Akzo Nobel NV Monday said it swung back to a net profit in the third quarter as the Dutch company, one of the world's leading paint and coatings makers, made faster-than-expected progress in cutting costs in a wide-reaching restructuring of its business.
The robust results sent the stock sharply higher in late trading on the Amsterdam bourse, despite management's downbeat outlook for near-term trading conditions. Akzo Nobel's share price was Europe's top blue-chip gainer Monday.
Akzo Nobel, best known for paint brands such as Dulux and Sikkens, said net profit came in at ?55 million ($212 million) compared with a ?.37 billion loss a year earlier when the company booked a ?.11 billion impairment charge on the value of its paint business.
Revenue fell by 5% to ?.78 billion, largely because of divestments and the weakening of major currencies against the euro. But the benefit of Akzo Nobel's efficiency drive were visible in a 22% rise in operating profit to ?03 million, largely because of a better performance at its streamlined paints business.
Analysts said the results were better than expected, as volumes and margins improved and restructuring costs fell.
"The restructuring is increasingly bearing fruit," analysts at Rabobank said in a note to clients. "With today's [earnings] beat, we believe [Akzo Nobel] will come pretty close, if not come up with a modest earnings surprise [in the fourth quarter]."
The results suggest that the efforts of Chief Executive Ton Büchner are slowly paying off. Mr. Büchner, 48, took the helm at the company last year but then took three months off after being diagnosed with temporary fatigue.
Since his return in December, he has given new financial targets for 2015 and accelerated plans to further streamline the chemicals group.
Akzo Nobel became one of the world's largest paints makers after it acquired U.K. rival Imperial Chemical Industries Ltd. in 2008 for £8 billion ($12.9 billion).
The Dutch company struggled to digest the debt-financed acquisition, which raised its exposure to Europe's troubled automotive and construction industries, culminating in a series of profit warnings in 2011.
Akzo Nobel has since slashed costs and laid off staff, selling its North American paints unit to U.S. rival PPG Industries Inc. for $1.05 billion last year.
Chief Financial Officer Keith Nichols said in an interview that restructuring will remain a priority, with change likely "across all divisions," resulting in more restructuring costs. New acquisitions are off the table, Mr. Nichols said.
