Akzo Nobel Model update post 2Q results – target price reduced
Akzo's 2Q adjusted EBITDA was up only 1% y/y and fell short to our and consensus forecasts by respectively 8% and 3% on fairly weak volumes (+1% y/y) and higher opex. Akzo lowered FY24 adjusted EBITDA guidance, now expected to land at the lower end of its initial € 1.5-1.65bn guidance range. We have lowered our FY24 forecasts by c. 4% and our FY25 forecast by c 2%. The mid term guidance of at least 16% adjusted EBITDA margin is maintained, which represents a 260bps increase from 2023A. Despite the 2Q bump, we acknowledge the improvement in earnings momentum in recent quarters. However, taking into account the rather volatile track record, low structural growth and reduced earnings forecasts, we maintain our Hold rating with target price reduced from € 75 to € 70.Akzo Nobel N.V. is a holding company. Through its subsidiaries, Co. is engaged in the production and marketing of paints, coatings and specialty chemicals. Co. has three segments: Decorative Paints, which supplies products for the professional and do-it-yourself markets, including paints, lacquers and varnishes, as well as products for surface preparation; Performance Coatings, which is divided into the following businesses: Automotive and Aerospace Coatings, Industrial Coatings, Marine and Protective Coatings, and Powder Coatings; and Specialty Chemicals, which are used in products such as ice cream, soups, disinfectants, plastics, soaps, detergents, cosmetics, paper and asphalt.
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