AkzoNobel misses Q3 forecasts as China's real estate slowdown drags paint sales

Reuters

AkzoNobel misses Q3 forecasts as China's real estate slowdown drags paint sales

6:49 sáng giờ GMT, 23 Tháng 10 2024

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Q3 adj. EBITDA at 394 mln euros vs consensus of 404 mln euros

Weak consumer confidence in China weighs on paint sales

China's high industrial activity helps coatings business

Adds detail on China, quotes from CFO interview in paragraphs 1-6

By Anna Peverieri and Dimitri Rhodes

Oct 23 (Reuters) -Dulux paints maker AkzoNobel AKZO.AS missed expectations for third-quarter revenue and earnings on Wednesday, as China's weak real estate market weighs on the sales of its decorative paints.

Shares in the Dutch paints-and-coatings maker were down 4.6% at 1219 GMT. They have fallen nearly 20% so far this year after a string of consensus misses in recent quarters.

"Our business in China is doing really well on the industrial side and it is doing pretty badly on the consumer side," finance chief Maarten de Vries said during a press call.

AkzoNobel's industrial unit, which makes specialised coatings used by many industries, benefits from high industrial activity bolstered by China's economic stimulus. The decorative paints business meanwhile is affected by low consumer confidence in the country.

"The government is trying to stimulate the real estate market which will stimulate paint sales, but that's still a work in progress," de Vries told Reuters. He added the issue in the China consumer business represented 6-7% of the group's sales.

The company said organic sales of its consumer products fell 11% in Asia in the quarter, largely due to competitive pricing and tough market conditions in China.

At the group level, third-quarter revenue fell 3% to 2.67 billion euros ($2.88 billion), missing the 2.76 billion euros expected by analysts on average.

Organic sales in the decorative paints business rose 1%, helped by higher pricing outside of China, but weighed down by flat sales in Europe and the Middle East alongside the decline in Asia.

Sales in the coatings division rose 2% organically, boosted by growth in its Marine, Protective and Powder Coatings units.

AkzoNobel said it expected its adjusted core profit (EBITDA) to reach 1.5 billion euros this year, at the bottom of its earlier forecast range and in line with analysts' expectations.

Third-quarter adjusted EBITDA fell 4.8% to 394 million euros, below the consensus of 404 million euros.

($1 = 0.9256 euros)

Reporting by Anna Peverieri and Dimitri Rhodes in Gdansk; editing by Milla Nissi

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