Akzo Nobel N.V.

Hello and welcome to today's ExxonBel Q3 2023 results call. My name is Bailey and I'll be the moderator for today's call. If you would like to ask a question during today's call, please press star followed by one on your telephone keypad. I'd now like to pass the conference over to Kenny Che, Head of Investor Relations. Please go ahead.

Thank you, Bailey. Good morning and welcome everyone on call to ExxonBel's investor update for the third quarter of 2023. I'm Kenny Che, Head of Investor Relations. In today's call, our CEO, Greg Puglione, and CFO, Martin DeVries, of Nobel.com. A replay of this webcast will also be made available following this event. There will be a Q&A session after the presentation. For additional information, please contact our investor relations teams. Before we start, a reminder of our forward-looking statements disclaimer on slide two. Please note this also applies to the conference call and answers to your questions. I will now hand over to Greg, who will start on slide three of the presentation.

Thanks, Kenny, and good morning to everyone on the call. We'll start today's presentation with an overview of our third quarter results before moving on to talk about our industrial transformation plan. Q3 is in line with guidance and marks a strong rebound across all our key financial metrics. Revenue grew 5%, excluding the impact from currencies, mainly as a result of good pricing management. Organic volumes in the quarter remain resilient despite a soft start to the quarter. While microeconomic uncertainties persist, we are pleased with the growth of our marine and protective business and our powder businesses, with the stabilization of demand in DECO Europe and signs of demand bottoming out across several of our coatings and markets. Q3 adjusted operating income was up by 76% on a strong rebound in gross margin, driven by robust pricing and raw material tailwinds. The strong performance in price versus raws brings our year-to-date margin expansion to around €400 million, which is very much in line with our improved guidance from Q2. We are also reporting on our second consecutive quarter of double-digit returns on sales, at 11.8% in Q3, 12.5% in coatings and 14.2% in paints. The strong growth in profitability in addition to solid free cash flow of 243 million euros resulted in a leverage ratio of 3.2 times net debt to EBITDA at quarter end. We're tracking well with our leverage target for year end. Let's turn to slide four. Our volumes were flat organically overall in Q3. This reflects our exposure to diverse end markets with positive developments in several end markets offset by continued macroeconomic weakness elsewhere. Paints was overall slightly above flat from a volume perspective and coatings slightly worse, but mostly because our high volume industrial coatings business, particularly wood coatings, is down with its end markets. As mentioned earlier, demand trends in decorative paints EMEA have stabilized. As for DecoChina, the backdrop remains similar to the first half of the year, with market demand improving, but at a slower pace than previously anticipated. Volumes in the quarter were up high single-digit percent as we left easier comps. Latin, Latin America, was a bit soft, but Brazil picked up in September as it enters the high season in the fourth quarter. In coatings, powder was a bright spot. We had expected market weakness to impact this business for longer, but demand in most of our segments improved during the quarter, especially in automotive, industrial, and even architectural. In marine and protective, the good momentum continued after a strong first half. We're pleased with the overall trajectory of this business. In automotive and specialty coatings, we were a bit weak in Europe, but did well in North America. And in industrial coatings, we are pleased that the positive trends indicated for coiled in the second quarter have carried into the third quarter, driven by both market share gains and an uptick in market activity, especially in China. Packaging demand also improved after a weak first half. Wood is tough, though, driven by depressed North American construction market, and we don't expect this to improve before mid-2024. We expect these trends to continue in the fourth order with a combination of easier comps and improving end market conditions across many businesses. Q4 volumes should be up low single digit, leading to an overall flattish 2023 from a volume perspective. I now hand over to Martin to go through the numbers on slide five.