September 8, 2017 / 5:59 AM / 10 months ago

UPDATE 1-Hours before shareholders meet, Akzo dumps bad news

(Updates with CFO on leave of absence)

AMSTERDAM, Sept 8 (Reuters) - Akzo Nobel, the Dutch company that rejected a 26.3 billion euro ($32 billion) buyout from U.S. rival PPG Industries in May, on Friday lowered its 2017 financial targets and announced a revamp of how it manages the two businesses it is not selling, paints and industrial coatings.

The company said it is facing cost inflation and currency headwinds and 2017 EBIT, though higher than last year, would not grow by the 100 million euros it had promised when rejecting PPG's advances.

In addition, CFO Maelys Castella will go on a leave of absence due to health reasons, and return "in a senior management position" when she is better, Akzo said. Her departure for health reasons follows the resignation of CEO Ton Buechner, who quit for health reasons in July.

New CEO Thierry Vanlancker is to meet with shareholders later Friday to defend the company's strategy, following a court order to repair relations badly damaged by shareholder anger over the course the company charted under Buechner and Supervisory Board Chairman Antony Burgmans.

Akzo Nobel is pursuing plans to sell or seek an initial public offering of shares for its specialty chemicals division by next spring in order to focus on paints and coatings.

The company's reorganisation will see management of those businesses combined and realigned on geographical lines.

"Challenges include unfavourable foreign exchange rates, continued headwinds for the Marine and Protective Coatings industry, temporary disruption to the manufacturing and supply chain during the third quarter and current margin pressure from greater than expected raw material cost inflation," the company said in a statement.

Vanlancker said the impact of these was having "a wider and greater impact as the year continues" and the company was raising prices and cutting costs in response.

He said the company would still meet new 2020 financial targets announced in April, including reaching 15 percent return on sales, though analysts have been sceptical from the start they could be achieved.

Castella will be replaced on a temporary basis by group controller Hans De Vriese while Akzo looks for a new CFO.

$1 = 0.8277 euros Reporting by Toby Sterling; Editing by Stephen Coates

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