Akzo Nobel N.V.

Good morning, everyone, and welcome to Oxinabel's Investor Update for the fourth quarter and full year 2025. I'm Jan-Willem Enhuis, Head of Investor Relations. Today, our CEO, Greg Pouw-Biome, and CFO, Maarten de Vries, will take you through our results. We'll refer to the presentation, which you can follow by webcast or download from our website at oxinabel.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 additional 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, Ian and Willem. Good morning to everyone on the call. In 2025, we made substantive strides towards a stronger Axial Nobel. In tepid markets, our progress was rooted in price discipline and the relentless execution of our efficiency programs, resulting in a full year adjusted EBITDA of $1,444,000,000, adjusted for Forex translation and our Indian divestment. This is within 1% of our initial constant currency guidance of $1,550,000 given at the beginning of the year. And profitability is at 14.2%, which is 40 basis points up versus last year. In Q4, volumes were down 2% year-on-year with a price mix up 1%. Our adjusted EBITDA came in at 309 million or 343 million, excluding Forex translation and the Indian divestment. This is 7% higher than last year on a comparable basis and corresponds to a 13% margin of 70 basis points year-on-year. Operationally, we achieved net OPEC savings of 98 million euros year to date, 28 million euros ahead of plan. Free cash flow came in materially higher at 606 million euros on efficient working capital management. And we reduced leverage to two times, bringing it in line with our midterm ambitions. Overall, we delivered a banner year in operational execution alongside two major portfolio moves, a value crystallizing divestment in India and our proposed merger with Accelta, which will reduce costs, boost innovation and accelerate growth. Let's now turn to slide four. Q4 volumes were down 2% year on year with mixed performance between our segments. Overall, DECO volumes were slightly down at minus 1%. Europe, Middle East, and Africa was flat, with growth in the UK and a recovery in Turkey, but continued weakness in France. Looking ahead, we expect 2026 to be stable, with a European recovery further out. Latin America declined mid-single digits, with Argentina doing well, but Brazil impacted by the BSF disposal. As you know, their There was a moment of lack of leadership of that business, which disrupted the Brazilian market in the middle of the year. But as Sherwin closed the deal and started running the business, this recovered, and Q4 was a good quarter for us. Growth will resume in 2026 as Brazil returns to normal trading conditions, which Brazil has already returned to normal trading conditions. So, so far, so good. China delivered low single-digit growth with our business continuing to outperform in a weak market. We expect this to continue in 2026 and for the Chinese market to finally rebound in 2027. Southeast Asia remained mixed with softer demand in Indonesia, more than offset by growth in Vietnam, where momentum is anticipated to remain solid throughout 2026. Let's turn to coatings now. In coatings, volumes declined 3% in Q4, primarily due to market pullback in most of our segments in North America. Powder remained impacted by low architectural demand, although Asia continued its strong momentum. Stabilization in North America is expected in the second half of 2026. Marine and Protective delivered a slower quarter with growth in yachts, but a lower marine on tougher comps. market share and dry docking will underpin volumes in 2026 market market share gains clearly in dry docking for 2026. automotive and specialty improved sequentially to flat volumes overall aerospace outperformed while refinish in north america remained at trough going forward low single digit growth will be driven by a strong aerospace with a very strong order book and stabilization and refinish in the second half of 2026. industrial coatings was down mid single digits coil and wood were in line with market our packaging business faces a temporary pullback due to an industry technology shift and delay approvals of our product we are uh planning to lose market share in 2026 because of this, but we will rebound and recover market share in 2027 on new awards. We're convinced we have best-in-class technology, so it's a temporary setback, but we will see a market share erosion in 2026 before rebounding in 2027 in packaging. On balance, we expect full-year volumes to be broadly flat in 2026, After a Q1 with similar conditions to Q4 of last year, we anticipate an improving market trajectory in the second half of the year, particularly in North America. Turning to slide five, we closed the sale of Accidental India Limited at an attractive 25 times EBITDA multiple, generating approximately 900 million euros of proceeds, which showcases that our active portfolio management creates exceptional value. We retained full ownership of our powder business in India by buying out the minorities and also secured a recurring royalty stream from the liquid coatings assets we divested to GSW. We continue our portfolio review in Asia as per our strategy to focus on leadership positions and to monetize assets that are significantly more valuable to other people than us. So there'll be more disposals in 2026 in Asia. All actions under our SG&A efficiency program were completed by mid-2025. We now expect around 200 million euros of gross cost savings based on the elimination of 2,900 functional positions. This is 80 million euros above our initial target while also delivering a leaner and more focused operating model. Meanwhile, our industrial excellence program continues to gather pace. We've closed 12 sites to date in the last two years since the start of the program, all without disruption to the business and while improving service levels. All actions under the industrial program are expected to be completed by end of 2026. We've got at least six more closures planned in 2026, and we're making good progress on this. In short, our programs are driving a leaner cost base, better return on capital, and a more focused agile organization. The impact of these programs is detailed on page six. Page six, two years into our efficiency journey, I thought it'd be helpful to present an overview of the phasing and the benefits of our two programs, very much like we did last year. Our SGA program was fully executed in less than a year. We've achieved 145 million euros in savings to date. with at least 50 million euro carryover in 2026, which will offset annual inflation alongside other productivity measures. In total, the program will deliver 200 million euros of gross cost savings, 80 million euros above the original plan, as I mentioned, with only 50 million euros higher than originally envisaged cost. So 80 million more value, only 50 million more cost, All of this completed in less than a year, 2,900 positions, a lot of them in Europe. So you can see that we executed and we executed decisively. Our industrial transformation program remains fully on track and will be completed at the end of 2026. The focus remains on footprint optimization, modernization of anchor sites, and supply chain consolidation. We expect a benefit of 90 million euros in 2026, alongside a slightly higher restructuring cost and corresponding cash outflow. With 110 million of carryover benefit in 2027, the program is set to deliver total gross savings of 300 million euros. If you take the two programs together, that's half a billion euros of cost takeout, demonstrating that our self-help is working and delivering a leaner organization with meaningful operating leverage on any volume recovery. Moving to slide seven. Slide seven is really a summary because the benefits of our efficiency programs, they're substantial, but sometimes they're obscured by the significant negative Forex translation of the past three years, which does not impact profitability, but does make the reported numbers harder to read. We've tried in this table to isolate the effects with profitability gains in both deco and coatings and a more efficient use of capital as highlighted by our working capital improvement. We've made steady progress over the past three years with adjusted EBITDA up 40% or almost half a billion euros on a comparable basis to 2022. Our progress has been built on price discipline, a leaner organization with greatly improved service levels. This, in conjunction with product innovation, will allow us to capture more than our share of commercial opportunities, even in software markets. The actions already in place will pave our way to achieving our midterm targets and more. And I'll now hand over to Martin to discuss our Q4 performance on slide eight. Martin?

Yeah, thanks, Greg, and good morning, everybody. At the group level, organic sales declined by 1%, with volumes down 2% and a positive price mix effect of 1%. The divestment of India had a negative 1% impact on revenue for both deco and coatings. FX Translation further reduced revenue by 6%, resulting in a reported revenue decline of 9%. In deco, volumes decreased by 1%, primarily driven by LATAM. While positive pricing in EMEA and LATAM was offset by a negative mix, organic sales for deco were down by 1%. In coatings, volumes were down 3%, reflecting ongoing weakness in North America. Group adjusted EBITDA was €309 million or €343 million at constant currencies and adjusted for the India divestment. The EBITDA margin improved to 13%, up 70 bps compared to prior year. This improvement was due to margin expansion of 240 bps in DECO, supported by structural cost savings. Improvements in coatings profitability continue to be muted by negative mix, particularly from weaker North America. We delivered another strong quarter of free cash flow totaling €362 million. For the full year, free cash flow reached €606 million, primarily driven by significant improvements in our working capital position. At year-end, trade working capital was 14.7%, a full percentage point below the previous year and within the target range. Importantly, we achieved this while driving our industrial transformation, which requires inventory build-up to support volume redistribution. Return on investment also improved to 13.5%, up from 13.3% last year. And finally, strong cash flow generation together with the proceeds from the India divestment enabled us to reduce net debt to below 3 billion euro and our leverage ratio to 2x in line with our plan. Turning now to our 26 outlook. Looking ahead, Based on current market visibility, we don't anticipate a material recovery across our end markets in 2026. A weak first half is expected, with the second half held by easier comparisons. We will remain firmly focused on the implementation of our self-help programs and maintaining strict cost discipline. In 2026, we aim to increase our full-year adjusted EBITDA by at least 100 million euro on a comparable basis, driven by cost rather than volume. Any volume recovery will be a plus. On a reported basis, including a €40 million scope adjustment for the India divestment and an expected further €35 million of FX translation impact, this should translate to a reported adjusted EBITDA at or above €1.47 billion. The €100 million step-up is driven by what we control. with the industrial program contributing €90 million of savings. Carryover of the SG&A program will offset inflation combined with productivity, as outlined in the overview table on slide 6. This provides a solid earnings baseline, with any improvement in market conditions translating into potential upside. The first quarter is expected to look a lot like the fourth quarter. Soft volume trends continuing, some efficiency uplift, and a negative FX impact of around €30 million. With that, back to Greg for the wrap-up.