April 22 (Reuters) - Dulux paint maker AkzoNobel reported a 3% drop in its first-quarter core profit on Wednesday, above market expectations, carried by better pricing and cost savings. The Dutch
AkzoNobel's price hikes help drive profits, to offset Iran war effects
AkzoNobel Reports Strong First-Quarter Performance Amid Geopolitical Tensions
By Dimitri Rhodes
April 22 (Reuters) - Dulux paint maker AkzoNobel reported a 7% jump in its first-quarter core profit on Wednesday, excluding activities of its recently sold India unit, carried by higher pricing and cost savings.
Business Model and Pricing Power
AkzoNobel sells branded products ranging from decorative paints to speciality coatings used on cargo ships and Formula 1 cars. This allows it to pass on price increases to customers more successfully than its commodity chemical counterparts.
Impact of Raw Material Costs
"Our raw material basket is going to go up by something like the high teens (percentage), given the disruption of the Strait of Hormuz," a full effect of which will be seen in the next two quarters, CEO Greg Poux-Guillaume told Reuters.
Financial Outlook and Market Reaction
The Dutch group, which had trimmed its outlook in February, stood by its 2026 core profit target of at least 1.47 billion euros, saying the impact from the Middle East conflict would be covered by its previously announced price hikes.
Its shares rose around 4% in early trading, as analysts from J.P. Morgan said the market was likely to welcome the outlook confirmation.
Analyst Perspectives
"There will likely still be some skepticism around the FY26 guidance that it doesn’t seem to be assuming any demand destruction from higher inflation, but this will likely be as much of a headwind for most others in the sector," the analysts wrote in a note to investors.
First-Quarter Earnings Details
AkzoNobel's adjusted earnings before interest, taxes, depreciation and amortisation were 345 million euros ($405 million) in the first quarter, corresponding to a margin of 14.5%. Analysts polled by it were expecting 323 million euros on average.
Portfolio Adjustments and Strategic Moves
Redeveloping the Portfolio in Asia
REDECORATING THE PORTFOLIO
AkzoNobel has been trimming its portfolio throughout Asia since 2025, including the sales of its units in India and Pakistan for $1.6 billion and 50 million euros, respectively.
"We continue to evaluate our positions in Southeast Asia, and that process is ongoing," finance chief Maarten de Vries said.
Planned Merger with Axalta Coating Systems
The group is also planning to merge with U.S. paint maker Axalta Coating Systems to create a combined company worth $25 billion.
Additional Information
($1 = 0.8517 euros)
(Reporting by Dimitri Rhodes in Gdansk, editing by Milla Nissi-Prussak)
