Akzo Nobel reported stronger-than-expected quarterly core earnings on Thursday as higher pricing helped offset supply chain issues, a coronavirus resurgence in China and the impact of Russia’s invasion of Ukraine.
Chief Executive Thierry Vanlancker said in a statement that the group’s “vigorous pricing initiatives” had helped it manage “the unprecedented variable cost inflation that impacted our industry during the quarter”.
The Dutch paints and coatings maker flagged uncertainties linked to sanctions on Russia, the resurgence of the coronavirus in China and supply chain constraints, but said it still expected raw material and other cost inflation to ease in the second half of this year.
The negative impact of the war in Ukraine on Akzo Nobel’s first-quarter operating income was around 5 million euros ($5.4 million), the management added in a call with journalists.
The Amsterdam-based firm said last week its business in Russia represented about 2% of revenue prior to the war. It added that its aerospace coatings activities, new investments and marketing activities in Russia had already been suspended.
Makers of chemicals such as Akzo Nobel and PPG Industries have been hit by rising raw materials costs because of supply chain issues and strong demand.
Akzo, which increased pricing by 17%, said raw material and other variable costs were 334 million euros higher than in the first quarter of 2021, for which it did not give a baseline figure.
It reported adjusted operating income of 230 million euros for the January to March quarter, down from 307 million euros in the same period last year, with revenue increasing 12% to 2.52 billion euros. Both measures beat analysts’ forecasts.
The group confirmed its guidance for 2023 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of 2 billion euros.