Form 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13 a - 16 or 15 d - 16 of
The Securities Exchange Act of 1934
Commission file number 0 - 017444
Akzo Nobel N.V.
(Translation of registrant's name into English)
76, Velperweg, 6824 BM Arnhem, the Netherlands
(Address of principal executive offices)
The following exhibit
is filed with this report
Akzo Nobel Report for the third quarter of 2003
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934 the registrant has duly caused this report to be signed on its behalf of
the undersigned, thereto duly authorized.
Akzo Nobel N.V.
Name : F.H. Hensel Name : J.J.M. Derckx
Title : Senior Vice President Title : Director Corporate Control
Finance
Dated : October 17, 2003
REPORT FOR THE 3RD QUARTER OF 2003
Key Figures
3rd quarter Millions of euros (EUR) January-September
- ------------------ -------------------------- ---------------------------
2003 2002 Ch.% 2003 2002 Ch.%
- ---- ---- ---- ---- ---- ----
178 232 (23) Net income* 543 716 (24)
0.62 0.81 - per share, in EUR 1.90 2.50
Sales
877 974 (10) - Pharma 2,649 3,008 (12)
1,339 1,411 (5) - Coatings 4,050 4,244 (5)
1,071 1,136 (6) - Chemicals 3,341 3,466 (4)
(33) (32) - Other (100) (99)
- ----- ----- ----- -----
3,254 3,489 (7) Total 9,940 10,619 (6)
===== ===== ===== =====
Operating income* (EBIT)
120 183 (34) - Pharma 407 588 (31)
128 136 (6) - Coatings 345 384 (10)
73 77 (5) - Chemicals 239 265 (10)
(17) (15) - Other (85) (59)
- ----- ----- ----- -----
304 381 (20) Total 906 1,178 (23)
===== ===== ===== =====
9.3 10.9 Return on sales*, in % 9.1 11.1
6.6 7.5 Interest coverage* 7.1 7.5
Gearing 1.09 1.46**
Number of employees 65,240 67,880**
Net income down 23% - in line with expectations
Successful focus on cost and cash
- - Forceful restructurings increasingly contributing
- - Net borrowings down EUR 0.5 billion
- - Market conditions still weak
- - Pensions and currency impact on operating income - EUR 62 million
- - Pharma - under continued pressure
- - Coatings - solid performance
- - Chemicals - robust performance continued
- - Interim dividend unchanged - EUR 0.30
- - Chemicals divestment program expanded - progressing well
- - Outlook unchanged - net income* significantly below 2002
* Excluding nonrecurring items.
** At December 31.
1
REPORT FOR THE 3RD QUARTER OF 2003
(R) or (TM) indicates trademarks in one or more countries.
The final results for 2003 will be published on February 3, 2004.
Note
The data in this report are unaudited.
Unless indicated otherwise, discussions in this report, such as on earnings
developments, exclude nonrecurring items.
Nonrecurring items relate to income and expenses resulting from normal business
operations, which, because of their size or nature, are disclosed separately to
give a better understanding of the underlying result for the period. These
include items, such as restructurings and impairment charges, and significant
gains and losses on the disposal of businesses, that do not meet the
requirements for extraordinary items. Operating income before nonrecurring
items is one of the key figures management uses to assess the performance of
the Company, as these figures better reflect the underlying trends in the
results of the activities.
Autonomous sales growth is defined as the change in sales attributable to
changed volumes and selling prices. It excludes currency, acquisition, and
divestment effects.
Safe Harbor Statement*
This report contains statements which address such key issues as Akzo Nobel's
growth strategy, future financial results, market positions, product
development, pharmaceutical products in the pipeline, and product approvals.
Such statements, including but not limited to the "Outlook", should be
carefully considered, and it should be understood that many factors could cause
forecasted and actual results to differ from these statements. These factors
include, but are not limited to, price fluctuations, currency fluctuations,
developments in raw material and personnel costs, pensions, physical and
environmental risks, legal issues, and legislative, fiscal, and other
regulatory measures. Stated competitive positions are based on management
estimates supported by information provided by specialized external agencies.
For a more complete discussion of the risk factors affecting our business
please refer to our 2002 Annual Report on Form 20-F filed with the United
States Securities and Exchange Commission, a copy of which can be found on the
Company's website www.akzonobel.com.
* Pursuant to the U.S. Private Securities Litigation Reform Act 1995.
2
REPORT FOR THE 3RD QUARTER OF 2003
C O N D E N S E D C O N S O L I D A T E D S T A T E M E N T O F I N C O M E
3rd quarter Millions of euros January-September
- ----------------------- ----------------------------------------- -----------------------
2003 2002 Ch. % 2003 2002 Ch. %
- ------ ------ ------ ------ ------ ------
3,254 3,489 (7) Sales 9,940 10,619 (6)
(2,950) (3,108) Operating costs (9,034) (9,441)
- ------ ------ ------ ------
304 381 (20) Operating income* (EBIT) 906 1,178 (23)
(46) (51) Financing charges (128) (158)
- ------ ------ ------ ------
258 330 Operating income* less financing charges 778 1,020
(79) (102) Taxes (236) (316)
- ------ ------ ------ ------
Earnings* of consolidated companies, after
179 228 (21) taxes 542 704 (23)
10 14 Earnings* from nonconsolidated companies 30 38
- ------ ------ ------ ------
189 242 Earnings* before minority interest 572 742
(11) (10) Minority interest (29) (26)
- ------ ------ ------ ------
178 232 (23) Net income excluding nonrecurring items 543 716 (24)
Nonrecurring items, after taxes and minority
interest (46)
- ------ ------ ------ ------
178 232 Net income 497 716
====== ====== ====== ======
9.3 10.9 Return on sales*, in % 9.1 11.1
6.6 7.5 Interest coverage* 7.1 7.5
Basic/diluted net income excl. nonrecurring
0.62 0.81 items per share, in EUR 1.90 2.50
0.62 0.81 Basic/diluted net income per share, in EUR 1.74 2.50
461 546 (16) EBITDA 1,392 1,677 (17)
123 164 Capital expenditures 380 482
145 154 Depreciation 451 468
*Excluding nonrecurring items.
3
REPORT FOR THE 3RD QUARTER OF 2003
Net income 23% lower - in line with expectations
Net income in the third quarter was EUR 178 million, down 23%. Net income per
share was EUR 0.62 (2002: EUR 0.81). In line with expectations, earnings were
burdened by the decline in Remeron(R) revenues, weaker key currencies, and
pensions.
For January-September 2003, net income excluding nonrecurring items decreased
24% to EUR 543 million. Taking net nonrecurring charges of EUR 46 million into
account, net income amounted to EUR 497 million (2002: EUR 716 million).
Successful focus on cost - workforce down 3,360 due to restructurings
At September 30, 2003, the Company had 65,240 employees, compared with 67,880
at year-end 2002. Restructurings at all three groups, which include divestments
of underperforming activities, caused a decrease of 3,360, of which 1,130 were
realized in the third quarter. Growth of certain businesses, seasonal
influences, and acquisitions expanded the workforce by 720.
Successful focus on cash - net borrowings down EUR 0.5 billion
During January-September 2003, net interest-bearing borrowings were reduced by
EUR 0.5 billion to EUR 2.7 billion, predominantly due to the funds balance
generated in the third quarter. Equity was up EUR 0.3 billion to EUR 2.5
billion. As a result, gearing improved to 1.09 (December 31, 2002: 1.46).
Divestment program expanded - progressing well
Early in September 2003, Akzo Nobel announced its intention to sell Catalysts,
Coating Resins, and Phosphorus Chemicals from its Chemicals portfolio in order
to create more room to maneuver for the Company. These businesses collectively
represent close to EUR 1 billion in sales. Therefore, the Company expects
proceeds clearly exceeding the amount of EUR 0.5 billion announced in May this
year. The divestment process is progressing well.
Interim dividend unchanged - EUR 0.30
Akzo Nobel will declare an interim dividend for 2003 of EUR 0.30 per common
share, unchanged from last year. This dividend is no indication for the total
2003 dividend. Starting October 20, 2003, Akzo Nobel shares will trade ex-
dividend. The interim dividend will be made payable on November 3, 2003.
Outlook unchanged - net income* significantly below 2002
Our outlook for 2003 remains unchanged. We expect that net income for 2003,
excluding nonrecurring items, will be significantly below the level of 2002.
* Excluding nonrecurring items.
4
REPORT FOR THE 3RD QUARTER OF 2003
Earnings burdened by currencies, pensions, and Remeron(R); restructurings
paying off Third-quarter sales of EUR 3.3 billion were 7% lower than last year.
Sales developed as follows:
Currency Acquisitions/
In % Total Volume Price translation divestments
- -------- ------- ------- ------- ------------ ------------
Pharma (10) (4) 1 (6) (1)
Coatings (5) - 2 (5) (2)
Chemicals (6) (1) - (6) 1
---- ---- ---- ---- ----
Akzo Nobel (7) (1) 1 (6) (1)
==== ==== ==== ==== ====
Operating income declined 20%, due to weakening key currencies, higher pension
charges, the drop in Remeron(R) earnings, and weak business conditions. This
impact was partially offset by the results of major cost-saving and
restructuring programs implemented at all three groups. Further restructurings
are in preparation. Operating income developed as follows:
Operating Change from 3rd quarter of 2002
income for ----------------------------------------------------------
Millions of 3rd quarter Operational Currency Increased
euros of 2003 Total performance translation pension charges
- ------------ ---------- --------- ----------- ----------- ---------------
Pharma 120 (63) (35) (20) (8)
Coatings 128 (8) 7 (7) (8)
Chemicals 73 (4) 7 (3) (8)
Other (17) (2) 6 - (8)
---------- --------- ----------- ----------- ---------------
Akzo Nobel 304 (77) (15) (30) (32)
========== ========= =========== =========== ===============
Currency translation effects were mainly caused by the weaker U.S. dollar,
pound sterling, and various Asian currencies.
Return on sales was 9.3%, against 10.9% in the third quarter of 2002.
Financing charges decreased as a result of lower short-term interest rates,
reduced net borrowings, and lower foreign currency exchange rates. Interest
coverage in the third quarter was 6.6.
Earnings from nonconsolidated companies went down from EUR 14 million to EUR 10
million, mainly due to lower earnings for Acordis and Flexsys.
5
REPORT FOR THE 3RD QUARTER OF 2003
Pharma - under continued pressure
3rd quarter Millions of euros January-September
- ----------------------- -------------------------- -----------------------
2003 2002 Ch. % 2003 2002 Ch. %
- ------ ------ ------ ------ ------ ------
Sales
551 622 Organon 1,691 1,942
258 264 Intervet 754 817
114 148 Diosynth 345 397
(46) (60) Intragroup sales/other (141) (148)
- ------ ------ ------ ------
877 974 (10) Total 2,649 3,008 (12)
120 183 (34) Operating income* (EBIT) 407 588 (31)
13.7 18.8 Return on sales*, in % 15.4 19.5
16.1 15.7 R&D expenses as % of sales 16.3 14.8
164 225 (27) EBITDA 536 716 (25)
35 82 Capital expenditures 145 227
Invested capital 2,536 2,475**
Number of employees 21,020 21,820**
* Excluding nonrecurring items.
** At December 31.
- - Organon:
- Remeron(R) - rapidly declining in U.S.; Remeron SolTab(TM) still holding up
- NuvaRing(R) - gathering momentum
- Puregon(R) and Livial(R) - growing
- - Intervet - mixed performance
- - Diosynth - impacted by weaker market conditions
- - Negative currency translation effect on sales - 6%
- - Cost-saving programs progressing ahead of schedule - workforce reduction 800
6
REPORT FOR THE 3RD QUARTER OF 2003
Pharma's third-quarter sales decreased 10% to EUR 0.9 billion, while operating
income declined 34% to EUR 120 million. Return on sales was 13.7% (2002:
18.8%). Pharma's earnings were affected by generic competition in the United
States for Remeron(R), weaker market conditions for Diosynth, weaker key
currencies, and higher pension charges. In order to realign cost levels to
decreasing sales volumes, cost-saving measures are actively pursued at all
Pharma businesses. Ahead of schedule, these restructurings are increasingly
contributing to earnings. So far the workforce has been reduced by 800 in 2003.
For the future pipeline, R&D expenses amounted to EUR 141 million, which is
16.1% of sales (2002: EUR 153 million and 15.7%, respectively).
The main products in Organon (human healthcare) developed as follows:
Sales Millions of euros or %
- ----------------------- ---------------------- -------------------------
January-
3rd quarter Autonomous September Autonomous
2003 growth, % 2003 growth, %
- ----------- ---------- ---------- ---------
38 (65) Remeron(R) in U.S. 174 (40)
Remeron(R) in rest of
79 31 world 227 28
131 7 Contraceptives 378 5
73 3 Puregon(R) 243 (1)
51 1 Livial(R) 149 2
The antidepressant Remeron is encountering severe generic competition in the
United States, while Remeron SolTab(TM) is still holding up. In the rest of the
world, Remeron/Remeron SolTab autonomous sales growth was 31%.
Sales for NuvaRing(R) (contraceptive ring) are gathering momentum with third-
quarter sales of EUR 12 million. Puregon(R) and Livial(R) also achieved
autonomous growth.
The introduction of the antithrombotic Arixtra(R) is progressing slowly with
sales of EUR 2 million in the third quarter of 2003.
At Intervet (animal healthcare) pressure on earnings from weak business
conditions in the United States was not fully offset by better performance in
the rest of the world.
At Diosynth (active pharmaceutical ingredients), whose earnings figures exclude
the divested Rosemont activities, business in the third quarter was impacted by
delivery delays, which should be caught up in the fourth quarter of 2003. In
addition, Diosynth felt the impact from the slowdown at Organon and weakening
demand in third-party markets.
7
REPORT FOR THE 3RD QUARTER OF 2003
Coatings - solid performance
3rd quarter Millions of euros January-September
- ------------------------ ---------------------- -------------------------
2003 2002* Ch. % 2003 2002* Ch. %
- ----- ------ ------ ------ ------ ------
Sales
516 542 Decorative Coatings 1,468 1,519
342 323 Industrial activities 999 977
223 232 Car Refinishes 669 713
209 196 Marine & Protective Coatings 627 624
63 127 Industrial Products 326 407
(14) (9) Intragroup sales/other (39) 4
- ----- ----- ------ ------
1,339 1,411 (5) Total 4,050 4,244 (5)
128 136 (6) Operating income** (EBIT) 345 384 (10)
9.6 9.6 Return on sales**, in % 8.5 9.0
163 175 (7) EBITDA 458 504 (9)
26 24 Capital expenditures 76 74
Invested capital 2,294 2,264***
Number of employees 28,770 29,790***
* 2002 sales figures per business unit have been adjusted for a slight
regrouping of activities.
** Excluding nonrecurring items.
***At December 31.
- - Autonomous growth 2% - negative currency translation effect 5%
- - Restructurings clearly contributing
- - Marine & Protective Coatings, Powder Coatings, and Industrial Finishes -
strong performance
- - Decorative Coatings - difficult market conditions
- - Impregnated Papers - divested
8
REPORT FOR THE 3RD QUARTER OF 2003
Coatings' third-quarter sales went down 5% to EUR 1.3 billion. Under generally
weak business conditions, Coatings still achieved autonomous sales growth of
2%, due to price increases. The negative impact from currencies was 5%, while
acquisitions and divestments (mainly Impregnated Papers), on balance, resulted
in a decrease of 2%.
Operating income went down 6% to EUR 128 million. Return on sales was
maintained at 9.6%. The contributions from cost savings did not fully offset
the negative impact of weaker key currencies and higher pension charges. Raw
material prices showed a slight upward trend. Excluding the impact of
currencies and pension charges, operating income grew EUR 7 million.
The restructuring programs are progressing according to schedule. These
restructurings, including the divestment of underperforming units, resulted
year to date in a workforce reduction of 1,670. The workforce expanded by 650,
reflecting increases in the growth areas Eastern Europe and Asia, seasonal
influences, and acquisitions.
Marine & Protective Coatings sustained its excellent performance. Powder
Coatings improved, reaping the benefits of restructuring programs and the
acquisition of Ferro's powder activities. The Industrial Finishes activities
also did better, especially in Asia. The performance of Decorative Coatings was
under pressure from the weak economic climate and unfavorable weather
conditions in Europe.
Capital expenditures of EUR 26 million were virtually at the previous year's
level. A strong focus is placed on activities with growth potential and on Asia
and Eastern Europe.
Akzo Nobel will strengthen its position in the Chinese coatings market by
investing in a new factory for decorative coatings on its site in Suzhou near
Shanghai. The facility will produce water-based wall paints for the Chinese
market.
Car Refinishes will establish an international R&D center in Pontiac, Michigan,
United States, and along with it, a new hi-tech dispersion facility to produce
Sikkens Autobase(R) Plus Car Refinishes paint for the North American region.
The total investment will amount to USD 30 million.
In October 2003, Akzo Nobel acquired the specialty plastic coatings business of
Belgium-based Techni-Coat International N.V., which comprises lifestyle-driven
plastic coatings for consumer electronics, cosmetic packaging, and sports and
leisure goods. It will significantly enhance the Company's worldwide growth in
this niche segment.
In October 2003, Akzo Nobel also increased its shareholding in the South Korean
powder coatings company Interpon Powder Coatings (Korea) Co., Ltd to 100%, thus
further strengthening its position in the Korean powder market.
9
REPORT FOR THE 3RD QUARTER OF 2003
Chemicals - robust performance continued
3rd quarter Millions of euros January-September
- -------------------------- ----------------------------------------------------------
2003 2002* Ch.% 2003 2002* Ch. %
- ------ ------ ------ ------ ------ ------
Sales
213 236 Pulp & Paper Chemicals 680 727
193 226 Surface Chemistry 609 630
189 203 Functional Chemicals 599 631
134 112 Base Chemicals 411 337
119 127 Polymer Chemicals 371 426
100 104 Resins 299 315
90 94 Catalysts 269 288
58 62 Salt 200 197
41 41 Energy 127 119
(66) (69) Intragroup sales/other (224) (204)
- ------ ------ ------ ------
1,071 1,136 (6) Total 3,341 3,466 (4)
73 77 (5) Operating income** (EBIT) 239 265 (10)
6.8 6.8 Return on sales**, in % 7.2 7.6
149 160 (7) EBITDA 476 510 (7)
59 56 Capital expenditures 150 173
Invested capital 2,679 2,850***
Number of employees 14,290 15,050***
* 2002 sales figures per business unit have been adjusted for a slight
regrouping of activities.
** Excluding nonrecurring items.
*** At December 31.
- - Business conditions continue to be weak
- - Negative currency translation effect on sales - 6%
- - Operating income clearly benefiting from restructurings
- - Catalysts and Base Chemicals - strong performance
- - Pulp & Paper Chemicals - restructurings contributing
- - Surface Chemistry and Polymer Chemicals - under pressure; restructurings
underway
- - Divestment program expanded - progressing well
10
REPORT FOR THE 3RD QUARTER OF 2003
In the third quarter, Chemicals' sales of approximately EUR 1.1 billion were 6%
down on last year. Despite the soft business conditions, volumes and prices
were virtually unchanged from last year. Currency translation had a negative
effect of 6%, while acquisitions, mainly ECI Elektro-Chemie, added 1%.
Operating income was down 5% to EUR 73 million. Return on sales was maintained
at 6.8%. The contributions from cost savings did not compensate for the
negative effects of weaker key currencies, increased pension charges, and
somewhat higher raw material and energy prices. Excluding the impact of
currencies and pension charges, operating income grew EUR 7 million.
The cost-saving programs are progressing well and have so far this year
resulted in a workforce decrease of 830. This quarter the Salt site at Stade,
Germany, was closed. In particular, Surface Chemistry and Polymer Chemicals,
which suffer most from the weak business climate, are vigorously pursuing
restructuring measures.
Catalysts again achieved a strong performance, while Base Chemicals benefited
from the acquisition of ECI Elektro-Chemie. Pulp & Paper Chemicals did better
as a result of cost-saving measures. Surface Chemistry and Polymer Chemicals
remained under pressure from soft market conditions.
Capital expenditures were well under control at EUR 59 million in this quarter,
which is 85% of depreciation.
In August 2003, the Company announced that Pulp & Paper Chemicals had secured a
15-year supply agreement as from 2005 for the delivery of chemicals to the
world's largest single-line bleached eucalyptus pulp mill in Brazil. As a
consequence, the business unit will invest EUR 50 million in several plants for
the production of chlorine dioxide (45 tons per day), oxygen, pulp production
process chemicals, and sodium chlorate (50,000 tons per annum). Through this
investment we will service key customers in a country that shows good growth
potential for this segment of the Company's business.
Early in September 2003, Akzo Nobel announced its intention to sell Catalysts,
Coating Resins and Phosphorus Chemicals from its Chemicals portfolio in order
to create more room to maneuver for the Company. These businesses collectively
represent close to EUR 1 billion in sales. The divestment process is
progressing well.
11
REPORT FOR THE 3RD QUARTER OF 2003
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Millions of euros January-September
- --------------------------------------------------- -------------------------------------
2003 2002
----------------- -----------------
Earnings before minority interest 535 742
Depreciation and amortization 486 499
------- -------
Cash flow 1,021 1,241
Changes in working capital (118) (155)
Changes in provisions and deferred tax assets (13) (18)
Retained income nonconsolidated companies (22) 12
Other items - 14
------- -------
Net cash provided by operations 868 1,094
Capital expenditures (380) (482)
Acquisitions (89) (237)
Proceeds from divestments 159 170
Repayments nonconsolidated companies 88 3
Other changes 5 (6)
------- -------
Net cash used for investing activities (217) (552)
Dividends paid (271) (275)
------- -------
Funds balance 380 267
Net cash generated by/(used for) financing
activities 204 (130)
Effect of exchange rate changes on cash and
cash equivalents (14) (37)
------- -------
Change in cash and cash equivalents 570 100
======= =======
12
REPORT FOR THE 3RD QUARTER OF 2003
Successful focus on cash - positive funds balance of EUR 380 million
The funds balance in the first nine months of 2003 was an inflow of EUR
380 million, EUR 113 million higher than in the previous year. This funds
balance was predominantly generated in the third quarter of 2003. Stricter
control over investment and acquisition spending more than offset the decline
in cash flow from operations, which was primarily due to the Company's lower
earnings.
Capital expenditures were reduced to EUR 380 million (2002: EUR 482 million),
which is 84% of depreciation.
Acquisition expenditures mainly related to payments in the first quarter for
CIRS and the final settlement for the acquisitions in 2002 of ECI Elektro-
Chemie and Crompton's Industrial Specialties. Proceeds from divestments
principally concerned Impregnated Papers.
Net cash generated by financing activities predominantly concerned the receipt
of the proceeds of the EUR 750 million bond, placed in June 2003, partially
offset by the redemption of short-term borrowings.
Nonrecurring items
The total net nonrecurring charges, already recognized in the first half year,
aggregated EUR 46 million and break down as follows:
Millions Minority
of euros Gross Taxes interest Net
- --------- --------- --------- --------- ---------
Pharma (22) 8 (14)
Coatings (4) 3 (9) (10)
Chemicals (35) 13 (22)
--------- --------- --------- ---------
Akzo Nobel (61) 24 (9) (46)
========= ========= ========= =========
Pharma's nonrecurring losses concern workforce reductions mainly at Organon in
various countries all over the world. At Coatings, a catch-up adjustment was
recognized in respect of a joint venture in Asia. Chemicals' charges relate to
several restructurings at Surface Chemistry and Resins.
13
REPORT FOR THE 3RD QUARTER OF 2003
CONDENSED CONSOLIDATED BALANCE SHEET
Millions of euros September 30, 2003 December 31, 2002
- --------------------------------------------------- ------------------ ------------------
Intangible assets* 613 629
Property, plant and equipment 4,100 4,402
Deferred tax assets 378 405
Deferred tax asset for minimum pension liability 476 503
Other financial noncurrent assets 1,131 1,309
Inventories 2,177 2,206
Receivables 2,812 2,815
Cash and cash equivalents 1,090 520
------------------ ------------------
Total 12,777 12,789
================== ==================
Capital and reserves 3,402 3,216
Minimum pension liability (1,056) (1,118)
------------------ ------------------
Akzo Nobel N.V. shareholders' equity 2,346 2,098
Minority interest 149 137
------------------ ------------------
Equity 2,495 2,235
Provisions 2,448 2,574
Minimum pension liability 1,704 1,794
Long-term borrowings 3,419 2,797
Short-term borrowings 394 979
Current liabilities 2,317 2,410
------------------ ------------------
Total 12,777 12,789
================== ==================
Gearing 1.09 1.46
Shareholders' equity per share, in EUR 8.21 7.34
Number of shares outstanding, in millions 285.7 285.7
* Intangible assets include capitalized prior service costs related to the
minimum pension liability of EUR 172 million.
14
CHANGES IN EQUITY
Capital Minimum Share-
and pension holders' Minority
Millions of euros reserves liability equity interest Equity
- ------------------------------- -------- --------- ---------- ---------- ----------
Situation at December 31, 2002 3,216 (1,118) 2,098 137 2,235
Income 497 497 38 535
Dividends (257) (257) (14) (271)
Changes in exchange rates (57) 62 5 (5) -
Other changes 3 3 (7) (4)
-------- --------- ---------- ---------- ----------
Situation at September 30, 2003 3,402 (1,056) 2,346 149 2,495
======== ========= ========== ========== ==========
Balance sheet substantially strengthened - net borrowings down EUR 0.5 billion;
equity up EUR 0.3 billion
During the first nine months of 2003 Akzo Nobel's balance sheet strengthened
substantially. Net interest-bearing borrowings were reduced by EUR 0.5 billion
to EUR 2.7 billion due to the focus on cash, while equity increased EUR 0.3
billion to EUR 2.5 billion as a consequence of retained income. As a result,
gearing strongly improved to 1.09 (December 31, 2002: 1.46).
Invested capital at September 30, 2003, amounted to EUR 8.3 billion, EUR 0.4
billion lower than at year-end 2002. This decrease is mainly attributable to
weakening of key currencies, but also reflects the Company's lower capital
expenditure level and divestments made.
As a consequence of the placement of the EUR 750 million bond in June 2003, the
cash and cash equivalents balance temporarily increased to EUR 1.1 billion.
This cash balance will decrease in the fourth quarter of 2003 through
redemption of long-term borrowings.
Arnhem, October 17, 2003 The Board of Management
15
REPORT FOR THE 1ST QUARTER OF 2001
Additional Information
The explanatory sheets used by the CFO during the press conference can be viewed
on Akzo Nobel's Internet site at: www.akzonobel.com/news/presentations.asp
Akzo Nobel N.V.
Velperweg 76
P.O. Box 9300
6800 SB Arnhem
The Netherlands
Tel. + 31 26 366 4433
Fax + 31 26 366 3250
E-mail ACC@akzonobel.com
Internetwww.akzonobel.com
16