Akzo Nobel (AKZA) Q2 2024 earnings summary

Executive summary

• Organic sales grew 2% year-over-year in Q2 2024, with volumes up 1% and gross margin expanding by 160 bps, though margin expansion was muted by higher-than-expected OPEX inflation.

• Adjusted EBITDA for Q2 was €411 million (14.8% margin), flat year-over-year, with leverage ratio at 2.9x.

• Net income for Q2 was €358 million, up from €212 million in Q2 2023; adjusted EPS from continuing operations was €1.07, up from €0.93.

• Return on investment improved to 13.7%, progressing toward the midterm target of 16–19%.

• Net debt to EBITDA ratio rose to 2.9x at Q2 end, reflecting seasonality and improved from 4.0x year-over-year.

Financial highlights

• Q2 revenue rose to €2,784 million from €2,741 million year-over-year; adjusted EBITDA was €411 million before hyperinflation, with margin stable at 14.8%.

• Adjusted EBITDA after hyperinflation was €400 million, marginally higher than last year.

• Free cash flow for Q2 was €77 million, returning to normal levels after higher prior year comps.

• Working capital as a percentage of revenue was 17.3%, with a target to reduce to 14% or below by year-end.

• Net income attributable to shareholders increased to €358 million in Q2.

Outlook and guidance

• Q3 profit expected to be broadly in line with Q2; full-year profit and adjusted EBITDA are expected at the lower end of guidance (€1.5–1.65 billion), assuming constant currencies and no major disruptions.

• Targeting low single-digit volume growth for the full year, with additional pricing actions and OpEx mitigation underway.

• Industrial efficiency actions expected to deliver over €25 million benefit in 2024 and over €250 million by 2027.

• Mid-term targets: adjusted EBITDA margin above 16%, ROI between 16–19%, and leverage ratio around 2x.