By Stephanie Hamel and Charlotte Eugenie Yvette Bawol
(Reuters) -Dulux paints maker Akzo Nobel reported a 1% rise in second-quarter core profit on Tuesday, falling short of analysts’ expectations, due to weaker volume growth and price increases, sending its shares down.
The Dutch paints-and-coatings maker has been focused on cutting costs as the wider industry faces a patchy recovery from a post-pandemic slowdown when raw material costs rose and the do-it-yourself market tried to reduce inventory.
Akzo Nobel reported adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of 400 million euros ($435.60 million), up from 397 million euros a year ago, but below the 414 million euros expected by analysts in a company-provided consensus.
The company said it now expects its 2024 EBITDA at the lower end of its forecast of 1.50 billion-1.65 billion euros.
Shares in the company were down 4.4% at 0856 GMT.
Plant closures announced in May in Ireland, the Netherlands and Zambia are on track to be completed by the end of the year, as part of a restructuring plan announced in October.
“We’re able to actually close earlier than what we thought, which then frees us up to kind of pull more closures forward,” said CFO Maarten de Vries in a call to investors.
“Akzo has too many sites in Europe,” said CEO Greg Poux-Guillaume in a press call.
Revenue decreased 1% in the Decorative paints business in the second-quarter compared with last year, due to weaker demand in China and Latin America and flat sales in Europe and the Middle-East.
But the group’s performance coatings saw a 3% revenue increase on the year, bolstered by higher prices and sales and double-digit growth in China.
Akzo Nobel’s main competitor, PPG Industries , also cut its annual adjusted profit forecast earlier this month, after reporting lower-than-expected second-quarter revenue due to weakness in its industrial coatings unit.
($1=0.9183 euros)
(Reporting by Stéphanie Hamel and Charlotte Bawol; Editing by Himani Sarkar, Janane Venkatraman, Neil Fullick and Louise Heavens)
