Akzo Nobel reported its Q1 figures, reporting revenue as flat in a seasonally low quarter; up 1% in constant currencies, with positive price/mix offset by 7% lower volumes; acquisitions contributed 1%. Adjusted operating income was up by 9% at €163 million, with last year at €149 million, which included gains on disposals, driven by ongoing pricing initiatives and cost-saving programs. ROS was at 7.5% from 6.8% in 2018.
Operating income at €113 million includes €50 million adverse impact from identified items, to which Akzo describe as "mainly related to transformation costs and non-cash impairments", in 2018: operating income of €108 million was negatively impacted by €41 million of these identified items. Decorative Paints ROS was up at 7.1% supported by 6% positive price/mix, driven by ongoing pricing initiatives.
In the Decorative Paints category, revenue was reported as flat; with 2% higher in constant currencies; price/mix was 6% positive, driven by pricing initiatives, while acquisitions contributed 2%. Adjusted operating income increased to €60 million, in 2018 it was at €56 million, with pricing initiatives and cost savings compensating for higher raw material costs and lower volumes.
In Europe, Middle East and Africa revenue was up 3% and up 5% in constant currencies due to successful pricing initiatives, partly offset by lower volumes. The acquisition of Fabryo in Romania, Xylazel in Spain and Doves Decorating Supplies in the UK contributed 2% to revenues. Introduction of Extreme Stay Clean exterior woodstain and a next generation stain resistant wallpaint supported its market positions in Eastern Europe and Italy, said Akzo.
Akzo said of its figures: "We continue executing our transformation to deliver the next €200 million cost savings by 2020, incurring one-off costs in 2019 and 2020. We target a leverage ratio of between 1.0-2.0 times net debt/ EBITDA by the end of 2020 and commit to retain a strong investment grade credit rating."