Q2 2024 Akzo Nobel NV Earnings Call Transcript
Key Points
- Akzo Nobel NV (AKZOF) reported a 2% organic sales growth in Q2 2024, marking the third consecutive quarter of volume growth.
- Gross margin expanded by 160 basis points year-on-year in Q2, and 270 basis points for the half year.
- The company is making good progress towards its midterm guidance range of 16% to 19% return on investment, currently at 13.7%.
- Operational improvements are expected to yield a benefit of about EUR25 million for 2024 and an incremental benefit of around EUR70 million for 2025.
- Targeted price increases and measures to combat inflationary pressure on OpEx are expected to improve financial performance in the second half of the year.
- Higher than expected operating costs muted adjusted EBITDA growth in Q2, with a EUR20 million deviation due to cost inefficiencies and wage inflation.
- Net debt to EBITDA ratio increased to 2.9 times from 2.7 times at the end of Q1, reflecting usual seasonality.
- Deco EMEA volumes were flat due to adverse weather conditions, impacting high-margin exterior paint sales.
- China Deco business experienced a mid-single digit volume decline, with competitive pricing pressures.
- Free cash flow was EUR77 million, showing a return to normal levels but still reflecting higher prior year comparisons.
Hi. Good morning, and welcome to Akzo Nobel's investor update for the second quarter of 2024. I'm Kenny Chae, Head of Investor Relations. Today, our CEO, Greg Guillaume, and CFO, Maarten de Vries will take you through our results.
We'll refer to the presentation which you can follow by webcast or download from our website at Akzonobel.com. A replay of the webcast will also be made available following the event. There will be a Q&A session after the presentation. For additional information, please contact our Investor Relations team. On slide 2, before we start a reminder of our forward-looking statements disclaimer. Please note this also applies to the conference call and answers to your questions.
I will now hand over to Greg, who will start on slide 3 of the presentation.
Thanks, Kenny. Good morning to everyone on the call. Our performance for Q2 showed
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