Akzo Nobel's Pharma Fuels Growth; Q3 Net Income Up 25%; Upward Trend Continued.Business Editors ARNHEM, the Netherlands--(BUSINESS WIRE)--Oct. 25, 2000 Akzo Nobel Akzo Nobel is a multinational company, active in the fields of healthcare products, coatings and chemicals. Headquartered in Amsterdam, the Netherlands, the company has activities in more than 80 countries, and employs approximately 62,000 people. , (EURONEXT: AKZ AKZ Autobusni Kolodvor Zagreb (Croatian: Zagreb Bus Station; Croatia) ; NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : AKZOY) the multinational pharmaceuticals, coatings and chemicals company, continued the upward trend with third-quarter net income up 25% to EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 242 million (1999: EUR 193 million). Growth driver Pharma continued its strong contribution to Akzo Nobel's best Q3 results ever. The full-year earnings growth of Akzo Nobel is expected to slightly exceed 20%. Financial Highlights, Third Quarter - Net income up 25% to EUR 242 million - trend continued - Net income per share EUR 0.85 (1999: EUR 0.68) - Sales(1) increase 16% to EUR 3,540 million - Operating income(1) 14% higher at EUR 417 million - Return on sales up to 11.8% from 9.6% - Interest coverage 6.2 (Q3 1999: 5.3) - Interim dividend EUR 0.30 - Outlook: full-year net income growth expected to slightly exceed 20% Business Highlights, Third Quarter - Pharma - unbroken growth momentum - Sales up 36% to EUR 951 million; operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. EUR 187 million, surging 41% - Pentasaccharides, a newly developed antithrombotic: - joint venture with Sanofi-Synthelabo for marketing and future development - EUR 45 million investment for U.S. manufacturing facilities - Acquisition of Bayer's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Animal Biologicals further strengthened Intervet's worldwide leading position - Coatings - earnings maintained amid raw material price pressure and economic slowdown - Sales of ongoing business up 9% to EUR 1,446 million; operating income up 3% to EUR 135 million - Acquisition of Dexter dexter /dex·ter/ (deks´ter) [L.] right; on the right side. dex·ter adj. Of or located on the right side. Coatings globalized Aerospace Coatings activities - Chemicals - sound performance - Sales increased 13% to EUR 1,187 million, operating income up 10% to EUR 107 million CFO See Chief Financial Officer. Fritz fritz n. Informal A condition in which something does not work properly: Our television is on the fritz. [Perhaps from German Fritz Frohlich: "Improved portfolio boosts growth and margin" "We are clearly reaping the benefits of our improved portfolio mix which is boosting our growth and improving our margin. Pharma is fueling Akzo Nobel's growth by contributing almost half of our operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. . Our strategy is clearly working," said Fritz Frohlich, Akzo Nobel's Chief Financial Officer. "Coatings maintained last year's earnings level amid pressure from increasing raw material prices and some economic slowdown. Chemicals continued its sound performance. For the full year we continue to expect double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" growth with net income expected to slightly exceed 20%." Net income - upward trend continued Third-quarter net income surged 25% to EUR 242 million. Pharma and Chemicals particularly contributed to the improvement. Coatings maintained its earnings level amid pressure from increasing raw material prices and some economic slowdown. Net income per share was EUR 0.85, against EUR 0.68 in 1999. Net income in the first nine months rose by 26% to EUR 726 million. The per share amount of EUR 2.54 compares with EUR 2.02 in 1999. Sales and earnings - spurred by Pharma Spurred by the continuous growth of Pharma, sales2 in the third quarter rose 16% to EUR 3.5 billion. Volumes were up 5%, with 1% higher average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. . Currency translations had a positive effect of 7%, while acquisitions and divestments, on balance, added 3%. Sales2 in the first nine months of 2000 aggregated EUR 10.4 billion, up 16%. Third-quarter operating income(2) increased 14% to EUR 417 million. The major contribution came from Pharma. Chemicals achieved a sound performance, while Coatings maintained its earnings level amid pressure from increasing raw material prices and some economic slowdown. Year-to-date operating income2 rose 21% to EUR 1,269 million. Return on sales Return on sales A measurement of operational efficiency equalingnet pre-tax profits divided by net sales expressed as a percentage. return on sales The portion of each dollar of sales that a firm is able to turn into income. in the third quarter improved from 9.6% to 11.8%. For January-September, this ratio went up from 9.7% to 12.2%. Pharma - unbroken growth momentum Pharma's sales in the third quarter were up 36% to EUR 951 million, with operating income surging 41% to EUR 187 million. Fritz Frohlich said, "Akzo Nobel's Pharma activities are booming. We are one of the fastest growing pharmaceutical companies. Both the human and animal healthcare operations are major growth engines. Synergies of the HR Vet acquisition are paying off faster than expected." Activities at Organon or·ga·non or or·ga·num n. pl. or·ga·nons or or·ga·nums or or·ga·na 1. An organ. 2. A set of principles for use in scientific investigation. organon pl. organa [Gr.] organ. , the human healthcare unit of Akzo Nobel, again achieved strong growth through the strength of the Company's product portfolio. Sales were up 21% due to healthy growth for contraceptives, Remeron(R), Puregon(R), and Livial(R). In the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , sales grew a sound 36%. An agreement was reached with Sanofi-Synthelabo on a joint venture for the marketing and future development of pentasaccharides. Organon will invest EUR 45 million in U.S. manufacturing facilities for this antithrombotic. Earnings of the animal healthcare activities more than doubled, due to strong volume growth and the integration of Hoechst Roussel Vet. The acquisition of Bayer's Animal Biological business in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. further strengthened Intervet's worldwide leading position. Coatings - earnings maintained amid raw material price pressure and some economic slowdown Coatings(3) sales in the third quarter were up 9% to EUR 1,446 million, and operating income of ongoing businesses was up 3% to EUR 135 million. Fritz Frohlich said, "The coatings industry is experiencing some testing market conditions. Operating income was slightly above the previous year's level, despite increasing pressure from higher raw material prices and some slowdown of the business climate. We are reaping the benefits of our worldwide No.1 coatings position." Car Refinishes again delivered a strong performance. Marine & Protective Coatings, achieved higher earnings due to improved market conditions, especially in Asia. The Decorative Coatings and Industrial Coatings An industrial coating is a paint or coating defined by its protective, rather than its aesthetic properties, although it can provide both. The most common use of industrial coatings is for corrosion control of steel or concrete. activities experienced market pressure. With the acquisition of Dexter's coatings business Akzo Nobel is a global player in Aerospace Coatings. Chemicals - sound performance Chemicals achieved a solid sales increase of 13% to EUR 1,187 million, with operating income up 10% to EUR 107 million. "Akzo Nobel Chemicals continued its solid performance with earnings clearly up," said Fritz Frohlich about Akzo Nobel's chemicals business. Catalysts' results were up considerably, due to the improved capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. in the petroleum refining industry. Base Chemicals achieved significantly higher earnings due to good market conditions for their key customers. The North American Bleaching bleaching, process of whitening by chemicals or by exposure to sun and air, commonly applied to textiles, paper pulp, wheat flour, petroleum products, oils and fats, straw, hair, feathers, and wood. Chemicals improved due to stronger volumes and prices. Several business units started to feel pressure from increasing raw material prices. The acquisition of Hopton Technologies will strengthen our Paper Chemicals position in North America. Interest coverage improved Financing charges for the third quarter were slightly over the prior year level. The positive effect of the reduced debt level was more than offset by the impact of higher currency exchange and short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. . Interest coverage was 6.2 (1999: 5.3). Higher earnings from nonconsolidated companies Earnings from nonconsolidated companies strongly increased to EUR 20 million from EUR 11 million in the third quarter of 1999. Results of Flexsys and Methanor were up and Acordis also contributed. Capital expenditures below depreciation Capital expenditures for January-September 2000 aggregated EUR 459 million, somewhat below depreciation. To facilitate future growth and further cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. , investment authorizations rose to EUR 595 million, predominantly for Pharma and Chemicals. Interim dividend of EUR 0.30 Akzo Nobel will declare an interim dividend for 2000 of EUR 0.30 per common share. Starting October 26, 2000, Akzo Nobel shares will be traded ex-dividend. The interim dividend will be made payable on November 13, 2000. Full-year earnings growth expected to exceed 20% Akzo Nobel expects that the growth of the full-year net income - excluding extraordinary and nonrecurring items - will slightly exceed 20%. This expectation assumes no major changes in economic growth and currencies. Note for the editor Akzo Nobel, based in the Netherlands, serves customers throughout the world with healthcare products, coatings, and chemicals. Consolidated sales for 1999 (excluding Acordis) totaled some EUR 12 billion (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 13 billion, GBP GBP In currencies, this is the abbreviation for the British Pound. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 8 billion). Currently, the Company employs 68,000 people in 75 countries. Financial results for the full year 2000 will be announced on February 23, 2001. Internet: http://www.akzonobel.com A webcast of the press conference of Akzo Nobel's third quarter results can be accessed via the homepage. Additional documentation on the third quarter results include our "Report for the 3rd Quarter", as well as the explanatory sheets used during the press conference. These can be obtained at: http://www.akzonobel.com/finance/index2.asp. Not for publication: For more information please contact: Akzo Nobel N.V., John de Munnik, tel. +31 26 366 4343 Taylor Rafferty (US Media Relations), John Dudzinsky, tel. (212)889-4350 (1) Excluding Acordis. (2) Excluding Acordis. (3) For the ongoing business (excluding divestments, mainly PRC-DeSoto). |
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