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Akzo Nobel NV AKZA

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Morningstar’s Analysis

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Inflation Bites AkzoNobel in Q3 but Not a Surprise; Shares Undervalued

Rob Hales, CFA Equity Analyst

Analyst Note

| Rob Hales, CFA |

Narrow-moat AkzoNobel reported third-quarter EBIT of EUR 325 million, down 26% versus 2020 but largely in line with Vara consensus. Shares are trading flat intraday. Raw material inflation drove the decline in profits as underlying demand remained strong. We’ve lowered our near-term estimates due to the raw materials headwind. However, we are raising our fair value estimate to EUR 107 from EUR 99 as we expect price increases to offset inflation over time and we now expect lower corporate costs in future. At current levels, the shares look undervalued.

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Company Profile

Business Description

Netherlands-based AkzoNobel is one of the world’s largest paint and coatings producers. Around 35% of sales are generated in mature Europe, while its Asia-Pacific division has grown quickly to more than 30% of sales. Construction-related end markets are the most important, but meaningful revenue is also generated from the industrial, consumer goods, and transportation markets.

Christian Neefestraat 2
Amsterdam, NH, 1077 WW, Netherlands
T +31 889697809
Sector Basic Materials
Industry Specialty Chemicals
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 32,800