AkzoNobel Earnings: Volume Turnaround Is a Positive Sign Going Into 2024 Despite Slight Profit Miss

Narrow-moat AkzoNobel reported full-year 2023 adjusted EBITDA of EUR 1.429 billion, slightly below the EUR 1.436 billion Visible Alpha consensus but significantly ahead of the EUR 1.157 billion reported last year. The year-on-year improvement was primarily driven by raw material price deflation. Encouragingly, the volume development turned positive in the fourth quarter across all business areas. For 2024, management expects adjusted EBITDA in the range of EUR 1.5 billion to EUR 1.65 billion and low-single-digit volume growth. The firm also issued its first midterm guidance under CEO Gregoire Poux-Guillaume, targeting low-single-digit volume growth on average through 2027, adjusted EBITDA margin of above 16% by 2026 or 2027 (including the benefits of the industrial transformation program announced last year), and a leverage ratio of 2 times to be reached in the same timeframe. With both the 2024 and the midterm guidance aligned with our forecast, we confirm our EUR 88 fair value estimate. At current levels, we believe shares remain undervalued, offering an upside of around 20% for patient investors.