EBITDA Beat and Margin Expansion
Q1 adjusted EBITDA of EUR 345 million, 7% ahead of consensus (EUR 323 million). Adjusted EBITDA margin rose to 14.5%, up 80 bps year-on-year, marking the fourth consecutive quarter of margin expansion.
Akzo Nobel
· AKZOY
April 22nd, 2026
Summary
- Earnings Call Date:
- 2026-04-22
- Change Since:
- +13.91%
- Next Earnings Date:
- 2026-07-28
Earnings Call Sentiment
PositiveThe call presented a largely constructive operational and financial picture: a beat on EBITDA, continued margin expansion (notably a strong Deco margin performance), progress on industrial transformation and portfolio optimization, strengthened liquidity and clear pricing actions to mitigate raw material inflation. Key challenges include a reported revenue decline driven by disposals and FX, soft volumes and mix in Coatings (particularly in North America and Europe), expected high-teens raw material inflation and seasonal negative free cash flow. Management emphasized disciplined pricing, cost actions and balance-sheet preparedness, and merger integration with Axalta is progressing on schedule.
Company Guidance
Akzo expects Q2 adjusted EBITDA of around EUR 400m and reiterates its 2026 adjusted EBITDA target of at or above EUR 1.7bn (including a EUR 100m step‑up driven by ~EUR 90m net savings from the industrial program); volumes are forecast broadly flat in Q2 (after Q1 organic sales -1%, volumes -1%, pricing +1%, mix -1%), while raw‑material and logistics inflation is now expected in the high‑teens for the rest of the year and announced price increases (mid‑single digits to low‑teens) should fully offset that inflation with P&L impact ramping in Q2 and the full effect visible in Q3. Supporting metrics: Q1 adjusted EBITDA was EUR 345m (consensus EUR 323m) with a 14.5% adjusted EBITDA margin (+80bps y/y) and Deco margin expansion of ~300bps (Deco ~17.3%); free cash flow improved by EUR 39m to -€144m, working capital at 16.8% (-20bps y/y), inventories just above 100 days, ROI 13.6% (13.1% prior), leverage ~2x, 15 sites closed to date (3 in Q1) with industrial transformation to be completed by year‑end, issuance of a EUR 1.1bn bond, and a Pakistan Deco sale agreed at ~EUR 50m (14x EBITDA).
Adjusted EBITDA Growth at Comparable Scope
Group adjusted EBITDA increased 7% at comparable scope (excluding India disposal and in constant currencies), reflecting improved underlying profitability.
Deco Strong Performance and Margin Improvement
Deco delivered strong price/mix of 2% and grew volumes in Asia and South America. Deco margin expanded ~300 bps in Q1, driven by pricing and structural cost savings.
Industrial Transformation Progress
Industrial transformation on track for completion by year-end: 3 additional site closures in Q1, 15 sites closed since program inception, targeting further closures (>18 total implied) and EUR 90 million net savings contributing to the EUR 100 million step-up.
Portfolio Optimization Momentum (Deco Asia)
Signed sale of Deco Pakistan for ~EUR 50 million at ~14x EBITDA; highlights value of Deco assets and supports ongoing Deco Asia review (India already divested).
Liquidity and Balance Sheet Actions
Issued EUR 1.1 billion dual-tranche bond in March, extending maturities and reinforcing liquidity ahead of proposed Axalta merger; leverage maintained at ~2x.
Free Cash Flow and Working Capital Improvement
Free cash flow improved by EUR 39 million year-on-year to -EUR 144 million (Q1 seasonal inventory build). Working capital ended the quarter at 16.8%, 20 bps below prior year.
Merger Execution Progress with Axalta
Merger preparations progressing as planned: PCAOB audit complete, confidential F-4 filed end-March, EGM expected early July, regulatory dialogues active; closing on track for end-2026/early-2027.
Operator
Hello, and welcome to the Akzo Nobel Q1 Results 2026 Earnings Call. My name is Alex. I'll be coordinating today's call. [Operator Instructions] I will now hand it over to Jan Willem to begin. Please go ahead.
Jan Willem Enhus
Good morning, and welcome to Akzo Nobel's investor update for the first quarter of 2026. I'm Jan Willem Enhus, Head of Investor Relations. Today, our CEO, Gregoire Poux-Guillaume; and CFO, Maarten de Vries, will take you through our results. We'll refer to the presentation, which you can follow by webcast or download from our website at akzonobel.com. A replay of the webcast will also be made available following the event. There will be a Q&A session after the presentation. For additional information, please contact our Investor Relations team. Before we start, a reminder of our forward-looking statements disclaimer on Slide 2.
Please note, this also applies to the conference call and answers to your questions. I'll now hand over to Greg, who will start on Slide 3 of the presentation.
Gregoire Poux-Guillaume
Thanks, Jan Willem. Good morning to everyone on the call. In Q1, we delivered a clear beat with EBITDA of EUR 345 million, coming in 7% ahead of the EUR 323 million consensus. Organic sales were 1% lower year-on-year with a 1% pricing gain offset by 1% declines in both mix and volumes. Profitability improved meaningfully. Adjusted EBITDA was up 7% at comparable scope, while adjusted EBITDA margin rose to 14.5%, up 80 basis points. This marks the fourth quarter of margin expansion year-on-year, driven by disciplined pricing and strong execution on our cost actions in soft end markets. Opera...
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