AkzoNobel Earnings: Volume Pressure Persists, but Direct Tariff Impact Appears Muted

AkzoNobel’s first-quarter results were mixed, as weakness across the decorative business offset relatively good results in the performance coatings business. Overall, organic sales were flat year over year. We are encouraged by Akzo’s price capture during the quarter, contributing 2% growth, but largely offset by a 2% decline in total volume. We also view management’s commentary on tariffs as positive, in general, with an expected EUR 35 million impact on annualized EBITDA costs if current tariffs remain, before any pricing mitigation actions. The greater risk derives from a potential softening in the macroeconomic environment, specifically for the coatings business, if a prolonged tariff regime were to hamper industrial activity. Ultimately, Akzo has worked to localize its raw material procurement and production, which should shield the firm from material tariff impacts, but a global slowdown in growth could have a strong impact on the company’s volumes. As such, we maintain our EUR 66 per share fair value estimate.