Akzo Nobel Painting the future is a gradual work
We have updated our earnings model following slightly better than expected 1Q24 results (with a 4% beat on adjusted EBITDA level), with very limited changes though that have been made to our 2024/2025 adjusted EBITDA forecast (upped by <1%). The past few years have been impacted by COVID-disruptions (which have given a temporary boost to Deco) and a fierce inflationary cycle, of which the dust has been settling in recent quarters with selling prices adjusted and now up about a quarter on a two year stack. Going forward, it looks like efficiency improvements and footprint optimization will be amongst the key drivers to further improve profitability. We put some faith in the execution of the plans but on the back of the limited structural growth of the industry, we consider Akzo's valuation to be about fair and reiterate our Hold rating and € 75 target price.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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