Other
43%
33%
24%
38%
28%
34%
Revenue by
Business Area
Operating income
by Business Area
Invested capital by
Business Area
6.6%
Return on sales
(operating income/revenue)
9.6%
Return on investment
(Operating income/average
12 months invested capital)
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Capital Markets Day 2014
~44% of revenues
New Build Projects
Maintenance, Renovation & Repair
Building Products & Components
~16% of revenues
Automotive OEM, Parts and Assembly
Automotive Repair
Marine and Air Transport
~16% of revenues
Consumer Durables
Consumer Packaged Goods
~24% of revenues
Natural Resource and Energy Industries
Process Industries
9
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
By end-user segment
2013, 100% = €80 billion
Capital Markets Day 2014
The global paints and coatings market is around €80 billion
By market sector
2013, 100% = €80 billion
Decorative
Paints
(42%)
Automotive
OEM
Protective
Vehicle
Refinish
Performance
Coatings
(58%)
General
Industrial
Powder
Wood
Marine
Coil Packaging
Aerospace
Yacht
Buildings and
Infrastructure
Transportation
Consumer
Goods
Industrial
10
Specialty
Finishes
Source: Orr & Boss; management analysis
Auto OEM excludes Automotive Plastics. Specialty Finishes includes both Auto and Non-Auto plastics
Capital Markets Day 2014
Consumer confidence levels in parts of Europe are rising while some emerging markets show decline
11 Source: Nielsen
115 111 110 95 94 85 84 77
51
0
20
40
60
80
100
120
India China Brazil Germany US Sweden UK Netherlands France
Consumer confidence, Q4 2013
Figures below 100 indicate some degree of pessimism
Upward trend compared to Q4 2012
Downward trend compared to Q4 2012
The majority of global manufacturing output is anticipating expansion
12 Capital Markets Day 2014
*Bubble size=manufacturing output, 2014e (US$bn: 2005 prices)
Sources: Oxford Economics, HSBC [China], Markit [US]
Purchase Managers’ Index (PMI)*
February 2014
China
Brazil
India
Germany
Japan
US
40
50
60
Ma
nu
factu
rin
g P
MI
Russia Australia
France
South Korea
Indonesia
Italy
Mexico
Spain
Canada
Turkey
Sweden
Taiwan Netherlands
UK
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
13 Capital Markets Day 2014
Although coming down, growth rates in high growth markets remain attractive
*Source: EIU: GDP year on year growth in local currency at constant prices
Currently 44% of revenues from high growth markets
• High growth markets remain
relatively high growth and
our focus for investment
• In general, growth
expectations have fallen
since we published the
strategy in 2013
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
14 Capital Markets Day 2014
High growth markets are 44% of revenue and their importance will increase
% of 2013 revenue
38%
Mature Europe
25%
Asia Pacific
3%
Other regions
11%
Latin America
15%
North America 8%
Emerging Europe
Share of revenues from high growth markets will increase over time
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
15 Capital Markets Day 2014
2013 showed challenging market
conditions in most end-user segments
and geographical end markets
Key developments in 2013:
• Results of Performance Improvement program
(€545 millions savings) delivered one year ahead
of schedule and exceeded targets
• Divesting non-strategic and weaker market
positions
• New strategy, targets, team, remuneration and
company values
• All actions done in difficult market conditions with
currency headwinds
2014 market conditions are
not expected to improve significantly
• Focus will be on:
– Organic growth
– Operating income
– Return on capital
– Operating cash flow
• Continue building on our end-user segments
and strong high growth market positions
• Continue to address operational improvements
and a focus on sustainability
• Drive cultural change by continuing company
values roll-out
Economic environment remains fragile,
while improvement actions are ongoing
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
0%
100%
Capital Markets Day 2014
Profit and loss breakdown*
% of total
In aggregate variable costs represent 53% of revenue
Decorative
Paints
Performance
Coatings
Specialty
Chemicals
AkzoNobel
Raw materials, energy and other variable costs
Fixed production costs
Selling, advertising, administration, R&D costs
EBIT margin
* Rounded percentages 16
• AkzoNobel is well positioned for
economic recovery
• Variable costs represent
53% of revenue,
down from 54% in 2012
• Decorative Paints is more
driven by personnel costs
in the distribution network, while
Specialty Chemicals has more
production costs
17 Capital Markets Day 2014
We are actively addressing all components of operating expenses
* All costs in € billion for 2013
Operating expenses
General &
Administrative Selling Expenses
Research,
Development &
Innovation
Global Business
Services Commercial Excellence Initiatives
Drives organic growth
€ 1.4 € 3.0 € 0.4
€ 4.7
Operating expense
components
Addressed by
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
• Restructuring activities to continue into 2014, moving into continuous improvement
which will enable us to achieve the 2015 targets
– 2014 restructuring charges expected to total at least €250 million and will be more evenly spread over
the year and Q1 2014 will be higher than the same quarter last year
– Thereafter, more normalized levels of restructuring costs, around 1% of revenues
Ongoing initiatives in 2014:
Drive towards continuous improvement and commercial excellence
Capital Markets Day 2014 18
Commercial Excellence
• Delivering quality products and innovations to our customers at a lower cost
to serve
− Improve customer satisfaction
− Drive organic growth
− Improve margins
− Sales and marketing productivity
Global Business Services
• Streamlining corporate functions (Finance, HR, IM et cetera) by introducing
a new Global Business Services function responsible for implementing
standardized core functional processes throughout the organization
• Centers of Excellence, Shared Service Centers, Business Partnering
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
19 Capital Markets Day 2014
Sustainability is business; business is sustainability
(Resource Efficiency Index)
A new indicator measuring how efficiently we generate value
(expressed as gross profit divided by cradle-to-grave carbon footprint)
of revenue by 2020 from products that are more sustainable for
our customers than the products of our competitors
more efficient resource and energy use across the entire value chain
by 2020 (measured by carbon footprint reduction)
AkzoNobel ranked #1 again in the Dow Jones Sustainability Index for the Materials Industry group
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
20 Capital Markets Day 2014
AkzoNobel values drive cultural change
Leading performance; gaining momentum
• ROS below peers
• Not earning our cost
of capital
• Inadequate free cash
flow
• Operating expenses
too high
• Not leveraging scale
Historical
issues
DP
7.5%
12%
PC
12%
25%
SC
12%
15%
Vision
& Strategy
2015 Targets
& Incentives
Culture
& Values
• Organic growth
• Operational
excellence
• ROS 9%
• ROI 14%
• Operating income -
not adjusted EBITDA
• CO₂ & Eco-premium
products
• Cash flow
• Incentives aligned
• Customer Focused
• Deliver on
Commitments
• Passion for
Excellence
• Winning Together
Business Area
Strategies
Business Area
Expected Outcomes
ROS
ROI
21 Capital Markets Day 2014
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
22 Capital Markets Day 2014
Introducing our three new Business Area Executive Committee members
Ruud Joosten
Decorative Paints
Conrad Keijzer
Performance Coatings
Werner Fuhrmann
Specialty Chemicals
23 Capital Markets Day 2014
Decorative Paints Ruud Joosten
• Business at a glance
• Decorative Paints market
• AkzoNobel in Decorative Paints
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Agenda
24 Capital Markets Day 2014
• Business at a glance
• Decorative Paints market
• AkzoNobel in Decorative Paints
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Business at a glance
25 Capital Markets Day 2014
49%
25%
14%
8% 4%
Mature Europe
Asia Pacific
Latin America
Emerging Europe
Other regions
Decorative Paints business at a glance
26 Capital Markets Day 2014 * Excludes a €198 million gain on the sale of Building Adhesives
Revenue by geographic spread
• We are the global leader in size in the attractive global
Decorative Paints market
• We are pursuing a vision of becoming the leading
global Decorative Paints company in size and performance
• Strategic priorities:
– Fix Europe
– Grow profitably in high-growth markets
€ million 2013
Revenue 4,174
EBITDA 362
Operating income 200*
Return on sales 4.8%*
Return on investment 6.9%*
Employees 16,240
Revenue by end-user
sub-segment
Decorative Paints key figures Key messages
84%
16% Maintenance,renovation and repair
New build projects
• Business at a glance
• Decorative Paints market
• AkzoNobel in Decorative Paints
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Decorative Paints market
27 Capital Markets Day 2014
0,0
0,2
0,4
0,6
0,8
1,0
1,2
2013 2014 2015 2016 2017
13% p.a.
6% p.a.
11% p.a.
10% p.a.
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
2013 2014 2015 2016 2017
Th
ou
sa
nd
s
28 Capital Markets Day 2014
Total market maintenance and repair
$ trillion, output
New build construction
$ trillion, output
The outlook for Buildings and Infrastructure is positive
Source: IHS / Construction IC , January, 2014
13% p.a.
5% p.a.
12% p.a.
9% p.a
Europe China US Brazil, Russia, India
50
75
100
125
150
2009 2010 2011 2012 2013 2014 2015
Belgium France Netherlands Spain UK
29 Capital Markets Day 2014
Housing transactions
Indexed to 2013
Source: Oxford Economics
European housing markets show signs of ‘bottoming out’
0
10
20
30
40
50
2013 2014 2015
EMEA North America Latin America Asia Pacific
30 Capital Markets Day 2014
• Used for protection
as well as decoration
• Consumption per capita
driven primarily by the
frequency of repainting
• Demand growth
closely correlated
with GDP growth,
consumer expectations
• In high-growth markets,
tends to outstrip GDP growth
by up to 1.5x
Decorative Paints sales
€ billion
The global Decorative Paints market is attractive in terms of size and growth
Source: Orr & Boss 2012; AkzoNobel analysis
31 Capital Markets Day 2014
2010 2015
Paint market growth*
$ billion
0%
25%
50%
75%
100%
2010 2015
Economy Mid-market Premium
Paint market composition*
% of total, by value
High-growth markets are growing well and are increasingly ‘trading up’
Source: Orr & Boss, management estimates.
* includes China, India, other emerging Asia-Pacific, Brazil, Argentina, other emerging Latin America, Middle East and Africa
• Paint markets in high-growth markets are still showing significant opportunities for growth
• Spending power of the middle class in high-growth markets is increasing
8% p.a.
• Business at a glance
• Decorative Paints market
• AkzoNobel in Decorative Paints
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
AkzoNobel in Decorative Paints
32 Capital Markets Day 2014
We are the largest player globally in Decorative Paints
33 Capital Markets Day 2014
0
1
2
3
4
5
Decorative Paints revenue
€ billion, 2013 unless noted
* 2012 data
Source: Annual Reports; AkzoNobel analysis
In Decorative Paints we hold strong market positions across all regions
34
Geographic area Geographic size
(€ billion)
AkzoNobel
position
Europe* 12.2 1
South East Asia and Pacific 1.7 1
China and North Asia 6.4 2
Latin America 2.5 2
India and South Asia 2.8 3
* Europe includes Africa and Middle East Capital Markets Day 2014
We are strong in the premium segment, but also compete successfully elsewhere
35 Capital Markets Day 2014
AkzoNobel Decorative Paints revenue by segment
% of revenue
0%
25%
50%
75%
100%
Brazil China Indonesia South Africa
Economy Mid-market Premium
36 Capital Markets Day 2014
• Our well-known brands are one of our
key competitive advantages
• We have a number of powerful, relevant
brands occupying a number of positions
across different markets (consumer,
professional, and other such as
woodcare)
• Where possible, we have leveraged our
scale and created a single global identity
• We have rationalized our brand portfolio –
concentrating our investment behind
fewer, bigger, better brands
We have very strong brands linked by a global approach to branding
Co
ns
um
er
Pro
fes
sio
na
l
Oth
er
Revenue by channel
* Excludes Building Adhesives
In Europe, we are the clear regional market share leader
37 Capital Markets Day 2014 37
• Clear regional market share leader
• Strong brand portfolio
• Strong multi-national relationships with key large scale outlets
• Restructuring activities a major focus
• Timing of return to growth in mature Europe still uncertain
€ billion 2013
Market size where AkzoNobel is represented 12.2
AkzoNobel revenue* 2.4
Employees ~9,300
Owned stores ~510
Revenue by region
Europe, Middle East, Africa
(EMEA)
23%
50%
27% Large-scale outlets
Small-scale outlets
Own stores
35%
25%
21%
19% North
West
South
East and Africa
Key messages
• Strong positions in China, Indonesia, Vietnam
• Strong position in premium in India
• Strong recent organic growth trajectory, based in large part on
significant distribution expansion
• Strong financial performance
• Strong brand presence
€ billion 2013
Market size where AkzoNobel is represented 7.7
AkzoNobel revenue 1.1
Employees ~4,700
Controlled, franchised or owned stores ~4,000
Asia Key messages
20%
80%
Project (Professional)
Trade (LSO and SSO)
Revenue by channel
53%
26%
21% China andNorth Asia
Southeast Asiaand Pacific
India andSouth Asia
In Asia, we have strong positions in the main high-growth markets
38 Capital Markets Day 2014 38
Revenue by region
• Strong positions in Brazil, Argentina, Uruguay
• Successful viral marketing campaign ‘Tudo de Cor’
• Strong mid-tier position in Brazil
• Strong innovation record
€ billion 2013
Market size where AkzoNobel is represented 1.6
AkzoNobel revenue 0.6
Employees ~1,800
Latin America Key messages
Revenue by channel
12%
60%
28% Home centers
Paint shops
Other68%
21%
11% Brazil
Argentina
Other
In Latin America, we have strong positions where we compete
39 Capital Markets Day 2014 39
Revenue by region
40 Capital Markets Day 2014
Our manufacturing footprint is changing to address our market environment
Existing Plants
Plants under construction
Megaplants
41 Capital Markets Day 2014
Capital expenditure supporting growth and manufacturing footprint optimization
• Rationalization of manufacturing footprint started as part of
Performance Improvement Program and this will continue
into 2014 and 2015
• Focus on megaplants to produce large volume products
for a particular region, supported by local sites that
produce more complex portfolios
– Enable growth, enhanced delivery and stock reduction
– Automation to drive cost effectiveness
• Cementing our footprint in high-growth markets
– Gwalior (India) and Guangzhou (China) opened in 2013
• 2013 capital expenditure was €171 million, or 4.1% of revenues
(2012: €206 million, 6.6% of revenues)
• Investment projects for 2014/2015 include:
– Ashington (UK)
– Chengdu (China)
Accomplishments to date
42 Capital Markets Day 2014 * Related to Performance Improvement Program
Area
Beginning 2008
End 2013
Cost reductions* n/a > 200 million
Number of FTEs 25,800 16,240
Brands 100 59
SKUs >90,000 69,000
Factories 80 45
Warehouses 160 135
ERP systems >40 1
0
1
2
3
4
43 Capital Markets Day 2014
• Titanium dioxide (TiO2) accounts for roughly
20% of total Decorative Paints
raw material spend
• Pricing of TiO2 has been volatile
in recent years, but stabilized during 2013
• We are able to source TiO2 from
suppliers across the globe
including China
Titanium dioxide (TiO2) pricing
€ thousand/metric ton
We are benefiting from a stabilizing raw material environment and local sourcing
Source: ICIS
Q1
2011
Q1
2012
Q1
2013
Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4
• Business at a glance
• Decorative Paints market
• AkzoNobel in Decorative Paints
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Strategy
44 Capital Markets Day 2014
45
Decorative Paints vision and targets
Decorative Paints vision
The leading global Decorative Paints company in size and performance
Expected outcomes (2015):
• Return on sales: 7.5%
• Return on investment: 12%
Capital Markets Day 2014
Actions Per the company agenda
Business area actions
• Fix Europe
• Grow profitably in high-growth
markets
• Leverage investments in
marketing, sales, innovation
• Improve supply chain
performance
• Generate more value with fewer
resources
Processes Per the company agenda
Business area capabilities
• Branding
• Distributor, wholesaler, retail
management
• Understanding and serving
professional painters
• Consumer inspiration
• Quality management
Strategic
focus areas Per the company
agenda
End-user
segments • Buildings and
Infrastructure
• Transportation
• Consumer Goods
• Industrial
46
Decorative Paints strategy on a page
Capital Markets Day 2014
• Business at a glance
• Decorative Paints market
• AkzoNobel in Decorative Paints
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Key actions and continuous improvement
47 Capital Markets Day 2014
48 Capital Markets Day 2014
Fix Europe
Objectives:
• Improve performance by driving operational excellence
and changing the operating model in Europe
• Ensure that we are positioned for organic growth in
mature European markets when the market recovers
(e.g. UK)
• Pursue organic growth in select countries where there
are attractive opportunities today
(e.g. Turkey, Poland)
49 Capital Markets Day 2014
Fix Europe
Actions:
• Implement a central operating model and simplify
our organizational structure
• Consolidate our manufacturing and distribution footprint
• Develop and implement standardized and efficient
marketing and sales platforms
• Redesign back office processes to support back office
consolidation and restructuring
• Maintain a strong focus on customers and markets
through the transition period
50 Capital Markets Day 2014
Changing our operating model in Europe
Action
2012
2013
2014
2015
Integrate relevant European activities and management
Rationalize product portfolio and raw materials
Rationalize manufacturing footprint
Fully implement sales excellence
Outsource certain finance businesses
Implement central operating model
Leverage repeatable models globally
51 Capital Markets Day 2014
Grow profitably in high-growth markets
Objectives:
• Outgrow the market
• Ensure that we leverage our (global) scale to ensure
that we improve relative profitability while we grow
Actions:
• Develop profitable mid-market business model(s)
• Build and implement a robust distribution strategy framework
• Leverage global marketing and innovation scale to win locally
• Leverage our strong brands
• Create and implement a digital marketing strategy
52 Capital Markets Day 2014
We are pursuing country-specific plans for profitable organic growth (1 of 3)
China
AkzoNobel position
Extensive geographic coverage across all regions
Actions
• Drive further expansion outside the eastern region
with investments in manufacturing footprint:
– New plant opened in Guangzhou (2013)
– Plant under construction in Chengdu (West)
• Drive growth in project channel
• Continue to develop emerging channels such
as e-commerce and Easy Paint Services channels
• Continuously optimize our product range
– Launch of Dulux Ambiance in premium segment
53 Capital Markets Day 2014
We are pursuing country-specific plans for profitable organic growth (2 of 3)
Brazil
AkzoNobel position
• Strong market positions in Brazil through the Coral brand
• Strongest player in the mid-market segment and therefore
well-positioned to profit from mid-tier growth
Actions
• Grow aggressively in the premium segment
• Continue to add points of sale through exclusive distributors
• Continue our ‘Tudo de Cor’ viral marketing program
54 Capital Markets Day 2014
We are pursuing country-specific plans for profitable organic growth (3 of 3)
Indonesia
AkzoNobel position
The leading paints company in the Indonesian market with
a strong market share
Actions
• Continue to build our premium portfolio through strong brands
including Dulux Weathershield and Dulux EasyClean
• Extend the reach of our Dulux brand and bring it to the
mid-market segment through the launch of Dulux Catylac
• Leverage new forms of communication and activation such as
Let’s Color TV Show and YouTube as well as digital activation
• Business at a glance
• Decorative Paints market
• AkzoNobel in Decorative Paints
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Financials
55 Capital Markets Day 2014
Key financials
56 Capital Markets Day 2014
€ million 2011 2012 2013
Revenue 4,201 4,297 4,174
EBITDA 389 284 362
Operating income 235 94 398
Return on sales 5.6% 2.2% 9.5%
Return on investment 4.7% 3.0% 13.7%
Employees 17,120 17,020 16,240
€ million 2011 2012 2013
Incidentals 2 14 (198)
Operating income excl. incidentals 237 108 200
Return on sales excl. incidentals 5.6% 2.5% 4.8%
PIP costs - 140 105
Operating income excl. PIP costs & incidentals 237 248 305
Return on sales excl. PIP costs & incidentals 5.6% 5.8% 7.3%
As reported*
Underlying*
Underlying performance
• Underlying return on sales,
adjusted for incidentals and
PIP costs has improved from
5.6% in 2011
to 7.3% in 2013
• Additional restructuring
initiatives will take place
in 2014
Expected 2015
financial outcomes
• Return on sales: 7.5%
• Return on investment: 12%
* Excluding North America Decorative Paint
• Business at a glance
• Decorative Paints market
• AkzoNobel in Decorative Paints
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Summary and conclusions
57 Capital Markets Day 2014
We will deliver our 2015 expected outcomes
58 Capital Markets Day 2014
• We are the global leader in Decorative Paints size-wise
• We can and will improve considerably in terms of performance in all regions
• We can expect good growth in high-growth countries but the recovery is still
uncertain in Europe
• Vision: the leading global Decorative Paints company in size and performance
• Strategic priorities:
– Fix Europe
– Grow profitably in high-growth countries
• All of this will lead to our expected 2015 financial outcomes:
– Return on sales: 7.5%
– Return on investment: 12%
59 Capital Markets Day 2014
Performance Coatings Conrad Keijzer
• Business at a glance
• Performance Coatings market
• AkzoNobel in Performance Coatings
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Agenda
Capital Markets Day 2014 60
• Business at a glance
• Performance Coatings market
• AkzoNobel in Performance Coatings
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Business at a glance
Capital Markets Day 2014 61
27%
20% 30%
8%
11% 4% Mature Europe
North America
Asia Pacific
Latin America
Emerging Europe
Other regions
24%
37%
25%
14% Buildings andInfrastructure
Transportation
ConsumerGoods
Industrial
Performance Coatings business at a glance
Key messages
• We have leading market positions
• Strategic priorities include:
– Performance improvement initiatives
– Differentiated growth strategies
Performance Coatings key figures
Revenue by end-user segment
Revenue by geographic spread
€ million 2013
Revenue 5,571
EBITDA 663
Operating income 525
Return on sales 9.4%
Return on investment 21.3%
Employees 21,360
Capital Markets Day 2014 62
27%
24% 17%
32%
Marine & ProtectiveCoatings
Automotive & AerospaceCoatings
Powder Coatings
Industrial Coatings
2013 revenue by Business Unit
We are organized in four Business Units
Marine & Protective
Coatings
• Protective
• Marine
• Yacht
Automotive &
Aerospace Coatings
• Vehicle Refinishes
• Specialty Finishes
• Aerospace
Industrial Coatings • Wood
• Coil
• Packaging
Powder Coatings • Powder
Business Unit Market sectors
Capital Markets Day 2014 63
• Vehicle Refinishes
• Specialty Finishes
• Aerospace
Automotive &
Aerospace Coatings
• Protective
• Marine
• Yacht
Marine &
Protective Coatings
• Powder Powder Coatings
• Wood
• Coil
• Packaging
Industrial Coatings
• Business at a glance
• Performance Coatings market
• AkzoNobel in Performance Coatings
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Performance Coatings market
Capital Markets Day 2014 64
The Performance Coatings market is based on twelve sectors
Performance Coatings market sectors
€ billion, 2013
Source: Orr & Boss 2011 for base data on market sectors; AkzoNobel analysis
AkzoNobel competes in these market sectors
Capital Markets Day 2014 65
0
1
2
3
4
5
6
72013 total market size ~ €50 billion
0
1
2
3
4
5
6
7
Protective VehicleRefinishes
Powder Wood Marine SpecialtyFinishes
Coil Packaging Aerospace Yacht
The five year outlook for most sectors is positive
Performance Coatings market sectors
€ billion, 2013
Source: Orr & Boss 2011 for base data on market sectors; AkzoNobel analysis
3-5 % (>GDP growth)
3% (at GDP growth)
See next slide
Capital Markets Day 2014 66
-5.7%
2007 08 09 10 11 12 13 14
Delivered On order
+18.4%
p.a.
-30.1%
The Marine new build market may have now reached the bottom of the cycle...
New build ship deliveries
Million deadweight tons, 2007 = 95
Source: Clarkson Research Services Limited, January 2014, AkzoNobel analysis Capital Markets Day 2014 67
Range of outcome
?
• Business at a glance
• Performance Coatings market
• AkzoNobel in Performance Coatings
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
AkzoNobel in Performance Coatings
Capital Markets Day 2014 68
AkzoNobel is the global market leader in Performance Coatings, excluding Automotive
Performance Coatings revenue
€ billion, 2013 unless noted
* 2012 data
Source: Annual Reports; AkzoNobel analysis Capital Markets Day 2014 69
0
1
2
3
4
5
6
Non-Automotive Automotive
0
1
2
3
4
5
6
7
Protective VehicleRefinishes
Powder Wood Marine SpecialtyFinishes
Coil Packaging Aerospace Yacht
AkzoNobel has many leading market sector positions in Performance Coatings
Performance Coatings market sectors
€ billion, 2013
AkzoNobel market share
position (by value) 2013 x
3
1
1
1/2
1
1 1
2
1/2 1
Capital Markets Day 2014 70 Source: Orr & Boss 2012 for base data on market sectors; AkzoNobel analysis
• Protective
• Coil
• Powder
• Wood Finishes
• Vehicle refinish
• Specialty finishes
• Powder
• Marine
• Aerospace
• Yacht
The Performance Coatings portfolio is balanced across the four end-user segments
• Powder
• Packaging
• Specialty finishes
• Wood finishes
• Protective
• Powder
71
24% 37% 25% 14%
Capital Markets Day 2014
72 Capital Markets Day 2014
Our paints and coatings can be found almost everywhere
We are well positioned globally in terms of revenue and manufacturing locations
BU manufacturing locations
Automotive & Aerospace
Marine & Protective
Industrial
Powder
Multi-BU site
27%
Mature Europe
31%
Asia Pacific
3%
Middle East
and Africa 9%
Latin America
19%
North America
11%
Emerging Europe
Capital Markets Day 2014 73
% of 2013 revenue
Manufacturing closures and room for further footprint consolidation
2011 Number of sites: 107
Closures:
• Brecksville (Powder)
2012 Number of sites: 102
Closures:
• Huizhou, Tianjin
(Specialty Finishes)
• Schramm Spain
(Specialty Finishes)
• Cologne (Wood)
• Nacka (Wood)
2013 Number of sites: 100
Closures:
• Birmingham, USA
(Coil)
• Isernhagen (Specialty
Finishes)
• Shanghai (Specialty
Finishes)
New sites:
• Chilca Peru (Wood)
Capital Markets Day 2014 74
2014-2015 Number of sites: 91
Intended closures:
• Elbeuf (Packaging)
• Romano (Powder)
• Nuremberg (Coil)
• Gamleby (Coil)
• Guarulhos (Coil, Wood)
• Suzhou (Powder)
• Ningbo (Powder)
• Singapore (Wood)
• Brisbane (MPC)
75 Capital Markets Day 2014
We successfully expanded our portfolio and global presence
* Adjusted for acquisitions
Acquisition Business Unit Year
Dow/Rohm & Haas Powder 2010
Lindgens Metal Decorating Coatings and Inks Industrial Coatings 2010
Changzhou Prime Automotive Paint Co., Ltd Vehicle Refinish 2010
Schramm & SCCP Automotive & Aerospace 2011
• Performance Coatings has made four bolt-on acquisitions over the last few years
that brought many benefits, including:
– Expanding our global reach
– Broadening our technology offering
– Taking leadership positions
– Extracting significant synergies, particularly in procurement
Continue to deliver strong and stable
return on investment
Improve return on sales
Grow volume organically
Room for improvement
over the next three years
What we have done
over the last three years
76 Capital Markets Day 2014
We have a strong business but there is room for improvement going forward
Grown the business in
a difficult market environment
• Bolt-on acquisitions
• Margin management actions
Reduced costs through the
performance improvement program
Delivered strong return on investment
on tight working capital management
and prudent capital expenditure
• Business at a glance
• Performance Coatings market
• AkzoNobel in Performance Coatings
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Strategy
Capital Markets Day 2014 77
Performance Coatings vision and targets
78
Performance Coatings vision:
The leading coatings
company from a
performance
perspective
Expected outcomes 2015:
• Return on sales: 12%
• Return on investment: 25%
Capital Markets Day 2014 78
End-user
segments • Buildings and
Infrastructure
• Transportation
• Consumer Goods
• Industrial
Actions Per the company agenda
Business area actions
• Drive overarching performance
improvement initiatives
• Pursue differentiated growth
strategies
– Outgrow the market organically
– Improve performance by
driving operational excellence
Processes Per the company agenda
Business area capabilities
• Key account management
• Coatings technology and product
innovation
• Footprint in growth markets
Strategic
focus areas Per the company
agenda
79
Performance Coatings strategy on a page
Capital Markets Day 2014 79
• Business at a glance
• Performance Coatings market
• AkzoNobel in Performance Coatings
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Key actions and continuous improvement
Capital Markets Day 2014 80
Actions
Embed standard processes and continuous
improvement capabilities to achieve year-on-year
savings exceeding inflation impact
Roll out a common set of commercial processes
to deliver both organic growth and
commercial efficiency
81 Capital Markets Day 2014
Initiative
Drive performance improvement initiatives
Use a cross-business, cross-functional approach
to deliver complexity reduction and
year-on-year savings in external spend
Deliver further complexity reduction and
continuously reduce external spend
Continuously improve operational productivity
Drive commercial excellence to increase
sales effectiveness
• Cost to serve aligned with
customer segmentation
• Right sizing the
sales organization
Drive commercial excellence to increase sales growth and commercial efficiency
Actions
• Best practice and competency training will be
focused on business in growth markets
• Achieve profitable organic sales growth
Commercial excellence is a key
value driver in Performance Coatings
Sa
les f
orc
e
eff
ective
ne
ss
Sa
les f
orc
e
eff
icie
ncy
Capital Markets Day 2014 82
• Best practice selling processes
• Competency training
• Margin management
• Organizational efficiency will be focused on
businesses in lower growth markets
• Reduce sales and marketing cost
0%
100%
EBIT margin
Selling, advertising, administration, R&D costs
Fixed production costs
Raw materials, energy and other variable costs
Actions
Drive further complexity reduction:
• Harmonize recipes
• SKU reductions
• Standardize formulations
Use a cross-functional approach to deliver
year-on-year savings in external spend
• Aggregate commodity spend
• Develop and utilize alternate supply sources
• Utilize value engineering
• Develop local suppliers and localize raw materials
spend
Performance Coatings 2013
Complexity reduction and continuously reduce external spend
Profit and loss breakdown*
% of total
* Rounded percentages Capital Markets Day 2014 83
Actions
Drive further complexity reduction:
• Harmonize recipes
• SKU reductions
Use a cross-functional approach to deliver
year-on-year savings in external spend
• Aggregate commodity spend
• Develop and utilize alternate supply sources
• Utilize value engineering
• Develop local suppliers and localize raw
materials spend
Continuously improve operational productivity
Actions
Embed standard processes and continuous
improvement capabilities to achieve
year-on-year savings exceeding inflation impact
• Continue footprint optimization
• Embed continuous improvement at all sites
• Standardize and optimize sales and
operations planning
• Reduce logistics and warehousing costs
by leveraging synergy across AkzoNobel
Supply Chain performance is a key element for
success in Performance Coatings
• Supply Chain cost
(Manufacturing, logistics and warehousing)
• Inventory value
Capital Markets Day 2014 84
85 Capital Markets Day 2014
Outgrow the market organically
• Marine
• Protective
• Powder
• Specialty Finishes
Improve performance by
driving operational excellence
• Industrial (Wood, Coil, Packaging)
• Vehicle Refinishes
• Yacht
• Aerospace
Expected outcomes
• Improved market share
• Costs don’t grow as fast as revenue
• Improved return on sales
in percentage terms
Expected outcomes
• Growth with the market
• Reduced absolute operating expenditure
• Improved return on sales based on
cost reduction
Pursue differentiated growth strategies
Market outlook
• Strong growth potential based on strong
end-user segment growth outlook
AkzoNobel position
• Global number 1 position
• Technology leadership
• High reputation brands
• Specification selling
Key actions
• Extend specification selling
• Further develop presence in growth regions
• Continued product innovation
‘Outgrow the market organically’ in Protective Coatings
Capital Markets Day 2014 86
‘Drive operational excellence’ in Coil Coatings
Market outlook
• Reasonable growth globally
• Pressure on margins, particularly in Europe
and Asia
AkzoNobel position
• Global number 1 position, with a strong
position in Asia/China
• Strong reputation in high-performance
architectural applications
• Leading innovator: Chrome-free technologies;
Cool ChemistryTM (Heat reflective coatings)
Key actions
• Footprint optimization in Europe
• Complexity reduction in formulas and in
low cost resin development
• Focus on margin management and cost to serve
Capital Markets Day 2014 87
• Business at a glance
• Performance Coatings market
• AkzoNobel in Performance Coatings
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Financials
Capital Markets Day 2014 88
Key financials
€ million 2011 2012 2013
Revenue 5,170 5,702 5,571
EBITDA 572 673 663
Operating income 458 542 525
Return on sales 8.9% 9.5% 9.4%
Return on investment 20.2% 21.7% 21.3%
Employees 21,960 21,310 21,360
Expected 2015 financial
outcomes
• Return on sales: 12%
• Return on investment: 25%
€ million 2011 2012 2013
Incidentals 2 0 0
Operating income excl. incidentals 456 542 525
Return on sales excl. incidentals 8.8% 9.5% 9.4%
PIP costs 0 90 102
Operating income excl. PIP costs & incidentals 456 632 627
Return on sales excl. PIP costs & incidentals 8.8% 11.1% 11.2%
As reported
Underlying
Underlying performance
• Sustained performance
• Underlying return on sales* has
improved from 8.8% in 2011 to
11.2% in 2013
• Additional restructuring
initiatives in 2014
*Adjusted for incidentals and PIP costs Capital Markets Day 2014 89
• Business at a glance
• Performance Coatings market
• AkzoNobel in Performance Coatings
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Summary and conclusions
Capital Markets Day 2014 90
We will deliver our 2015 expected outcomes
A world leading performance coatings company
• Leading market positions
• Reference customers in all segments
• Balanced portfolio in terms of end-user segments
• Over 50% of revenue from high growth markets
• Strong brands built on strong product technologies
New strategy based on
• Overarching performance improvement initiatives
• Differentiated growth strategies
This will deliver our expected 2015 outcomes
• Return on sales: 12%
• Return on investment: 25%
Capital Markets Day 2014 91
92 Capital Markets Day 2014
Specialty Chemicals Werner Fuhrmann
• Business at a glance
• Specialty Chemicals market
• AkzoNobel in Specialty Chemicals
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Agenda
93 Capital Markets Day 2014
• Business at a glance
• Specialty Chemicals market
• AkzoNobel in Specialty Chemicals
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Business at a glance
94 Capital Markets Day 2014
Business at a glance
95 Capital Markets Day 2014
Key messages
• Serving attractive markets, growing over the cycle
• Leading positions in five main platforms
• 56% of revenues generated outside of mature Europe
• Significant expansion investments now operational
• Driving functional excellence
Specialty Chemicals key figures
Revenue by end user segment
Revenue by geographic spread
18%
6%
19%57%
Buildings and
infrastructure
Transportation
Consumer
goods
Industrial
44%
22%
17%
10%
5%2%
Mature Europe
North America
Asia Pacific
Latin America
Emerging Europe
Other regions
€ million 2013
Revenue 4,949
EBITDA 726
Operating income* 418
Return on sales* 8.5%
Return on investment* 11.6%
Employees 10,430
* Excludes incidentals
• Business at a glance
• Specialty Chemicals market
• AkzoNobel in Specialty Chemicals
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Specialty Chemicals market
96 Capital Markets Day 2014
97 Capital Markets Day 2014
• $3.5 trillion market
• Solution provider for society
– manufacturing
– food production
– climate change
• Continuous growth
• Strong growth in China
1990 2000 2012 2020
Other
China
Asia Pacific
North America
Western Europe
0.9
1.3
3.4
6.3
Chemicals industry over time, by geography
$ trillion
The chemical industry is large and growing
Source: McKinsey
6.6%
%
6.8%
%
7.4%
% CAGR (nominal)
Purchasing Managers’ Index is good indicator for Chemical industry dynamics
Source: Markit, Institute of Supply Management. China data is from the HSBC/Markit survey
Brazil Eurozone US
30
40
50
60
70
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Purchasing Managers’ Index (Manufacturing)
Figures above 50 represent some optimism; figures below 50 represent some pessimism
China
Capital Markets Day 2014 98
99 Capital Markets Day 2014
Middle East:
Moving downstream based on
low cost petrochemicals
US:
Shale gas impacting ethylene prices
Middle East and US build on raw material strengths
Products
Chemical
value parks
Intermediates
C4s
Pygas
Pyoil
Ethylene oxide
Ethane
Naphtha
Petro-
chemical
parks
Polyols
Polyethylene
Isocyanates
Propylene glycol
Amines
Glycol ethers
Elastomers Conversion
parks
Europe vs. US ethylene price differential
€/ton
-300
-200
-100
0
100
200
300
400
500
600
1995 2000 2005 2010
Source: Market Reports
Specialty and consumer chemicals
extra-EU chemicals trade surplus
continue to grow
100 Capital Markets Day 2014
Europe is largest trader in Chemicals… and value enhancer
Source: Eurostat and Cefic Chemdata International (2013),
Unless specified, chemical industry excludes pharmaceuticals, Unless specified, EU refers to EU 27
EU chemicals sector posted a record
trade surplus in 2012
* North American Free Trade Agreement
** Rest of Europe includes Switzerland, Norway, Turkey, Russia and Ukraine
*** Asia excluding China and Japan
• Business at a glance
• Specialty Chemicals market
• AkzoNobel in Specialty Chemicals
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
AkzoNobel in Specialty Chemicals
101 Capital Markets Day 2014
Salt-chlorine chain
100% of Industrial Chemicals
Ethylene Oxide Network
40% of Functional Chemicals
Surfactants
85% of Surface Chemistry
Bleaching Chemicals
60% of Pulp & Performance chemicals
102 Capital Markets Day 2014
Our Business Units Our Platforms
Five well positioned platforms in their industries
Industrial Chemicals
Pulp & Performance chemicals
Surface Chemistry
Polymer Catalysts
40% of Functional Chemicals
Functional Chemicals
• Sodium chlorate
• Hydrogen peroxide
• Ethylene oxide
• Ethylene amines
• Cellulosics
• Organic peroxides
• Metal alkyls
• Ethyoxylates
• Natural oil and fat based nitrogen surfactants
• Energy/Salt
• Chlorine
Platforms operate world scale plants based on advanced technologies
• Monochloroacetic acid
• Chloromethanes
Our main chemical platforms Key products
Salt-chlorine chain
Bleaching chemicals
Ethylene oxide network
Polymer catalysts
Surfactants
• Chelates
• Micronutrients
Capital Markets Day 2014 103
Major projects and timing of spend
• Capital expenditure peaked at 8.7%
of revenue in 2012
• Infrastructure is now in place and ready to take
on additional demand
0
100
200
300
400
500
2010 2011 2012 2013
Capital Expenditure Depreciation and Amortization
BA Specialty Chemicals capital expenditure
€ million
We have invested in the recent past and are well-prepared for future growth
Investment project 2010 2011 2012 2013 2014 2015
Ningbo multisite
Frankfurt membrane
Brazil Eldorado
Brazil Suzano
Boxing
Capital Markets Day 2014 104
Global manufacturing network serves both regional and global customers
Asia Pacific
17%
Latin America
10%
Emerging Europe
5%
North America
22%
Mature Europe
44%
Middle East and
Africa
2%
Multi-site
Site
% of 2013 global revenue
Capital Markets Day 2014 105
Accomplishments to date
106 Capital Markets Day 2014
Area 2010 2013 Delta
Number of operations integrated with customers 15 17 +13%
Sales per FTE (k€) 445 467 +5%
Capacity expansions (>10%) 12 units
Number of manufacturing sites 109 102 -7%
Sales/site (€ million) 42.6 48.5 +14%
Renewable energy usage n/a 31%
Waste (ton/€ million sales) 15.8 12.0 -24%
Number of ERP systems 9 3 -67%
Cost reductions (€ million)* n/a 142
Number of FTEs 11,100 10,430 -6%
*Related to Performance Improvement Program
• Business at a glance
• Specialty Chemicals market
• AkzoNobel in Specialty Chemicals
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Strategy
107 Capital Markets Day 2014
Specialty Chemicals vision:
Delivering leading
performance based on
sustainable chemical
platforms driving
profitable growth in
selected markets
Expected outcomes (2015):
• Return on sales: 12%
• Return on investment: 15%
Specialty Chemicals vision and targets
108 Capital Markets Day 2014
Actions
Per the company agenda
Business area actions
• Drive functional excellence
– Supply chain and operations
– Commercial excellence
– Talent management
• Reduce organizational complexity
• Strengthen product & process
innovation
• Capitalize on industry changes
• Build on our strong chemical
platforms to deliver profitable
growth in selected markets
Processes
Per the company agenda
Business area capabilities
• Understanding customer needs
• Management of integrated value
chains
• Continuous technological
advancement
• Engineering and project
management
Strategic
focus areas Per the company
agenda
End-user
segments • Buildings and
Infrastructure
• Transportation
• Consumer Goods
• Industrial
109
Specialty Chemicals strategy on a page
Capital Markets Day 2014
• Business at a glance
• Specialty Chemicals market
• AkzoNobel in Specialty Chemicals
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Key actions and continuous improvement
110 Capital Markets Day 2014
111 Capital Markets Day 2014
Four operational improvement initiatives
Improve
productivity of
supply chain and
operations
• Asset optimization
• Production system
roll out
• Lean six sigma
• Industrial IT platform
• Yield, waste
and quality focus
Strengthen
commercial
excellence
• Customer value
creation
• Organic growth
• Margin management
• Sales force
productivity
Reduce
organizational
costs
• Restructuring
• Organization
delayering
• Restricted
recruitment
Enhance product
and process
innovation
• New applications
and products
• Variable cost
reduction
• Process
intensification
• Standard processes
Improve performance by driving
operational excellence
~50% of portfolio
Main platforms
• Salt-chlorine chain
• Polymer catalysts
• Ethylene oxide network
112 Capital Markets Day 2014
Outgrow the market organically
~ 50% of portfolio
Main platforms
• Bleaching chemicals
• Surfactants
Actions
• Reduce costs and further
improve productivity in
operations
• Improve raw material
(cost) position
Differentiated strategies per platform
Actions
• Capitalize on investments
• Grow by successfully
commercializing products
for attractive applications
Bleaching Chemicals: Creating value from Chemical Islands
Capital Markets Day 2014 113
114 Capital Markets Day 2014
Market
• Stable and growing market
• Packaging materials is growth
driver
• Geo shift to South America
Customers
• Domtar, Georgia Pacific, Stora
Enso
AkzoNobel strengths
• Technology leader
• Chemical island concept creates
high value for stakeholders
• Sustainable manufacturing
footprint
Actions going forward
• Capitalize on current chemical islands
• Pursue new opportunities
• Reduce costs through process
improvements and automation
Bleaching chemicals: Growth via integration with customers
115 Capital Markets Day 2014
Salt-Chlorine chain: Right at the heart of the customer base
* Pipelines transporting crude oil (RAPL), nafta (PALL), industrial gasses, ethylene and
propylene
Refinery Steam cracker
Pipelines*
Refinery & olefin producer Olefin consumer
116 Capital Markets Day 2014
Market
• Flat
• Industry consolidation
Customers
• Bayer, Huntsman, Shin-Etsu
AkzoNobel strengths
• Number 1 in Northwest Europe in
chlor alkali and salt
• Linked to key players in the industry
• Number 1 globally in MCA and
chloromethanes
• Relatively low dependency on
ethylene
Actions going forward
• Continue cost/technology
leadership improvements
• Further reduce dependency on gas
• Exploit full potential of
Frankfurt investment
Salt-chlorine chain: Leveraging an advantaged asset base
117 Capital Markets Day 2014
Patented dosing technology
• 20 -30 % higher reactor output
• Improved safety and quality
Implemented by plastic producers:
• Vinnolit GmbH & Co. - Germany
• Ercros SA - Spain, JSC
• Kaustik - Russia
• Mexichem - Mexico
Polymer catalysts: Reaping the benefits from innovation
118 Capital Markets Day 2014
Market
• Global plastics market
consistently growing
• Shift from Europe to Asia and
Middle East
Customers
• BASF, Dow, Shin-Etsu
AkzoNobel strengths
• Market and technology leader
• Global manufacturing network
• Combination of organic peroxides
and metal alkyls
Actions going forward
• Restructure European footprint
• Exploit investments in China
• Expand customer base with
on site dosing technology
Polymer catalysts: Leadership through operational excellence
Ethylene oxide network: Capitalizing on China investments
Site plan
Hydrogen
Cyanide Organic
Peroxides
Ethylene
Amines Cellulosics
Surfactants
Chelates Bio-treatment
facility
Ethylene
Oxide
Capital Markets Day 2014 119
120 Capital Markets Day 2014
Market
• Diverse end markets, many of which
are low cyclicality
Customers
• Air Products, AkzoNobel Decorative
Paints, Yara
AkzoNobel strengths
• Integrated clusters close to end
markets
• Recent investment in all technologies
in China, creating a new network hub
• Cost reductions delivered in
manufacturing and support functions
Actions going forward
• Capitalize on investments by further
expanding in Asian markets
• Optimizing product supply across
the value chain
• Successfully market Stimwell and
cellulosics
Ethylene oxide network: Optimize value chains of integrated clusters
Surfactants: Growing with attractive end markets
Oilfield
Mining
Lubricants
Agriculture
Capital Markets Day 2014 121
122 Capital Markets Day 2014
Market
• Mix of markets with steady and high
growth patterns
• Some markets actively demanding
further product innovations
Customers
• Baker Hughes, Lubrizol, Monsanto
AkzoNobel strengths
• Leader in nitrogen surfactant
technology
• Global production network
• Strong innovation pipeline
Actions going forward
• Allocate resources to most attractive market
(agricultural, mining applications, oilfield,
fuel and lubricants)
• Capitalize on and expand our position
in China
• Leverage global leadership in nitrogen
surfactants
Surfactants: Broad and innovative application spectrum
Our platforms build on value chains
Raw materials
Base chemicals
Chemical inter-mediates
Performance/ functional chemicals
‘End’ products
123
Bleaching chemicals
Salt-chlorine chain
Ethylene oxide network
Polymer catalysts
Surfactants
Capital Markets Day 2014
Our platforms build on value chains
Raw materials
Base chemicals
Chemical inter-mediates
Performance/ functional chemicals
‘End’ products
124
Bleaching chemicals
Salt-chlorine chain
Ethylene oxide network
Polymer catalysts
Surfactants
Capital Markets Day 2014
Serving plastics industry
Ethoxylation chemistry
Electrochemistry
• Business at a glance
• Specialty Chemicals market
• AkzoNobel in Specialty Chemicals
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Financials
125 Capital Markets Day 2014
Key financials
126 Capital Markets Day 2014
€ million 2011 2012 2013
Revenue 5,335 5,543 4,949
EBITDA 909 830 726
Operating income 622 500 297
Return on sales 11.7% 9.0% 6.0%
Return on investment 18.3% 13.6% 8.2%
Employees 11,510 10,750 10,430
Expected 2015
financial outcomes
• Return on sales: 12%
• Return on investment: 15%
€ million 2011 2012 2013
Incidentals 6 24 121
Operating income excl. incidentals 628 524 418
Return on sales excl. incidentals 11.8% 9.5% 8.5%
Restructuring charges - 42 74
Operating income excl. restructuring charges & incidentals 628 566 492
Return on sales excl. restructuring charges & incidentals 11.8% 10.2% 10.0%
As reported
Underlying
Underlying performance
• Challenging market conditions
• Recent investments positioned
for further growth
• Continue the focus on
productivity improvements
• Business at a glance
• Specialty Chemicals market
• AkzoNobel in Specialty Chemicals
• Strategy
• Key actions and continuous improvement
• Financials
• Summary and conclusions
Summary and conclusions
127 Capital Markets Day 2014
We will deliver our 2015 expected outcomes
128 Capital Markets Day 2014
Our business
• Serving attractive markets
• Leading in 5 platforms
• 56% of revenues outside mature Europe
• Expansion investments operational
What we will do
• Grow selectively
• Exploit manufacturing clusters
• Continuously improve productivity
• Functional excellence
All of this will lead to our expected 2015 financial outcomes:
• Return on sales: 12%
• Return on investment: 15%
129 Capital Markets Day 2014
Financial Topics Keith Nichols
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Summary 2013 results
Capital Markets Day 2014
€ million FY 2013 Δ%
Revenue 14,590 -5
Operating income 958 6
Ratio, % FY 2013 FY 2012*
Return on sales 6.6 5.9
Return on sales (excluding incidentals and PIP costs) 8.5 8.2
Moving average return on investment 9.6 8.9
Increase
Decrease
-4% -5%
+1% 0%
-2%
Volume Price/Mix Acquisitions/divestments
Exchange rates Total
Revenue development FY 2013 vs. FY 2012
130 * 2012 excluding impairment (€2.1 billion)
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Foreign currency developments
Capital Markets Day 2014
-6
-2
2
6
Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel
Quarterly foreign exchange rate development in % year-on-year revenue
-7% -5% -5% -4%
2012
2013
131
• Adverse currency effects, particularly impacting 2H 2013, were visible in all business areas and
largely driven by our exposure to high growth markets
• To a large extent revenues and costs are geographically matched giving a natural hedge to
translational impact
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Capital expenditure will be more in line with depreciation and amortization
132 Capital Markets Day 2014
• 40-50% of capital expenditure is
growth related
• Going forward, capital expenditure will be
around 4% of revenues, in line with
depreciation and amortization
2013
€ 666
€ 826
4.6%
2012
5.4%
2011
€ 708
2010
4.5%
3.7%
€ 534
Other
Decorative Paints
Performance Coatings
Specialty Chemicals % of revenues
Capital Expenditures (millions €)
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Performance improvement actions release cash in Operating Working Capital
133 Capital Markets Day 2014
1.834 1.572 1.384
12.9%
10.7% 9.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
0
500
1.000
1.500
2.000
2.500
2011 2012 2013
Operating Working Capital OWC as % of LQ revenue*4
Operating Working Capital
€ million
• Operating Working Capital
as % of revenue has
reduced towards 9.9%
• Significant seasonality occurs
during the year with peak
requirement in the summer
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
0,0
0,5
1,0
1,5
2010 2011 2012 2013
2015 target: net debt to EBITDA ratio of less than two
134 Capital Markets Day 2014
Net debt/EBITDA
x
• We have a strong liquidity position to support
business needs: net cash and cash equivalents
€2.1 billion*
• Undrawn revolving credit facility of €1.8 billion
(2018) €1.5 and $3 billion commercial paper
programs, backed by revolving credit facility
• 2013 improvement in Net Debt / EBITDA
• Maintain investment grade rating of BBB+
* At the end of Q4 2013
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Continuously reducing costs of long term bonds
135 Capital Markets Day 2014
Debt maturities
€ million
Average cost of long term bonds
%
7.29 6.35 5.62 4.89
0
2
4
6
8
2010 2011 2012 2013
825 622
800 750
306 379
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
€ bonds £ bonds $ bonds
• Debt duration 3.6 years
• Improving cash flow and
divestments enabled full
repayment of two maturing
bonds without refinancing
Repaid
5.62%
7.75%
7.25%
8.00%
4.00% 2.62%
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Cash flow sources and uses
136 Capital Markets Day 2014
• Restructuring and pension
top-ups consume a significant
proportion of cash
• Performance improvement
focus starts to address
cash challenge
• Remuneration metrics
include cash generation
• Positive cash in 2013 driven by
divestments of Decorative
Paints North-America and
Building Adhesives
On track to deliver cash positive after dividend in 2015
2012 2013
Source Use Source Use
Dividends
Divestments** EBITDA
Other* OWC
CapEx
Provisions
Pensions
* Including interest and tax ** Including acquisitions, divestments and discontinued operations
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Proactively managing or removing pension liabilities
137 Capital Markets Day 2014
Interest rate /
Inflation hedging
• ICIPF’s active management of interest rate and inflation
exposure, with around 80% of defined benefit obligation
(DBO) risks hedged to date
Longevity hedging • Courtaulds (CPS) longevity swap with Swiss Re in 2012
(€1.75billion)
Captive insurance • Considered to be too complex
Divestments
• Sale of Decorative Paints Canada in 2013 (DBO
reduced by €301 million)
• Sale of National Starch in 2011 resulted in substantial
DBO reduction
Cash out /
Sleeper management
• US plan deferred members offered a cash out in 2013
(red. €85 million)
• UK CPS cash out in 2013 (DBO reduced by €39 million)
Buy-in / Buy-out
• USA buy-out with MetLife in 2013 (DBO reduced by
€493 million)
• Sweden buy-out in 2008; substantial DBO reduction
Retain and
Manage Risk
Remove Risk
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Pension cash flow guidance
138 Capital Markets Day 2014
• Top-ups relate mainly to the 2 big UK plans, the ICI Pension Fund
and the CPS Pension Scheme
• Top-ups are based on prudent actuarial valuation of liabilities,
which differs from accounting liability
• Actuarial pension deficit of the 2 big UK plans is estimated at
€1.5-2 billion
• The next triennial funding review for the ICI Pension Fund is
expected to be completed in 2015 and in 2016 for the CPS Scheme
• The forward looking estimates make no allowance for changes
in the funded status at future actuarial valuations or for additional
contributions to de-risking such as the 2013 MetLife transaction
in the US
Defined benefit pension cash top-ups
€ million
2013 actual* 311
2014 -17 est.** ~330/year
2018 est.** ~100
*Excludes one-off contribution of €127 million to our US plan to part-finance the transfer of pensioners to MetLife in December 2013
** Based upon currently agreed deficit contribution schedules for the UK plans
Make sure line weight is
consistent
Regular contributions
€ million 2014 estimated
Defined benefit 110
Defined contribution 180
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Dividend policy unchanged
139 Capital Markets Day 2014
• Our dividend policy is to pay a stable to rising
dividend each year
• An interim and final dividend will be paid in
cash unless shareholders elect to receive a
stock dividend
0.33 0.33
2013 2012
1.12 1.12
2011
0.33
1.12
2010
0.32
1.08
2009
0.30
1.05
Final dividend Interim dividend
Dividends paid (€)
Financial summary
• We are delivering performance improvement with our strategy:
− Underlying return on sales and return on investment improving
− Net debt and cost of borrowing significantly reduced
− Performance Improvement Program finalized early
− Further pension de-risking with the US MetLife buyout
• Cash challenge being addressed
• Capital expenditure levels are lower, more in line with depreciation and amortization
• Restructuring costs will continue in 2014; expected to be greater than
€250 million and will be more evenly spread over the year and Q1 2014
will be higher than the same quarter last year
• Foreign exchange movements are expected to continue to have an impact
on our results
140 Capital Markets Day 2014
141 Capital Markets Day 2014
Conclusion Ton Büchner
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Expected 2015 outcomes per business area
142 Capital Markets Day 2014
Return on sales
Return on investment
%
%
7.5
12.0 12.0
0
2
4
6
8
10
12
14
Decorative Paints Performance Coatings Specialty Chemicals
12.0
25.0
15.0
0
5
10
15
20
25
30
Decorative Paints Performance Coatings Specialty Chemicals
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
8.9 9.6
14.0
0
4
8
12
16
2012 2013 2015
Return on sales
(Operating income/revenue)
%
143
Return on investment
(Operating income/average
12 months invested capital)
%
Capital Markets Day 2014
Net debt/EBITDA
x
2015 financial targets focused on quality of earnings and value creation
*2012 excluding impairment (€2.1 billion) and after IAS19
5.9 6.6
9.0
0
4
8
12
2012 2013 2015
1.4 1.0
2.0
0
1
2
3
2012 2013 2015
* * <
On track to achieve 2015 targets
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
144 Capital Markets Day 2014
We will deliver our 2015 targets
What has been done
• New strategy, targets, team, remuneration and company values
• Performance Improvement Program successfully completed
• Delivering in line with guidance despite difficult market conditions
with currency headwinds
• Underlying return on sales and return on investment improving
What are we doing
• End-user segment focus providing direction for our market initiatives
and innovation spend
• Driving continuous improvement through restructuring, cost reduction
and delivering organic growth
• Focus on operating income, return on investment and
cash generation
• Drive cultural change with company values roll-out
• We remain on track to deliver our 2015 targets
145 Capital Markets Day 2014
Questions
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Safe Harbor Statement
Capital Markets Day 2014
This presentation contains statements which address such key issues as
AkzoNobel’s growth strategy, future financial results, market positions, product development, products in
the pipeline, and product approvals. Such statements should be carefully considered, and it should be
understood that many factors could cause forecasted and actual results to differ from these statements.
These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw
material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative,
fiscal, and other regulatory measures. Stated competitive positions are based on management estimates
supported by information provided by specialized external agencies. For a more comprehensive discussion
of the risk factors affecting our business please see our latest Annual Report, a copy of which can be found
on the company’s corporate website www.akzonobel.com.
146
147 Capital Markets Day 2014
Appendices
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Variable costs analysis
Capital Markets Day 2014
29%
3%
5%
6%
15%
2%
10%
17%
7%
6%
2013 (excluding Decorative Paints North America)
* Other variable costs include variable selling costs (e.g. freight) and products for resale ** Other raw materials include cardolite, hylar etc.
*** Chemicals and intermediates include caustic soda, acetic acid, tallow, ethylene, ethylene oxide, sulfur, amines etc.
Energy & other variable costs*
Raw materials
Other raw materials**
Titanium
dioxide
Coatings’ specialties
Resins
Pigments
Additives
Solvents
Packaging
Chemicals and
intermediates***
148
255-255-255
185-201-208
068-105-125
085-190-207
000-146-187
000-139-197
000-081-146
134-134-136
000-000-000
183-185-186
000-139-197
000-081-146
134-134-136
183-185-186
185-201-208
255-255-255
Text Bk D1
Color 6
Color 5
Color 4
Color 3
Color 2
Color 1
Text Bk D2
Text Bk L1
Text Bk L2
Hyper
F. Hyper
Text D2
Text L2
Agenda main
Agenda main 2nd
Both short & long term incentives have been aligned with our priorities
149 Capital Markets Day 2014
• More than 600 executives are affected by this change
• Alignment of priorities
• Return on investment incentive brought closer to relevant management levels
Executive short term incentive 2013
STI
Element
Metric
20% Return on investment
20% Operating income
30% Operating cash flow
30% Personal targets – related to
performance improvement
plan
LTI
Element
Metric
35% Return on investment
35% Total Shareholder Return
30% Sustainability / SAM - DJSI
Executive long term incentive 2013
Key Features
• Premium waterborne with excellent finish
• Very fast drying – 2 hours between coats
• High blocking resistance “same day” concept
• Low VOC emission - >60% less than
previous formulation
Growth potential
• Launched in Brazil and extended into Argentine
market – reduced marketing complexity in LATAM
• Scope for introducing quality improvements and
cost savings into the European and Asian markets
• Potential to deliver sustainability targets of VOC
emissions and eco–premium sales
New waterborne enamel with superior performance for the LATAM decorative market
Customer Benefits
• Odorless, quick drying and non-yellowing
• Improved open time – better spreading and
levelling
• Easier cleaning of application tools (brush, roller &
spray-gun)
• An affordable enamel – great value for money
Innovation Pipeline 2014 Decorative Paints – Coral Coralit Zero
Capital Markets Day 2014 150
151
Key Features
• High-gloss wood coating for luxury interiors based
on proprietary technology (joint Lufthansa Technik/
AkzoNobel patent)
• Unsurpassed aesthetics originating from smooth,
high-clarity, high-gloss finish
• Compliant with fire retardancy requirements for
aircraft and the International Maritime
Organization
Customer Benefits
• Market-leading finish setting the industry
benchmark
• Exclusivity to Lufthansa Technik for use in the VIP
jet market
• Easy and secure application
• Reduced refit time for VIP jets
Growth Potential
• Exclusive to Lufthansa Technik for the VIP jet
market
• Significant growth opportunities identified for the
luxury yacht market (launch in 2014)
Innovation Pipeline 2014 Wood Finishes – Duritan® fire retarding, high-gloss system
A fire retarding, high-gloss coating system for wooden interiors of luxury jets and yachts
Capital Markets Day 2014
Innovation Pipeline 2014 Industrial Chemicals – Ecosel®AsphaltProtection
Key Features
• Additive to de-icing brine in small amounts
• Prevents formation of hard ice inside
asphalt pores
• Reduces frost damage to roads substantially
• Harmless to people and nature
• Eco-premium product
Customer Benefits
• Up to 50% less winter damage to
road surface
• Substantial savings on road
maintenance and repair
• Asphalt lifetime extended
• Contribution to traffic safety
Growth Potential
• Product to be launched in Q1-2014
• Global potential: all roads subject to
wintry conditions
Capital Markets Day 2014 152
Reducing frost damage to roads