Akzo Nobel NV (NASDAQ:AKZOY) 3rd quarter earnings report.

ARNHEM, The Netherlands--(BUSINESS WIRE)--Nov. 2, 1994--Akzo Nobel closed the third quarter of 1994 with a net income of NLG (Netherlands Guilders) 322 million, amply exceeding the figure for last year's corresponding period.

This gain in income follows the trend of the preceding quarters. Net income before before extraordinary items was 35% higher than last year, both in the third quarter and in the period January-September.

Practically all business units made contributions toward the overall performance gain relative to last year. This also applies to Akzo Nobel's Fibers businesses, which posted a slightly positive operating income, a distinct improvement from last year's red figures, although the results of Textile Fibers are still depressed.

The economic upswing in Europe and the healthy business climate in the United States favored Akzo Nobel's results. Notably, higher sales volumes and cost reductions were major factors in the gain in operating income.

Volume rose about 5%, compared with the same quarter a year ago. Average selling prices were approximately 2% higher, but this positive effect was largely canceled out by general price rises for raw materials. The sales gain caused by volume and price effects was offset by an unfavorable currency translation effect of 3%, principally due to the low rate of the U.S. dollar. In the third quarter it averaged NLG 1.75, down 8% from last year, whereas in the first two quarters of the year it was on average 4% higher than in last year's corresponding period. While a low rate of the dollar is on balance unfavorable for Akzo Nobel as far as competitiveness and translation of income in dollars is concerned, the rate of the dollar is not the decisive factor in Akzo Nobel's overall performance, and its negative effect is more than offset by the favorable economic development.

Cost reductions were achieved through restructuring programs and efficiency improvements, as is also reflected in a net reduction of the work force. The number of employees at Fibers decreased by 700 and at Coatings by 300, while Chemicals and Pharma each registered an increase of 200.

The development outlined above resulted in an increase of operating income by NLG 129 million to NLG 487 million. Expressed as a percentage of sales, this translates into a margin of 9.0% vs. 6.9% in the third quarter of 1993. All groups contributed to this gain in operating income, both in absolute terms and as a percentage of sales.

As in 1993, financing charges were at a level of approximately NLG 70 million per quarter. As a result of the higher operating income, interest cover -- which is defined as the ratio between operating income and financing charges -- rose from 5.2 in January-September 1993 to 6.9 in the first nine months of this year.

Net income per Akzo Nobel share before extraordinary items for January-September 1994 amounted to NLG 13.59, up 20% from Akzo's premerger figure of NLG 11.30 for the same period of last year.

During the third quarter Akzo Nobel continued to pursue its policy to strengthen its leading or potentially leading businesses and either to divest other activities or bring them into strategic alliances with other companies. In line with this policy, Akzo Nobel's stake in General Pain Co. de Mexico was sold to Colorin Industrias de Materiales Sinteticos, and an agreement was signed with Cambrex for the sale of the Nobel Pharma chemistry business. Also in the third quarter, a letter of intent was signed with Textilwerke Deggendorf in Germany, under which this company will acquire 51% of the shares held by Akzo Nobel Faser in Kuagtextil, effective Jan. 1, 1995.

In order to strengthen its presence in China, Akzo Nobel took over the remaining 30% stock in Develing Beheer in Bunschoten, the Netherlands, thus acquiring full ownership. We also acquired full ownership of Akzo-TVK in Hungary, a paint manufacturing joint venture with Tiszia Vegyi Kombinat, from which we took over the remaining 49% stock. -0-

              Akzo Nobel NV Consolidated Statement of Income
                           3rd Quarter 1994
                       (millions of guilders NLG)

                         3rd Quarter       Jan.-Sept.
                     1994      1993     1994      1993

Net sales           5,415      5,187    16,756   15,771
Operating costs    (4,928)    (4,829)  (15,257) (14,695)
Operating income      487        358     1,499    1,076
Financing charges     (69)       (69)     (218)    (208)
Operating income less
 financing charges    418        289     1,281      868
Taxes                (115)       (62)     (366)    (207)
Earnings of consolidated
 companies, from normal
 operations, after
 taxes                303        227       915      661
Earnings from non-
 consolidated
 companies             30         18        76       63
Extraordinary items              (55)      (75)     (96)
Earnings before
 minority interest    333        190       916      628
Minority interest     (11)        (6)      (25)     (11)
Net income            322        184       891      617
Net income per share,
 in NLG              4.53       2.59     12.54     8.69
Ditto, before
 extraordinary items 4.53       3.37     13.59    10.04
Common stock, in
 thousands of shares                    71,066   71,023
Property, plant and
 equipment
Expenditures          430        330     1,115      935
Depreciation          285        283       883      857
Number of employees                     72,700   73,400

           Akzo Nobel NV Sales and Operating Income by Group

                      3rd Quarter             January-September
                   1994         1993        1994             1993

Net Sales
 Chemicals         1,834        1,818       5,916            5,612
 Coatings          1,748        1,699       5,240            5,013
 Pharma              958          903       2,883            2,670
 Fibers              868          760       2,717            2,460
 Other activities
 and intercompany
 deliveries            7            7          --               16
Total              5,415        5,187      16,756           15,771

Operating Income
 Chemicals           163          116         535              357
 Coatings            169          138         454              336
 Pharma              173          155         503              435
 Fibers                1          (32)         59              (11)
 Other activities and
 nonallocated items  (19)         (19)        (52)             (41)
Total                487          358       1,499            1,076

CONTACT: Akzo Nobel Inc., Chicago

Nick Sommers, 312/906-7612