Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13 a - 16 or 15 d - 16 of
The Securities Exchange Act of 1934
Commission file number 0 - 017444
Akzo Nobel N.V.
(Translation of registrant's name into English)
76, Velperweg, 6824 BM Arnhem, the Netherlands
(Address of principal executive offices)
The following exhibit
is filed with this report
Akzo Nobel Report for the second quarter of 2004
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its behalf of
the undersigned, thereto duly authorized.
Akzo Nobel N.V.
Name : F.H. Hensel Name : J.J.M. Derckx
Title : Senior Vice President Title : Director Corporate Control
Finance
Dated : July 19, 2004
Report for the 2nd quarter of 2004
Key figures
2nd quarter Millions of euros (EUR) January-June
------------------- ------------------------------ -------------------------
2004 2003* Ch.% 2004 2003* Ch.%
----- ----- ---- ------ ------ -----
216 201 7 Net income excl. nonrec. items 392 365 7
0.76 0.70 - per share, in EUR 1.37 1.28
112 180 (38) Net income 245 319 (23)
0.39 0.63 - per share, in EUR 0.86 1.12
Sales
808 888 (9) Pharma 1,629 1,772 (8)
1,397 1,411 (1) Coatings 2,628 2,673 (2)
1,147 1,133 1 Chemicals 2,265 2,308 (2)
(27) (33) Other (59) (67)
----- ----- ------ ------
3,325 3,399 (2) Total 6,463 6,686 (3)
----- ----- ------ ------
Operating income ** (EBIT)
117 146 (20) Pharma 272 287 (5)
146 137 7 Coatings 228 207 10
93 79 18 Chemicals 186 176 6
(21) (34) Other (59) (68)
----- ----- ------ ------
335 328 2 Total 627 602 4
----- ----- ------ ------
10.1 9.6 Return on sales **, in % 9.7 9.0
9.3 7.5 Interest coverage 9.2 7.3
Gearing 0.99 0.92***
1.37****
Number of employees 63,950 64,580***
66,360****
Operational performance up; significant nonrecurring charges
- Pharma - going through tough times
- Coatings and Chemicals - clearly up due to autonomous growth and cost savings
- Net nonrecurring charges of EUR 104 million - restructurings and antitrust
cases
- Chemicals divestments - on track
- Outlook unchanged - net income, excluding nonrecurring items and special
benefits, below 2003
* 2003 figures have been adjusted for a minor regrouping
of activities between Coatings and Chemicals.
** Excluding nonrecurring items.
*** At December 31, 2003.
**** At June 30, 2003.
1
Report for the 2nd quarter of 2004
C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F I N C O M E
2nd quarter Millions of euros January-June
----------------------- ------------------------------------------------------------- -----------------------
2004 2003 Ch. % 2004 2003 Ch. %
------ ------ ----- ------- ------- -----
3,325 3,399 (2) Sales 6,463 6,686 (3)
(2,990) (3,071) Operating costs (5,836) (6,084)
------ ------- ------- -------
335 328 2 Operating income * (EBIT) 627 602 4
(36) (44) Financing charges (68) (82)
------ ------- ------- -------
299 284 Operating income * less financing charges 559 520
(82) (89) Taxes (164) (157)
------ ------- ------- -------
Earnings * of consolidated companies, after
217 195 11 taxes 395 363 9
10 14 Earnings * from nonconsolidated companies 16 20
------ ------- ------- -------
227 209 Earnings * before minority interest 411 383
(11) (8) Minority interest (19) (18)
------ ------- ------- -------
216 201 7 Net income excluding nonrecurring items 392 365 7
(104) (21) Nonrecurring items, after taxes and minority interest (147) (46)
------ ------- ------- -------
112 180 Net income 245 319
------ ------- ------- -------
10.1 9.6 Return on sales *, in % 9.7 9.0
9.3 7.5 Interest coverage 9.2 7.3
Basic/diluted net income excl. nonrecurring items per
0.76 0.70 share **, in EUR 1.37 1.28
0.39 0.63 Basic/diluted net income per share **, in EUR 0.86 1.12
490 494 (1) EBITDA 939 931 1
134 144 Capital expenditures 241 257
143 154 Depreciation 287 306
* Excluding nonrecurring items.
** Diluted per share amounts are equal to the basic per share amounts with
the exception of diluted net income excluding nonrecurring items per share
for the second quarter of 2004, which was EUR 0.75, and net income per
share for January-June 2004 and 2003, which were EUR 0.85 and EUR 1.11,
respectively.
2
Report for the 2nd quarter of 2004
Operational performance up; significant nonrecurring losses
Net income excluding nonrecurring items in the second quarter rose 7% to EUR
216 million. Net income * per share was EUR 0.76 (2003: EUR 0.70). Including
net nonrecurring losses of EUR 104 million, second-quarter net income was down
38% to EUR 112 million.
For the first half of 2004, net income excluding nonrecurring items amounted to
EUR 392 million, up 7% on 2003. Taking into account net nonrecurring losses of
EUR 147 million, net income decreased 23% to EUR 245 million.
Autonomous sales growth of 2%
Second-quarter sales of EUR 3.3 billion were slightly below last year.
Autonomous growth at Coatings and Chemicals was more than offset by lower
Pharma volumes, negative currency translation effects, and divestments. Sales
developed as follows:
Currency Acquisitions/
In % Total Volume Price translation divestments
------------ ------ ------- ------ ----------- -------------
Pharma (9) (7) 1 (3)
Coatings (1) 5 - (1) (5)
Chemicals 1 2 2 (2) (1)
Akzo Nobel (2) 1 1 (2) (2)
Operating income - up 2%
Operating income of EUR 335 million was up 2% on last year. The improved
operational performance of Coatings and Chemicals and lower pension charges
more than offset the earnings decline at Pharma and the negative currency
translation effects. Earnings developed as follows:
Operating Change from 2nd quarter of 2003
income * ----------------------------------------
Millions of for 2nd quarter Operational Currency Lower pension
euros of 2004 Total performance translation charges
----------- ------------ ----- ----------- ----------- -------------
Pharma 117 (29) (27) (5) 3
Coatings 146 9 10 (4) 3
Chemicals 93 14 12 (1) 3
Other ** (21) 13 10 - 3
------------ ----- ----------- ----------- -------------
Akzo Nobel 335 7 5 (10) 12
* Excluding nonrecurring items.
** "Other" mainly comprises pension costs related to former employees of
divested operations and results of the (intermediate) holding companies
and the captive insurance companies.
3
Report for the 2nd quarter of 2004
Currency translation effects were mainly caused by the weaker U.S. dollar and
various Asian currencies.
Return on sales was 10.1%, against 9.6% in the second quarter of 2003.
Financing charges decreased substantially as a result of reduced net borrowings
and lower foreign currency exchange rates. Interest coverage in the second
quarter improved to 9.3 (2003: 7.5).
The effective tax rate decreased from 31% to 27%, due to incidental factors and
changes in the geographic distribution of the Company's results.
Earnings from nonconsolidated companies decreased from EUR 14 million to EUR 10
million, mainly attributable to the Chemicals joint ventures Methanor, FCC
Brazil, and Eka Polymer Latex.
Workforce - down 1,440 from restructurings
At June 30, 2004, the Company had 63,950 employees, compared with 64,580 at
year-end 2003. Restructurings at all three groups caused a decrease of 1,440,
while growth of certain businesses, seasonal influences, and acquisitions and
divestments on balance resulted in a workforce expansion of 810. Developments
were as follows:
June 30, Other December 31,
2004 Restructurings changes 2003
------------- --------- -------------- -------- ------------
Pharma 19,920 (910) 150 20,680
Coatings 28,890 (260) 810 28,340
Chemicals 14,020 (240) (150) 14,410
Other 1,120 (30) 1,150
--------- -------------- -------- -----------
Akzo Nobel 63,950 (1,440) 810 64,580
4
Report for the 2nd quarter of 2004
Nonrecurring items
In the second quarter of 2004, the Company registered net nonrecurring losses
of EUR 104 million. The total net nonrecurring charges for the first half year
aggregate EUR 147 million and break down as follows:
Millions of euros Gross Taxes Net
------------------------ ------- ----- -----
Pharma (69) 21 (48)
Coatings (38) 13 (25)
Chemicals (17) 4 (13)
Other (47) 1 (46)
------ ----- -----
Total (171) 39 (132)
Nonconsolidated companies (15)
-----
Akzo Nobel (147)
Pharma's nonrecurring losses mainly concern impairment and closure costs of the
Organon production site in West Orange, New Jersey, restructuring charges at
Diosynth, and costs related to the Remeron (R) court cases in the United
States, for which in the first quarter a settlement with generic drug
manufacturers was reached. The cases with the direct and indirect purchasers
and the State Attorneys General are still ongoing, for which no provisions were
recognized yet *.
Coatings' charges relate to the worldwide restructuring program at Car
Refinishes, involving a workforce reduction of 600 jobs.
At Chemicals, nonrecurring charges were incurred for the closure of the Surface
Chemistry site in Littleborough, United Kingdom.
The nonrecurring charge under Other predominantly consists of an addition to
the provision-originally recognized in 2000-for the antitrust cases the Company
is involved in *.
The loss for nonconsolidated companies concerns the settlement of certain
guarantees for pensions, granted to Acordis at the time of its divestment.
Outlook unchanged - net income, excluding nonrecurring items and special
benefits, below 2003
As a consequence of the ongoing negative developments in Pharma, despite
somewhat more positive trends in Coatings and Chemicals, we confirm our earlier
expressed expectation that full-year net income, excluding nonrecurring items,
will be below 2003. This outlook takes the operational impact of the announced
Chemicals divestments into account. The special benefit in 2003 from the
asenapine cooperation of EUR 70 million, after taxes, is excluded in this
comparison.
* Reference is made to the disclosures on pages 98 and 99 in the Akzo Nobel
Annual Report 2003.
5
Report for the 2nd quarter of 2004
Pharma - going through tough times
2nd quarter Millions of euros January-June
---------------------- ----------------------------- ----------------------
2004 2003 Ch. % 2004 2003 Ch. %
---- ----- ----- ------ ----- -----
Sales
502 576 Organon 1,009 1,140
254 243 Intervet 511 496
96 126 Diosynth 198 231
(44) (57) Intragroup sales/other (89) (95)
---- ---- ------ ------
808 888 (9) Total 1,629 1,772 (8)
117 146 (20) Operating income * (EBIT) 272 287 (5)
14.5 16.4 Return on sales *, in % 16.7 16.2
32.1 32.2 S&D expenses as % of sales 32.2 32.4
14.6 16.5 R&D expenses as % of sales 15.4 16.4
158 188 (16) EBITDA 358 372 (4)
37 59 Capital expenditures 78 110
Invested capital 2,638 2,506**
Number of employees 19,920 20,680**
* Excluding nonrecurring items.
** At December 31.
- Sales down - due to lower volumes and currencies
- Cost saving programs - on track
- Organon - facing tough times
- Remeron (R) - major decline due to generic competition
- infertility and HT products - sales under pressure
- gepirone ER - not approved by FDA
- contraceptives - NuvaRing (R) gathering momentum
- co-promotion for Avinza (R) - successful
- Intervet - autonomous growth of 6%
- Diosynth - suffering from overcapacity; restructurings progressing well
6
Report for the 2nd quarter of 2004
Pharma is going through tough times. Sales in the second quarter decreased 9%
to EUR 0.8 billion, due to generic competition in the United States for Remeron
(R), weaker key currencies, and lower sales for infertility and HT products.
Operating income declined 20% to EUR 117 million. Return on sales was 14.5%
(2003: 16.4%). In the first half of 2004, due to restructuring the workforce
was reduced by 910. The restructuring and cost saving measures are clearly
paying off, but did not offset the negative impact from lower Organon sales and
the earnings decline at Diosynth. R&D expenses were temporarily somewhat lower
this quarter.
The main products in Organon (Human Healthcare) developed as follows:
-------------------------- ---------------- ---------------------------
Millions of euros Sales Autonomous growth, %
2nd quarter 2004 on Q-2 2003 on Q-1 2004
---------------- ---------------------------
Remeron (R) in U.S. 14 (74) (3)
Remeron (R) in rest of world 79 1 (10)
Contraceptives 131 4 3
Puregon (R)/Follistim (R) 71 (13) 7
Livial (R) 41 (20) 4
In the United States, the effects of the generic competition for
antidepressants Remeron (R) and Remeron (R) SolTab (R) are bottoming out. In
the rest of the world, Remeron's autonomous sales growth was 1% compared to the
second quarter of 2003, however down 10% compared to the first quarter of 2004.
In June 2004, Organon was informed by the FDA that the antidepressant gepirone
ER was "not approvable."
Sales for contraceptives were up, aided by NuvaRing (R) (contraceptive ring),
which turned in second quarter 2004 sales of EUR 19 million (Q-2 2003: EUR 9
million; Q-1 2004: EUR 15 million).
Sales of Puregon (R)/Follistim (R) were down in the second quarter of 2004,
mainly due to delivery problems in the United States and changed reimbursement
policies of the healthcare providers in several important countries. Compared
to the first quarter of 2004 sales were higher. The launch of Follistim (R)-AQ
(TM) cartridge in the United States was progressing well during the quarter.
Livial (R) sales were impacted by the ongoing discussions about the results of
studies on hormone therapies, but were better than in the first quarter of
2004.
The co-promotion with Ligand for their Avinza (R) is showing healthy growth.
The animal healthcare activities Intervet achieved 6% autonomous growth and
turned in a satisfactory performance.
Diosynth (active pharmaceutical ingredients) is suffering from overcapacity in
the industry and lower (captive) demand. The restructuring program affecting
350 jobs is progressing well. In June 2004, Diosynth and Human Genome Sciences
reached an agreement on the process development and production of clinical
quantities of a therapeutic monoclonal antibody. Diosynth will be responsible
for technology transfer, scaling-up, and production in its new large-scale cell
culture facility in Oss, the Netherlands.
7
Report for the 2nd quarter of 2004
Coatings - clearly up due to autonomous growth and cost savings
2nd quarter Millions of euros January-June
----------------------- ----------------------------- ------------------------
2004 2003 Ch. % 2004 2003 Ch. %
----- ----- ----- ------- ------ -----
Sales
544 534 Decorative Coatings 972 952
408 373 Industrial activities 781 735
232 228 Car Refinishes/Nobilas 453 446
227 214 Marine & Protective Coatings 446 418
(14) (2) Intragroup sales/other (24) (7)
----- ----- ------- ------
1,397 1,347 4 Total continued operations 2,628 2,544 3
64 Impregnated papers 129
----- ----- ------- ------
1,397 1,411 (1) Total 2,628 2,673 (2)
146 137 7 Operating income ** (EBIT) 228 207 10
10.5 9.7 Return on sales **, in % 8.7 7.7
181 174 4 EBITDA 297 283 5
29 26 Capital expenditures 50 48
Invested capital 2,208 2,043***
Number of employees 28,890 28,340***
* 2003 figures have been adjusted for a minor regrouping of
activities between Coatings and Chemicals.
** Excluding nonrecurring items.
*** At December 31.
- Autonomous growth 5% - mainly Asia Pacific and U.S.
- Restructurings paying off - operating income up 7%
- Raw material prices - increasing
- Decorative Coatings - affected by a hesitant business climate in Europe
- Marine & Protective Coatings - star performer
- Industrial activities - solid growth
- Car Refinishes - pressure on margins; major worldwide restructuring announced
- Capital expenditures focused on Asia Pacific
- Various bolt-on acquisitions
8
Report for the 2nd quarter of 2004
In the second quarter, sales of the ongoing Coatings activities grew 4% to EUR
1.4 billion. Autonomous sales growth was 5%, mainly attributable to volume
growth. The negative currency impact was 1%.
Operating income rose 7% to EUR 146 million. Return on sales was 10.5% (2003:
9.7%). The contributions from cost savings and lower pension charges more than
offset the negative impact of weaker currencies and higher raw material prices,
which now are clearly showing an upward trend.
Marine & Protective Coatings, Industrial Finishes, and Powder Coatings improved
further. The performance of Decorative Coatings is under pressure from a
hesitant business climate in Western Europe and Turkey. Car Refinishes suffers
from pressure on margins. In order to realign this business unit with the
changing market conditions, a major worldwide restructuring was announced,
affecting 600 jobs.
The restructuring programs are progressing well, resulting in a workforce
reduction of 260 in the first half of 2004. In growth areas, such as Asia and
Eastern Europe, and due to seasonal influences and acquisitions the workforce
expanded by 810.
Capital expenditures of EUR 29 million (93% of depreciation) were slightly up
compared to the previous year's level. Expenditures are especially directed
toward participation in the booming growth in Asia. Two new multi-purpose sites
for Industrial Finishes were recently opened in China. In May 2004, the Company
announced the construction of a new Decorative Coatings factory in Vietnam.
In the second quarter several bolt-on acquisitions were completed or announced.
Nobilas acquired the U.K.-based company Aon Motor Accident Management. This
acquisition will secure a leading position for Nobilas in the U.K. market. The
Company also announced that Decorative Coatings is to acquire Timpe & Mock, the
second largest decorative paint wholesaler in Germany with annual sales of EUR
125 million. This is a major step in the Company's strategy to increase its
presence in Germany, the largest coatings market in Europe.
In July 2004, Akzo Nobel signed a contract with the ALTANA Group under which it
will acquire their Rhenacoat coil coatings business in France. This is a
strategically important acquisition because it will provide Akzo Nobel with a
dedicated coil coatings manufacturing facility in France, Europe's largest coil
market.
Coatings is pruning its portfolio through selective divestments, which included
the industrial resins business in France and the mirror coatings activities in
Belgium.
9
Report for the 2nd quarter of 2004
Chemicals - clearly up due to autonomous growth and cost savings
2nd quarter Millions of euros January-June
------------------------- ------------------------ -------------------------------
2004 2003* Ch. % 2004 2003* Ch. %
----- ----- ------ ------ ------ ------
Sales
241 244 Pulp & Paper Chemicals 478 520
231 231 Surface Chemistry 447 455
201 202 Functional Chemicals 401 410
144 143 Base Chemicals 279 277
121 122 Polymer Chemical 241 252
101 88 Catalysts 192 179
77 73 Resins 150 146
62 65 Salt 135 142
43 43 Energy 86 86
(74) (78) Intragroup sales/other (144) (159)
----- ----- ------ ------
1,147 1,133 1 Total 2,265 2,308 (2)
93 79 18 Operating income ** (EBIT) 186 17 6
8.1 7.0 Return on sales **, in % 8.2 7.6
171 163 5 EBITDA 339 339 -
68 57 Capital expenditures 112 93
Invested capital 2,657 2,604***
Number of employees 14,020 14,410***
* 2003 figures have been adjusted for a minor regrouping of activities
between Coatings and Chemicals.
** Excluding nonrecurring items.
*** At December 31.
- Autonomous growth of 4%
- Cost saving programs paying off - operating income up 18%
- Raw material and energy prices - increasing
- Functional, Polymer, and Pulp & Paper Chemicals, and Surface Chemistry -
benefiting from restructurings and cost savings
- Salt and Base Chemicals - under pressure
- Divestment programs - on schedule
10
Report for the 2nd quarter of 2004
Chemicals' second-quarter sales of EUR 1.1 billion were 1% higher than last
year. With uncertain economic conditions persisting in the various regions and
markets, volumes and prices were both up 2% from last year. Currency
translation had a negative effect of 2%, while divestments resulted in a
decrease of 1%.
Operating income jumped 18% to EUR 93 million. Return on sales was 8.1% (2003:
7.0%). The contributions from autonomous growth and cost savings as well as
lower pension costs more than offset the negative effects of higher raw
material and energy prices and weaker key currencies.
The restructuring programs are progressing well and resulted in a workforce
decrease of 240 in the first half of 2004.
Functional Chemicals, Surface Chemistry, Polymer Chemicals, and Pulp & Paper
Chemicals clearly benefited from their restructuring and cost saving programs
as well as from growth of their activities. Catalysts achieved strong sales
growth. Earnings of Salt were under pressure from high shipping costs in Asia,
while Base Chemicals was affected by lower caustic prices.
Capital expenditures were up to EUR 68 million, equivalent to 93% of
depreciation.
The divestments of Catalysts to Albemarle for EUR 625 million * and of
Phosphorus Chemicals to Ripplewood Holdings for EUR 230 million * are expected
to be completed in the third quarter of 2004. The divestment of Coating Resins
is on track for completion in the last quarter of 2004.
In June 2004, the European Commission decided to allow the Dutch Government to
support Akzo Nobel's plans to end chlorine transport by rail in the Netherlands
in 2006. This decision makes it financially feasible for Akzo Nobel to start
the relocation of chlorine factories. Under the plan, Akzo Nobel will invest
around EUR 160 million in a new chlorine plant in Delfzijl. The Company will
receive some EUR 65 million from the Dutch Government for the whole project.
* Free of cash and debt.
11
Report for the 2nd quarter of 2004
C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
Millions of euros January-June
--------------------------------------------------------------------------- --------------------------------------
2004 2003
--------------- -----------------
Total earnings before minority interest 264 346
Depreciation and amortization 312 329
----- -----
Cash flow 576 675
Changes in working capital (331) (325)
Impairments 30
Changes in provisions, deferred tax assets and
accrued prepaid pension costs (56) 118
Retained income of nonconsolidated companies (11) (16)
Other changes (1) -
----- -----
Net cash provided by operations 207 452
Capital expenditures (241) (257)
Acquisitions (22) (89)
Proceeds from divestments 44 40
Repayments nonconsolidated companies 81 84
Other changes (1) (1)
----- -----
Net cash used for investing activities (139) (223)
Dividends paid (270) (268)
----- -----
Funds balance (202) (39)
Net cash (used for)/generated by financing activities (138) 624
Effect of exchange rate changes on cash and cash equivalents 6 (13)
----- -----
Change in cash and cash equivalents (334) 572
----- -----
12
Report for the 2nd quarter of 2004
Operational cash flow - lower due to payments for restructurings and pensions
The funds balance for the first half year of 2004 was EUR 202 million negative
(2003: EUR 39 million negative).
Cash flow from operations decreased from EUR 452 million to EUR 207 million in
2004, mainly due to significantly higher payments from provisions. These
payments include significant restructuring expenditures and also the additional
payment of EUR 50 million to the pension fund in the Netherlands in the first
quarter of 2004. The seasonal increase of working capital was in line with the
previous year.
Capital expenditures were reduced to EUR 241 million (2003: EUR 257 million),
which is 84% of depreciation.
13
Report for the 2nd quarter of 2004
C O N D E N S E D C O N S O L I D A T E D B A L A N C E S H E E T
Millions of euros June 30, 2004 December 31, 2003
------------------------------------------------ ------------- -----------------
Intangible assets * 595 590
Property, plant and equipment 3,884 3,967
Deferred tax assets 401 429
Deferred tax asset for minimum pension liability 371 361
Other financial noncurrent assets 1,044 1,076
Inventories 2,186 2,133
Receivables 3,191 2,671
Cash and cash equivalents 393 727
------- -------
Total 12,065 11,954
------- -------
Capital and reserves 3,392 3,326
Minimum pension liability (851) (824)
------- -------
Akzo Nobel N.V. shareholders' equity 2,541 2,502
Minority interest 139 140
------- -------
Equity 2,680 2,642
Provisions 2,513 2,581
Provision for minimum pension liability 1,379 1,342
Long-term borrowings 2,747 2,717
Short-term borrowings 306 441
Current liabilities 2,440 2,231
-------- -------
Total 12,065 11,954
-------- -------
Gearing 0.99 0.92
Shareholders' equity per share, in EUR 8.89 8.76
Number of shares outstanding, in millions 285.8 285.7
* Intangible assets include capitalized prior service costs related to the
minimum pension liability of EUR 166 million at June 30, 2004 and of EUR
165 million at December 31, 2003.
14
Report for the 2nd quarter of 2004
C H A N G E S I N E Q U I T Y
Capital Minimum Share-
and pension holders' Minority
reserves liability equity interest Equity
------------------------------ --------- --------- -------- --------- ------
Millions of euros
Situation at December 31, 2003 3,326 (824) 2,502 140 2,642
Income 245 245 19 264
Dividend (257) (257) (13) (270)
Changes in exchange rates 78 (27) 51 3 54
Changes in minority interest
in subsidiaries (10) (10)
--------- --------- -------- --------- ------
Situation at June 30, 2004 3,392 (851) 2,541 139 2,680
--------- --------- -------- --------- ------
Strong financial position
Invested capital at June 30, 2004, amounted to EUR 8.4 billion, EUR 0.2 billion
higher than at December 31, 2003, mainly due to the seasonal increase of
working capital and currency translation.
Equity was somewhat up, because first half year income and positive currency
translation effects more than offset dividends paid. Net interest-bearing
borrowings seasonally increased by EUR 0.2 billion. Gearing was 0.99 (December
31, 2003: 0.92; June 30, 2003: 1.37).
Arnhem, July 19, 2004 The Board of Management
15
Report for the 2nd quarter of 2004
The report for the 3rd quarter of 2004 will be published on October 19, 2004.
Note
The data in this report are unaudited.
(R) or (TM) indicates trademarks in one or more countries.
The 2003 comparative figures for Coatings and Chemicals have been adjusted for
a minor regrouping of activities between these two segments.
Unless indicated otherwise, discussions in this report, such as on earnings
developments, exclude nonrecurring items.
Nonrecurring items relate to income and expenses resulting from normal business
operations, which, because of their size or nature, are disclosed separately to
give a better understanding of the underlying result for the period. These
include items such as restructurings and impairment charges, significant gains
and losses on the disposal of businesses, and costs related to law suits and
antitrust cases, not meeting the requirements for extraordinary items.
Operating income before nonrecurring items is one of the key figures management
uses to assess the performance of the Company, as these figures better reflect
the underlying trends in the results of the activities.
Autonomous sales growth is defined as the change in sales attributable to
changed volumes and selling prices. It excludes currency, acquisition, and
divestment effects.
Safe Harbor Statement *
This report contains statements which address such key issues as Akzo Nobel's
growth strategy, future financial results, market positions, product
development, pharmaceutical products in the pipeline, and product approvals.
Such statements, including but not limited to the "Outlook", should be
carefully considered, and it should be understood that many factors could cause
forecasted and actual results to differ from these statements. These factors
include, but are not limited to price fluctuations, currency fluctuations,
developments in raw material and personnel costs, pensions, physical and
environmental risks, legal issues, and legislative, fiscal, and other
regulatory measures. Stated competitive positions are based on management
estimates supported by information provided by specialized external agencies.
For a more complete discussion of the risk factors affecting our business
please refer to our Annual Report on Form 20-F filed with the United States
Securities and Exchange Commission.
* Pursuant to the U.S. Private Securities Litigation Reform Act 1995
Additional Information Akzo Nobel N.V.
The explanatory sheets used by the CFO during Velperweg 76
the press conference can be viewed on Akzo P.O. Box 9300
Nobel's Internet site at: 6800 SB Arnhem
www.akzonobel.com/news/presentations.asp The Netherlands
Tel. + 31 26 366 4433
Fax + 31 26 366 3250
E-mail ACC@akzonobel.com
Internet www.akzonobel.com
16