Akzo Nobel posts Q4 profit beat despite persistent cost pressures

By Scott Kanowsky 

Investing.com -- Akzo Nobel NV (AS:AKZO) has reported a steep fall in fourth-quarter earnings, but still beat analysts' estimates, thanks in part to price hikes aimed at offsetting a spike in input expenses.

Adjusted operating income slumped by 40% in the three months to the end of December to €126 million (€1 = $1.0749), as the Dutch decorative paints and coatings manufacturer was hit by an uptick in raw material and freight costs. COVID-related restrictions in China weighed on performance as well, with volumes slipping by 9%.

But quarterly revenue still rose by almost a tenth in constant currency to €2.61B, mainly due to "significant" pricing initiatives. This increase helped the bottom-line figure come in above Bloomberg consensus estimates of €123.7M.

Shares in the maker of Dulux paints jumped by as much as 10% at one point on Wednesday, touching their highest level since June, although some of these gains were later erased.

The Amsterdam-based group now expects to deliver adjusted core earnings of between €1.2B to €1.5B in 2023, which analysts at Morgan Stanley said they believe is ahead of investor expectations. Akzo Nobel also pledged to work to control the impact of macroeconomic uncertainties on organic volume growth.

"Cost reduction programs are expected to mitigate the ongoing pressure from inflation in operating expenses for 2023," the company said in a statement. 

Declining raw material costs are also seen as having a "favorable impact" on profitability, Akzo Nobel added.