AkzoNobel's Earnings: EBIT in Line With Vara Consensus, Boosted by Pricing and Lower Raw Materials

Narrow-moat AkzoNobel reported second-quarter EBIT of EUR 311 million, up 25% versus 2022 and in line with Vara consensus. The robust pricing environment for both segments coupled with the initial benefits of raw materials deflation and lower restructuring costs for performance coatings provided significant impetus for EBIT growth, offsetting the challenges posed by lower volumes and currency headwinds. In light of these developments, management raised the guidance for 2023 adjusted EBITDA, setting a new range of EUR 1.40 billion to EUR 1.55 billion, surpassing the previous estimate of EUR 1.2 billion to EUR 1.5 billion. This positive development has elicited a favorable market response, as evidenced by the 3% intraday rise in the share price, well ahead of industry peers. We don't anticipate any changes to our EUR 100 fair value estimate. The shares currently appear undervalued.