AKZOF - AkzoNobel N.V. (AKZOF) Q4 2023 Earnings Call Transcript
2024-02-07 20:04:08 ET
AkzoNobel N.V. (AKZOF)
Q4 2023 Earnings Conference Call
February 7, 2024 03:00 AM ET
Company Participants
Kenny Chae - Head, IR
Gregoire Poux-Guillaume - CEO
Maarten de Vries - CFO
Conference Call Participants
Charlie Webb - Morgan Stanley
Laurent Favre - BNP Paribas
Alex Stewart - Barclays
Matthew Yates - Bank of America Merrill Lynch
Geoff Haire - UBS
Chetan Udeshi - JPMorgan
Christian Faitz - Kepler Cheuvreux
Aron Ceccarelli - Berenberg
Peter Clark - Société Générale
Jaideep Pandya - On Field Investment Research
Chris Counihan - Jefferies
Presentation
Kenny Chae
Good morning, and welcome to AkzoNobel's Investor Update for the Fourth Quarter of 2023. I'm Kenny Chae, Head of Investor Relations. Today, our CEO, Greg Poux-Guillaume; and CFO, Maarten de Vries, will take you through our results.
Refer to the presentation, which you follow by webcast or download from our website at akzonobel.com. A replay of this webcast will also be made available following this 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 will now hand over to Greg, who will start on Slide 3 of the presentation.
Gregoire Poux-Guillaume
Thanks Kenny and good morning to everyone on the call. We'll start today's presentation with an overview of our performance for the fourth quarter and the full year. We'll then go over our guidance for 2024, as well as our mid-term ambitions.
Our Q4 results demonstrate a solid performance, building on the positive momentum from previous quarters. Revenue increased 4% in constant currencies, primarily due to organic volume growth of 3% with growth in all of our business units in the fourth quarter. We continued to benefit from raw material deflation, and this combined with resilient pricing and positive volumes, resulted in a margin expansion of 390 basis points.
Adjusted operating income increased by 75% to €220 million in the fourth quarter. That €220 million was really €244 million, in line with our guidance, excluding the big hyperinflation accounting correction triggered by the elections in Argentina.
Improved profitability and a reduction in our working capital contributed to a strong free cash flow of €460 million in Q4 and this resulted in further deleveraging. We finished the year with a net debt to EBITDA ratio of 2.7 times.
Overall, 2023 was a year in which AkzoNobel delivered a clear rebound in performance. Despite facing soft market conditions in the first half, our businesses quickly stabilized and delivered flat volumes for the full year, a result of outperformance in many of our markets and a testament to the resilience of our portfolio -- the resilience of our portfolio, sorry.
Despite persistent inflationary pressure and significant unfavorable currency effects during the year, our focus and execution enabled us to beat the targets we set ourselves and there is more to come.
Turning to Slide 4. Organic volumes were up 3% in Q4. We achieved positive volume growth in all our business units, the first since the second quarter of 2021, with Deco Asia, Marine and Protective, and Powder Coatings being the top performers.
In Deco EMEA -- I'm sorry, in Deco, looking at the regions one-by-one. EMEA bottomed out mid-year and exceeded our expectations by delivering low-single-digit volume growth in Q4.
In Latin America, Q4 performance was driven by strong volume growth in Brazil during its peak trading season at the end of the year. Asia largely followed the trends seen earlier in the year....
AkzoNobel N.V. (AKZOF) Q4 2023 Earnings Call Transcript