Akzo Nobel India Annual General Meeting 14 th Aug 2017 Kolkata
Contents 1. About AkzoNobel 2. Indian Business Environment 3. Akzo Nobel India Performance 4. Concluding Remarks 2
AkzoNobel an Essentials Company Essential Color Essential Protection Essential Ingredients We create everyday essentials to make people's lives more liveable and inspiring 3
About AkzoNobel 10.6% ROS Top 10 DJSI * companies Carbon footprint reduced 634 mn invested for growth 14,197 mn Revenue 15.0% ROI 20% Ecopremium solutions 200 mn+ savings Safer operations Based on 2016 figures * Dow Jones Sustainability Indices 300+ Human Cities projects 4
Indian Business Environment 5
A year of Policy Reforms Demonetisation RERA Union Budget GST Lower discretionary spends (52% of household budget) Blip in industrial growth Real Estate Act effected from 1st May to improve transparency Govt. Agenda - Transform, Energize & Clean India Infrastructure status for affordable housing sector Boost to Railways, Infrastructure, Defence, Agro One Tax regime from 1 st Jul Digital compliance Improve ease of doing business Unclog supply chains Lower offtakes during Oct-Dec 2016 quarter. However, full recovery in 2017 Implications on Coatings Industry $1.3 tn estimated to Coatings industry to be invested in Real benefit from Estate between investment in 2018-2024 infrastructure projects Rate increased from 25% to 28%. PMI fell to 8-year low. 6
Macroeconomic Indicators Repo Rate Lower Interest Rates 7.75% 7.25% 6.75% 6.5% 6.25% CPI Cooling Inflation 5.1% Brent Crude Range-bound Crude Prices 47.8 47.8 6% 1.5% INR vs. USD Rupee strengthened PMI Slow Factory activity CSI Growth slows 52.9 62.2 64.5 47.9 1.8% 0.40% Repo rate is updated for Aug 2017. CSI and CPI are published at a month s lag; hence shown Jun data. All other data points are until Jul 2017. 7
Industry Growth in India 24.0% 16.0% 8.0% 0.0% 8% - 11% 7-7.5% 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Coatings Industry Value Growth GDP Growth Coatings industry Growth 1.2X 1.5X GDP Growth Hence, estimated growth 8% - 11% 24.0% 16.0% 10-12% 8.0% 0.0% 7-7.5% 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Chemicals Industry Value Growth GDP Growth Chemicals Industry Growth 1.5X 2.0X GDP Growth Hence, estimated growth 10% - 12% Source: GDP forecast - IMF 8
Akzo Nobel India Performance 9
The year gone by Groundbreaking of Powder plant in Mumbai Acquisition of BASF s industrial coatings completed Golden Peacock Award for CSR Awards for 'Pioneer in Coatings Technology' & Business Excellence MCA JV with Atul Ltd. announced New campaign on Dulux Weathershield Powerflexx Invests in Specialty Coatings plant in Noida Paints Academy lauded by PM Modi at Skills Exhibition, Kanpur Denim Drift launched as Colour of the Year Q1 2016-17 Q2 2016-17 Q3 2016-17 Q4 2016-17 10
Pioneering Innovations Lets Color! Industrial Innovations Digital Innovations Protective coatings for Trivandrum Intl Airport Drone inspection in Marine Carbon Credits in Marine industry Design App: support architects, designers & specifiers Connect App: faster & more effective sales of Powder coatings Pipe coatings Specialty coatings for consoles Intertrac Vision: first ever digital tool for the shipping industry ANI awarded Globe Platinum Awards for Pioneering Coatings Technology 11
Financial Highlights Revenue from Operations up 7% Profit from Operations up 17% Rs. 31,344 mn Rs. 2,924 mn Rs. 29,347 mn Rs. 2,498 mn 2015-16 2016-17 PAT up 15% 2015-16 2016-17 Higher Return on Investment (ROI) Rs. 2,142 mn Rs. 2,470 mn 38.7% 38.8% 2015-16 2016-17 2015-16 2016-17 12
The Magic of 3! First time exceeding 3,000 Cr Revenue and 300 Cr EBIT Gross Revenue EBIT Merger 21,170 24,209 26,378 27,416 29,108 31,099 3,062 8% Revenue CAGR 20% EBIT CAGR 2,634 10,624 10,158 10,109 1,937 1,417 1,395 1,223 688 760 832 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Figures in INR mn; 2015-16 and 2016-17 as per IndAS Standalone Financials; Prior years as per IGAAP; CAGR calculated since Merger 13
Rewarding our shareholders BSE Performance BSE Return: 94% May 28, 2010 Aug 1, 2017 ANI Stock Performance (INR) Appreciation: 207% May 28, 2010 Aug 1, 2017 ANI Return: 258% ANI Dividend per share (INR) 18 20 80 75 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 Stock performance available from May 2010 (name change effected) 20 70 * Proposed dividend 22 * Yield @ 1.2% (as at 31 st Mar 2017) 14
Growing Sustainably 20% Ecopremium solutions 29% lower CO2 emission 14% energy consumption reduced 54% reduction in waste Solar energy at Thane, Mohali & Bangalore Eco-friendly solutions to our customers All sites Zero discharge 30% water consumption reduced Statistics analyzed over 2010-2016 15
Deploying Human Cities in India Doing Well by Doing Good Lets Color! Contributing to community Partnering NGOs Educating the future of India Education at grassroot levels Vocational training Driving Change Collaboration with Traffic Police 34 schools; 7,000 students covered ANI awarded Golden Peacock Award for CSR 16
Step change in Strategy 17
AN Global Strategy Chemicals» AN Chemicals to be separated into a new entity by Q1 2018» Building on successes & maintaining Operational Excellence» Debottlenecking to create volume leverage AkzoNobel Strategy:» Create two focused businesses» Dual-track process with project teams in place» Separation within 12 months Live our Values, Principles, & develop our people Continue to improve & excel Paints & Coatings Lead the way in Sustainability #1 choice for customers Drive Digital & Innovation Build worldclass brands & color expertise 2020 Ambition * ROS 15% ROI > 25% Strong financial and operational foundation Rationalization of global functions to support business * Excluding unallocated corporate center costs and invested capital; assumes no significant market disruption 18
Concluding Remarks 19
Summary India to maintain its momentum; poised to grow at ~7% Sustained growth expectations for the coatings industry (CAGR 8% - 10%) Driving operational efficiencies with sustainability Investing for growth ~INR 100 Cr investments in new facilities and equipment Touching peoples lives through our Essential Ingredients, Essential Protection and Essential Colors Human Cities initiative contributing to Government s Smart Cities Program Rewarding our shareholders for their support through our growth journey; Rs 22/share Dividend recommended 20
Thank you, Mr. Kaviratne! 21
Welcome, Mr. Jain! 22
Thank you! 23
Safe Harbor Statement This press release may contain statements which address such key issues as AkzoNobel s growth strategy, future financial results, market positions, product development, products in the pipeline, and product approvals. Such statements should be carefully considered, and it should be understood that many factors could cause forecasted and actual results to differ materially 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. 24