AkzoNobel shares fall on Q2 miss, lowered 2025 EBITDA outlook

Investing.com -- AkzoNobel (AS:AKZO)shares declined more than 2% on Tuesday after the company missed second-quarter earnings estimates and cut its full-year EBITDA guidance, citing adverse foreign exchange effects and weaker pricing trends.

The Dutch paints and coatings company reported second-quarter adjusted EBITDA of €393 million, 2% below Jefferies’ forecast and 3% under consensus estimates of €403 million. 

Sales fell 5.7% year-over-year to €2.63 billion, trailing Jefferies’ projection of €2.72 billion and consensus expectations of €2.69 billion. 

Morgan Stanley (NYSE:MS) noted the EBITDA result was 5.7% below its estimate and 3% under Visible Alpha consensus.

AkzoNobel lowered its 2025 full-year adjusted EBITDA guidance to over €1.48 billion, down from its prior target of more than €1.55 billion. 

The revised figure stands 1% below Jefferies’ estimate of €1.50 billion and 2% below consensus of €1.51 billion. 

The company now expects volumes to be flat to slightly negative for the year, compared to a prior forecast of flat to low single-digit decline.

Volume declined 1% in the second quarter, while price/mix rose 1%. Currency effects negatively impacted sales by 5%, with other items contributing a further 1% decline. 

Adjusted EBITDA margin improved 60 basis points year-over-year. Adjusted EBIT was €303 million, 1% below Jefferies’ estimate and 3% below consensus, with EBIT margin rising 40 basis points.

In the Decorative Paints segment, adjusted EBITDA was €192 million, 3% below Jefferies’ estimate but 2% above consensus. 

Sales totaled €1.08 billion, with flat volumes, a 1% increase in price/mix, and a 5% drag from currency. EBITDA margin improved by 220 basis points. Regionally, EMEA saw flat organic growth, Asia declined 4%, and Latin America grew 10%.

Performance Coatings posted adjusted EBITDA of €213 million, missing Jefferies’ estimate by 3% and consensus by 9%. 

Sales were €1.55 billion. Volumes declined 2%, price/mix rose 2%, and currency and other items each reduced sales by 1%. 

EBITDA margin declined by 60 basis points year-over-year. By end-market, Powder Coatings fell 1% organically, Marine and Protective Coatings rose 6%, Automotive and Specialty Coatings declined 3%, and Industrial Coatings volumes dropped 2%.

Operating cash flow rose to €234 million from €151 million a year earlier. Free cash flow increased to €162 million, up from €77 million. Net debt stood at €4.28 billion, resulting in a net debt-to-EBITDA ratio of 2.9x.

Morgan Stanley cited underperformance in net pricing/mix at +1%, versus its expectation of +2%. 

The brokerage maintained an “overweight” rating with a €75 price target but warned the second-half run-rate could prompt a downgrade to 2026 consensus estimates.