AKZO NOBEL: How to spend it AKZA NA

Akzo’s 1Q21 adj. operating profit increased by 43% with the adj. operating profit margin up by 320bps. After an 4.3 pp margin increase in the period 2018-2020, the 1Q performance further adds to management’s track record with guidance still aiming for another 50bps increase in 2021 as well as the following two years. We appreciate Akzo for the self help profit improvement potential and its leadership positions in the attractive global paints & coatings industry, which is characterized by a fairly low capital intensity, improved pricing discipline and consolidation potential. Akzo’s strong balance sheet allows to participate in the expected further consolidation and/or continue to return the significant excess cash generation to shareholders in the form of share buybacks. We currently expect Akzo to return an aggregate amount of € 2.7bn to shareholders in the next three years in the form of buybacks in addition to € 1.1bn dividends, together almost. 20% of current market cap. We maintain our Accumulate rating and € 110 TP.