Akzo Nobel N.V.

Hello, everyone, and welcome to today's Axo Noble Q2 results call. My name is Harry, and I'll be your operator today. All lines are currently in listen-only mode, and there will be an opportunity for Q&A after management's prepared remarks. If you would like to enter the queue for questions, please dial star followed by one on your telephone keypad. I would now like to hand the call over to Kenny Che, Head of Investor Relations, to begin. Please go ahead.

Thank you, Ari. Good morning and welcome to Axonobel's Investor Update for the second quarter of 2025. I'm Kenny Che, Head of Investor Relations. Today, our CEO, Greg Puglione, and CFO, Martin DeVries, will take you through our results. We'll refer to the presentation, which you can follow by webcast or download from our website at axonobel.com. A replay of the webcast will also be made available following the event. There will be a Q&A session after the presentation. For more information, please contact our investor relations team. 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. Good morning to everyone on the call. ExxonMobil had a good quarter in tepid markets. We delivered on the things that we can control. Our gross margin was up 40 basis points year-on-year on price versus raws margin extension, in line with our plan. And our EBITDA was up by 60 basis points on significantly lower OPEX from our efficiency actions. Volumes were slightly down, but above market and Forex, while a significant headwind continues to be limited to a translation impact, as shown by our solid 15% EBITDA for the quarter, despite 24 million of Forex. We generated 162 million of free cash flow in the quarter, despite 49 million euros of identified items cash out, largely related to restructuring. And finally, we sold most of our Indian businesses at 25 times 2025 EBITDA for 1.4 billion euros, while maintaining a royalty stream for coatings. Our teams continue to demonstrate agility and discipline across the board, and we're hitting on our operational and strategic milestones. With that, let me walk you through the key figures for the second quarter. Organic sales were flat, volumes declined by 1%, while price mix contributed positively, with pricing up 2%, partially offset by a negative 1% mix impact. Adjusted EBITDA came in at 393 million euros, or 417 million euros adjusted for Forex. Forex headwinds intensified this quarter, with a 5% negative impact on revenue, marginally higher than the prior quarter. Despite this, our EBITDA margin extended by 60 basis points to 15%, reflecting our pricing discipline and the structural benefits of our SG&A and industrial programs. Turning to the first half, we deliver net OPEC savings of €35 million year-on-year, a significant contribution especially considering wage and other inflationary costs. The SG&E actions announced three quarters ago are now completed, and we've announced five additional site closures in the first half of 2025. Adjusted EBITDA for the first half totaled €750 million, or €781 million, corrected for Forex. Our adjusted leverage ratio stands at 2.9 times, elevated due to seasonality, but we expect this to improve through the second half as free cash flow strengthens. Let's now turn to slide four with an update on our strategic commitments. We continue to hit our strategic milestones. Firstly, we've successfully signed the sale of ExxonMobil India to the JSW Group. This represents a key first step in our ongoing portfolio review. Using the most recent fiscal year results, the transaction values the business at 25 times EBITDA, not including the future dividend stream of 4.5% of sales for the coating businesses. Closing is expected in the fourth quarter. Nets of the purchase of 100% of the powder business, which we will retain, We expect 900 million euros in net cash proceeds. 500 of that will go to deleveraging and 400 million euros to a share buyback, which we will initiate at closing. Secondly, the SG&A program we announced late September of last year is now fully implemented. The annualized benefit is tracking ahead of plan and expected to deliver greater than 150 million euros of recurring savings. and we see more efficiency potential ahead. Thirdly, our industrial transformation is progressing ahead of schedule. We have announced five site closures so far this year, three in Europe, Middle East, and Africa, and two in Canada, with consultations underway. These actions will deliver structural savings and operational efficiencies in the coming quarters. We have done this while continuing to improve our service levels, specifically in North America for marine and protective and for powders. were not operating at high levels of service, a stark difference to two years ago. Together, these initiatives are unlocking value and positioning the company for stronger and more focused growth. Let's now turn to slide five. Future volumes were down 1% year-on-year, an improvement from Q1, supported by DecoChina's return to growth. Let's start with decorative paints. In EMEA, volumes were slightly lower year-on-year. Growth in Western Europe was more than offset by continued softness in Southern Europe. In Latam, Brazil had a slower start to the quarter due to the timing of price increases in Q1, but impact eased as the quarter progressed. Underlying demand remains healthy, and we expect further recovery in the second half. In China, volumes rebounded strongly with high single-digit growth, supported by improving demand and continued pricing stability. This marks a clear turnaround from prior quarters and reflects our strengthened position coming out of the competitive cycle. In Southeast Asia, volumes were flat. Growth in Vietnam helped offset continuing weakness in Indonesia, while consumer sentiment remained subdued. Let's turn to coatings now. Power volumes declined slightly, with sequential improvement in automotive, offset by continued softness in the architectural segment. Despite ongoing market challenges, our focus on higher growth segments continued to support our relative outperformance. Marine and Protective remained the key growth engine in coatings, delivering mid-single-digit volume growth. Protective itself saw strong double-digit growth, while marine began to normalize following an exceptionally strong run in prior quarters. In automotive and specialty coatings, volumes were under pressure, particularly in North America, where refinished demand remained soft. However, aerospace continued to perform well, especially across EMEA and Asia. Industrial coatings was also impacted by weakness in North America. Looking ahead, we remain vigilant to evolving market patterns across regions and segments. Despite ongoing macro uncertainties, our portfolio, strong market position, and disciplined execution underpin a resilient performance. We're well positioned to navigate the current environment and capture opportunities as conditions stabilize. Martin will now provide an update on our financials on Site6, Martin.