Akzo Nobel posts 21 pct rise in Q3 profit

AP News
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Posted: Oct 21, 2010 3:55 AM
Akzo Nobel posts 21 pct rise in Q3 profit

Akzo Nobel NV, the biggest maker of paints and coatings, reported Thursday that third quarter profits rose 21 percent due to cost-cutting, growth in emerging markets, and strength at its industrial chemicals arm.

Net profit was euro238 million ($332 million), up from euro197 million in the same period a year ago. Sales rose 13 percent to euro3.87 billion.

Akzo Nobel is known for household paint brands such as Glidden and Dulux, and supplies paint for Wal-Mart, Home Depot and Martha Stewart Living in the U.S.

Paint sales were up 8 percent on higher volumes, as prices remained about flat. The company said sales growth of 30 percent and 25 percent in Asia and Latin America outweighed a fall in Europe.

Paint sales grew 9 percent in the U.S. due to currency effects. Operating profits at the division improved to euro136 million from euro125 million, mostly as a result of lower restructuring costs.

"Construction and housing markets, particularly in our mature markets, remain soft," Akzo Nobel said in a statement.

It declined to give a specific outlook, saying its size, presence in diverse markets and a strong balance sheet give it competitive advantages. It has net debt of euro2 billion, about unchanged from the start of 2010.

Sales grew 18 percent at the company's coatings arm, which serves automakers and ship builders. But raw materials costs rose and its operating profits were euro129 million versus euro122 million a year ago _ also improving mostly as a result of cost-cutting.

The company's chemicals division, which makes an array of industrial chemicals used in the paper, mining, plastics and other industries, accounted for the lion's share of operating profit growth, at euro188 million versus euro135 million a year ago.

Akzo said the division was able to offset rising raw material costs and actually expanded margins. "Demand in the personal care, agricultural, mining and other performance application segments remains very healthy," the company said.