2011… · akzonobel i report for the third quarter of 2011 3 operating roi % moving average roi %...

Report for the third quarter2011

2 AkzoNobel I Report for the third quarter of 2011

•Revenueup5percentdrivenbypricingactionstooffsetrawmaterialcostinflation

•Weakereconomicconditionsandcontinuedrawmaterialpriceinflationimpactresults,particularlyinDecorativePaints

•EBITDAdecreasedto€507million(2010:€574million)•Netincomefromcontinuingoperations€148million(2010:€217million)

•AdjustedEPS€0.91(2010:€1.19)•Interimdividendof€0.33persharedeclared,up3percent•Majorperformanceimprovementprogramlaunchedtodeliver€500millionEBITDAin2014

Our results ataglance

(39 percent in high growth markets)

A North America

B Emerging Europe

Mature Europe

Asia Pacific

C

D

E

F

Latin America Other regions

%

20

6

39

21

104

100

C

D

EF

A

B

(Based on the full year 2010)

AkzoNobel around the worldRevenue by destination

In € millions

Q3 11Q3 10 Q4 10 Q1 11 Q2 110

1000

2000

3000

4000

5000

3,8674,097 4,051

3,6203,762

0

100

200

300

400

500In € millions

Q2 11 Q3 11Q3 10 Q4 10 Q1 11

437

377

551

507

574

Revenue EBITDA

AkzoNobel I Report for the third quarter of 20113

Operating ROI %Moving average ROI %

Q4 09 - Q3 10 Q4 10 - Q3 11Q4 08 - Q3 09

8.9%

11.0%9.7%

28.2%

22.2%

24.4%

Returns on invested capital

Continuing operations before incidentals3rdquarter January-September

2010 2011 ∆% in€ millions 2010 2011 ∆%

3,867 4,051 5 Revenue 11,020 11,910 8

574 507 (12) EBITDA 1,587 1,495 (6)

14.8 12.5 EBITDAmargin(in%) 14.4 12.6

428 352 (18) EBIT 1,152 1,042 (10)

11.1 8.7 EBITmargin(in%) 10.5 8.7

MovingaverageROI(in%) 11.0 9.7

OperatingROI(in%) 28.2 24.4

1.19 0.91 Adjustedearningspershare(in€) 2.89 2.73

After incidentals3rdquarter January-September

2010 2011 ∆% in€ millions 2010 2011 ∆%

381 301 (21) Operatingincome 1,060 1,006 (5)

217 148 Netincomefromcontinuingoperations 534 531

21 1 Netincomefromdiscontinuedoperations 58 14

238 149 Netincometotaloperations 592 545

0.93 0.63 Earningspersharefromcontinuingoperations(in€) 2.29 2.27

1.02 0.63 Earningspersharefromtotaloperations(in€) 2.54 2.33

109 158 Capitalexpenditures 336 452

378 409 Netcashfromoperatingactivities 244 55

Interestcoverage 7.0 7.9

Investedcapital 12,677 13,194

Netdebt 2,030 1,595

Numberofemployees 55,530 56,350

Financialhighlights


Revenuewasup5percent,duetovolumegrowthof1percentandpricingof9percent(beforea3percentadversemixeffect).Weakereconomicconditionsandcontinuedrawmaterialpriceinflationadverselyimpactedourresults,particularlyinDecorativePaints.Wehavelaunchedamajorperformanceimprovementprogramtodeliver€500millionEBITDAin2014.

EBITDA has been impacted by further rawmaterialprice inflation,demandvolatilityandsoftdemand.

We are implementing a major performanceimprovement program which includesfunctionalandoperationalexcellenceinitiativestosustainablyunderpinourperformance.Thisprogramwillensurethatourgrowthambitionsaredeliveredatorabovethemid-pointofour13-15percentEBITDAmarginguidance.

Revenue• TheDecorativePaintsbusinessshoweda

revenueincreaseof5percent(7percentonaconstantcurrencybasis)inthethirdquarter.RevenueincreasedacrossallregionsexceptforNorthAmerica,whererevenuewas4percentdowncomparedtothepreviousyear.SalesvolumeinAsiaandLatinAmericagrew6and10percentrespectively.However,demandinourmaturemarketsremainedweakandthepaceofgrowthinAsiaslowed.

• RevenueinPerformanceCoatingswasup5percent,whichwaspositivelyaffectedbya1percentvolumeincrease,a7percentpriceincrease,andoffsetby3percentnegativecurrencyeffect.IndustrialCoatingsshowedthestrongestgrowth.Atsegmentlevel,MarineremainsaffectedbytheshortfallinNewConstructionandWoodAsiacontinuestobeweakbecauseofitsexposuretotheUShousingmarket.Wecontinuetomanageoursellingpricesinresponsetothehighrawmaterialcosts.

• InSpecialtyChemicals,revenuedevelopmentremainedpositiveinthethirdquarter,withallofourbusinessunitscontributingtothe6percentincreaseinrevenue.Volumesinthequarterwereslightlydown,butyear-to-dateisstill2percentaheadoflastyear.Thestrengthinmanufacturingandindustrialproduction,particularlyinAsiaandNorthAmerica,resultedinstabledemandacrossmostofourbusinesslines,withsomeexceptionswhereweseedecreaseddemandanduncertaintyinorderingpatterns.Thedemandintheresidentialconstructionrelatedbusinessesremainedweak.

Financial highlights

+1%

+6% 0% -2%

+5%8

10

0246

Revenue development Q3 2011Increase Decrease

Acquisitions In Performance Coatings, the acquisition ofcoatingsmanufacturerSchrammHoldingAGhasclosedearlyOctober,2011.Thisacquisitionwill enable us to strengthen our globalleadershippositioninspecialtyplasticcoatings.In Specialty Chemicals, we announced theacquisition of Boxing Oleochemicals, the

leadingsupplierofnitrileaminesandderivativesinChinaandthroughoutAsia.

Revenue

3rdquarter January-September

2010 2011 ∆% in€ millions 2010 2011 ∆%

1,372 1,435 5 DecorativePaints 3,829 4,092 7

1,239 1,295 5 PerformanceCoatings 3,548 3,844 8

1,272 1,349 6 SpecialtyChemicals 3,684 4,050 10

(16) (28) Otheractivities/eliminations (41) (76)

3,867 4,051 5 Total 11,020 11,910 8

Volume development per quarter (year-on-year; in %)

Q310 Q410 Q111 Q211 Q3 11

DecorativePaints – 1 9 6 4

PerformanceCoatings 5 5 7 2 1

SpecialtyChemicals 10 3 6 1 (1)

Total 4 3 7 3 1

Price/mix development per quarter (year-on-year; in %)

Q310 Q410 Q111 Q211 Q3 11

DecorativePaints 1 2 1 2 3

PerformanceCoatings – 3 2 3 7

SpecialtyChemicals 2 8 6 8 8

Total 1 4 3 4 6

in % versus Q3 2010Volume Price/mix Acquisitions Exchange

ratesTotal

DecorativePaints 4 3 – (2) 5

PerformanceCoatings 1 7 – (3) 5

SpecialtyChemicals (1) 8 – (1) 6

Total 1 6 – (2) 5


Raw materialsRawmaterials have continued to impact ourmarginsinthethirdquarter,particularlyvisiblein Decorative Paints. Sequentially comparedtothesecondquarter,rawmaterialcostshaverisenaround2percent,andcomparedtothethirdquarter lastyeararound15percent.Forthe quarters to come we anticipatemost ofthe rawmaterials to rise, albeit with amoremoderate pace, except for titanium dioxidewhichcontinuestobefacedwithtightsupplycircumstances, causing further upwardprice pressure. We continue to mitigate thepressures by using ourmarginmanagementprograms.

EBITDA• InDecorativePaints,EBITDAwasdown25

percentforthequarterduetoweakerdemand,increasedrawmaterialpricesandunfavorableproductmixeffects(customerdowntrading)whichhasimpactedprofitmargins.EBITDAmarginwas10.3percent(2010:14.4percent).

• InPerformanceCoatings,marginshavebeenaffectedbyhigherrawmaterialcostsaswellasnegativemixeffects,particularlyinhighgrowtheconomies.Costcontrolandrestructuringeffortsinmaturemarketsareongoingandcontinuetosupportperformanceasdorecentacquisitions.EBITDAmarginwas12.1percent(2010:13.4percent).

• InSpecialtyChemicals,theinputcostsarelargelydrivenbypetrochemicalderivativesandenergy.Escalationofthesecosts,combinedwithnegativecurrencyeffectsandalessfavorablesupplyanddemandbalanceloweredouraveragemargins.Weregainedpartofthelostmarginsinthesecondpartofthequarterduetopriceincreases.EBITDAmarginwas17.6percent(2010:20.0percent).

Incidental itemsRestructuring is mainly related to Europeanbusinesses in Decorative Paints andPerformanceCoatings.

EBIT in "other"Corporatecostsinthequarterwerebelowtheprevious year. Additional costs for functionalexcellence activities were offset by costsavings. The result of our captive insurancecompanieswas in linewiththepreviousyear.The year-to-date result is better than theprevious year due to the lower number ofclaims. Other costs were lower due to costsavingsandfavorablenon-recurringitems.

Net financing expensesNet financing charges remained unchangedcompared to Q3 2010, amounting to€70million.Significantitemsincludedare:• Financingexpensesonpensionswhich

decreasedby€11millionto€15million(2010:€26million)mainlyduetolowerdiscountrates

• Netinterestondebtdecreasedby€2millionto€35million(2010:€37million)duetothecloseoutofinterestrateswaps

• Interestonprovisionswhichincreasedby€7millionto€13million(2010:€6million)duetolowerdiscountrates

• Otheritemswhichincludedanincreaseincostsof€5millionto€9million(2010:€4million)onforeigncurrencyresultsofhedgedfutureinterestcashflows.

TaxTheQ3taxrateis31percent(2010:25percent),impacted by changes in tax rates on themeasurement of deferred tax andnon-deductible cost. Excluding these andotheroneofffactors,thetaxratewouldhavebeen29percent.In2010,theQ3taxratewaslowbecauseofseveraladjustmentstopreviousyears and a tax-exempt gain related to theacquiredpowdercoatingsactivities.Theyear-to-date tax rate is 29 percent (2010:26percent).

EBITDA3rdquarter January-September

2010 2011 ∆% in€ millions 2010 2011 ∆%

198 148 (25) DecorativePaints 485 429 (12)

166 157 (5) PerformanceCoatings 500 470 (6)

254 238 (6) SpecialtyChemicals 718 699 (3)

(44) (36) Otheractivities/eliminations (116) (103)

574 507 (12) Total 1,587 1,495 (6)

Incidentals included in operating income


2010 2011 in€ millions 2010 2011

(53) (47) Restructuringcosts (91) (76)

– 2 Resultsrelatedtomajorlegal,antitrustandenvironmentalcases

(1) 24

15 (5) Resultsonacquisitionsanddivestments 17 21

(9) (1) Otherincidentalresults (17) (5)

(47) (51) Incidentals included in operating income

(92) (36)

EBIT in other3rdquarter January-September

2010 2011 in€ millions 2010 2011

(25) (19) Corporatecosts (68) (69)

3 (4) Pensions 5 (11)

2 2 Insurances (2) 10

(28) (20) Other (63) (43)

(48) (41) EBIT in “other” (128) (113)


Revenue development Q3 2011

-2%

+4%

+3% 0%+5%

Volume AcquisitionsPrice/mix Exchange rates

Total

Increase Decrease

810

246

0

The Decorative Paints business showed arevenueincreaseof5percent(7percentonaconstant currency basis) in the third quarter.Revenue increasedacrossall regionsexceptfor North America, where revenue was4percentdowncomparedtothepreviousyear.Our growth strategy of investing in brands,distributionandpeople,aswellasexpandingintomid-tiermarketsinhighgrowthregions,isprogressing. Sales volume in Asia and LatinAmericagrewby6and10percentrespectively.However, demand in our mature marketsremainedweakandthepaceofgrowthinAsiaslowed.EBITDAwasdown25percentforthequarterduetoweakerdemand,increasedrawmaterial prices and unfavorable productmixeffects (customer downtrading) which hasimpactedprofitmargins.EBITDAmarginwas10.3 percent (2010: 14.4 percent). Furtherprice increases are being implemented. InEuropeandNorthAmerica, therehavebeenchanges inmanagementstructuresandcostreductionactionsareunderway.

EuropeIn Europe, revenue was up 3 percent (up4 percent in constant currencies). Revenuewasdrivenbyhighervolumedevelopmentbutadversely impacted by product and countrymix.Performanceacrossthebusinessvaried,withcontinuedstrongperformance inTurkey,Russia andBuildingAdhesives, aswell as apartialrecoveryintheUKonthebackofstrongpromotional activities. However, in theSouthern European markets, margins wereweakerduetoincreasedvariablecostinflationand adverse product mix. Additional priceincreaseshavebeenandwill continue tobeimplementedinthefourthquarter.

AmericasRevenue in the US was down 3 percent(4percentupinconstantcurrencies).VolumesintheUSwereinlinewithpreviousyear.ThenewWalmartbusinessdeliveredthemajorityoftheQ3revenueimprovement.Performanceinthe US declined due to raw material costincreases outpacing pricing actions, acontinuedweakerproductmixandinvestmentin Walmart. In Canada, Q3 revenue was6percentbelow2010(5percent inconstantcurrencies)drivenbylowerdemand,particularlyinRetail.Thedecreaseindemandwasduetoweakconsumerconfidence.InLatinAmerica,Q3 revenue was 22 percent above 2010(25percent inconstantcurrencies)drivenbyprice, mix and share gain. Successfulmarketingcampaign (TudoDeCor)andnewproduct launch contributed to the favorablesharedevelopment.

AsiaRevenue increased 7 percent (10 percent inconstant currencies). All countries in Asiacontributedtothisgrowth.Howeverthepaceof growth in Asia decelerated in the thirdquarter.

RevenueinChinagrewby2percent(3percentin constant currencies) in the third quarter.Comparedtothesecondquarter,thegrowthratedeclinedduetoaslowingintheChineseproperty market. The volume of propertytransactionsdeclinedsharplyasaresultofa

• Revenueincreased5percent;EBITDAdecreased25percent•Weakerdemand,unfavorableproductmixandhigherrawmaterialcosts,particularlyinEuropeandNorthAmerica

•High-growthmarketsdeliveredhighersales• Furtherpriceincreasesarebeingimplementedandthecostbaseisbeingadjustedforlowervolumes

Decorative Paints


In € millions

90

191

148

198

63

Q1 11 Q2 11 Q3 11Q3 10 Q4 10

In € millions

Q2 11 Q3 11Q3 10 Q4 10 Q1 110

300

600

900

1200

15001,461 1,435

1,372

1,1391,196

Revenue

EBITDA

series of Chinese government tighteningmeasurestocurbpropertyprices.Inthethirdquarter, we opened or upgraded about200 Dulux stores and launched integratedcampaignsforseveralnewproductsincludingForestBreathandVOCFree.Let’sColourwasalsoakeycampaigntobuildthebrandimageand inspire customers to redecorate theirhousesandoffices.

In South East Asia and Pacific, revenueincreased by 8 percent versus 2010(11 percent in constant currencies). Strongrevenue growth was achieved in most keymarkets except for Vietnam, which wasnegativelyaffectedbyitsweakeningeconomicsituation. Margin management offset mostincreases inrawmaterialpricesandadversemixeffects.Theregioncontinuesto invest inbrands, people and tinting machines togeneratetop-linegrowth.

Growth in India continued to be strong at19percent in thethirdquarter (24percent inconstantcurrencies)duetohighdemandandstrongpricing.

Keybrands

Revenue3rdquarter January-September

2010 2011 ∆% in€ millions 2010 2011 ∆%

720 739 3 DecorativePaintsEurope 2,042 2,123 4

423 447 6 DecorativePaintsAmericas 1,181 1,269 7

231 248 7 DecorativePaintsAsia 610 702 15

(2) 1 Other/intragroupeliminations (4) (2)

1,372 1,435 5 Total 3,829 4,092 7

Before incidentals

198 148 (25) EBITDA 485 429 (12)

14.4 10.3 EBITDAmargin(in%) 12.7 10.5

148 95 (36) EBIT 335 275 (18)

10.8 6.6 EBITmargin(in%) 8.7 6.7


After incidentals

136 57 Operatingincome 301 231






Volume AcquisitionsPrice/mix Exchange rates

Total

+1%

+7% 0% -3%+5%

Increase Decrease10

2468

0

Performance Coatings• Revenueincreased5percent;EBITDAdecreased5percent• Rawmaterialcostscontinuetopressuremargins• EBITDAmarginat12.1percent(2010:13.4percent)• StronggrowthinIndustrialCoatings,whileweakeningmarketsimpactMarineandWoodFinishessegments

•Continuedfocusoncostcontrolandmarginmanagementinitiatives

Revenuewas up 5 percent (8 percent on aconstantcurrencybasis)drivenbya7percentpriceincrease.IndustrialCoatingsshowedthestrongest growth. At segment level, Marineremains affected by the shortfall in NewConstructionandWoodAsiacontinuestobeweak because of its exposure to the UShousingmarket.Wecontinuetomanageourselling prices in response to the high rawmaterialcosts.Ourmarginshavebeenaffectedbyhighrawmaterialcostsaswellasnegativemix effects, particularly in high growtheconomies. Cost control and restructuringefforts in mature markets are ongoing andcontinuetosupportperformanceasdorecentacquisitions. In thebeginningofOctoberwealso finalized the acquisition of SchrammHoldingAG.

Marine and Protective CoatingsRevenue forMarineandProtectiveCoatingswas up 3 percent from last year, with flatvolumesandnegativecurrency.Marinevolumelevels fellasNewConstructionoutputat themajoryardscontinuestodecline,alongwithaslow quarter for Coastal and Navy, partiallyoffsetby increase inDeepSeaMaintenanceactivity. Protective Coatings’ strong growthcontinueswithHeavyIndustryandOilandGas

markets experiencing good rates of growthacross all geographic regions, with theAmericas proving particularly strong. Yachtperformance has been affected bymacroeconomic factors, with low marketactivity across all regions. Increasing rawmaterial prices continue to pressure themargins despite our margin managementactivities.InProtectiveCoatings,launchactivityisunderway for Interchar2060—a thin-filmintumescentfireprotectionproduct.

Wood Finishes and AdhesivesWood Finishes and Adhesives’ revenuedecreased by 2 percent from last year,negatively affected by lower volumes andcurrencyandpartiallyoffsetbyprices.Volumesremainweakinmanyofthemarketsegments,mainlydrivenbytheprolongedhousingcrisisin theUSandslowingeconomies inEurope.However,demandremainedstableinNorthernEuropeandgrew inSouthAmerica,EasternEurope and Turkey. Operating costs remainbelow last year’s level, reflecting ongoingrestructuring efforts and cost-optimizationactivities. The impact of rawmaterial pricescontinuestoaffectourmarginsinallsegments.New manufacturing capacity in Vietnam isscheduled tobecommissioned in the fourth

quarterandwearebeginningconstructionofanewboardresinfacilityinPeru.

Automotive and Aerospace CoatingsAutomotiveandAerospaceCoatings’revenuedecreased by 1 percent over previous year,negativelyaffectedbycurrencies,acquisitionanddivestment activities. Volumes remainedflatinthequarter—withgrowthattributedtoAsia’stradesegmentsandAerospaceoffsetbylowerVehicleRefinishesvolumesinmatureEurope.CV-OEMvolumesremainedconstantsupported by continuing demand in the USand Western Europe. Aerospace Coatingsexperiencedastrongquarter,benefittingfromincreased production rates at Boeing andAirbus and high demand from Russia. Rawmaterialpricepressurecontinuestoaffectallthesegmentsofourbusiness.AutomotiveandAerospaceCoatingswasselectedbyToyotaMotorsEurope(TME)asthepreferredsupplierfor its European dealers and official bodyshops.

Powder CoatingsPowderCoatingsexperiencedagoodquarterwith revenue up 6 percent over last year,supported by pricing actions and negativelyaffectedbycurrencyandvolume.Salesgrowthwasmostevident intheUSandhighgrowthmarkets such as Turkey and Russia. Rawmaterial developments remained challengingdespite price and margin managementactivities. Powder Coatings’ cost basebenefited from the further consolidation ofRohmandHaasactivities,bothinEuropeandNorthAmerica.PowderCoatingsannouncedapartnership with BioCote and launchedInterponAM—apowdercoatingproductthatincorporatesBioCoteantimicrobialtechnology,


Revenue

EBITDA

Revenue3rdquarter January-September

2010 2011 ∆% in€ millions 2010 2011 ∆%

334 344 3 MarineandProtectiveCoatings 996 1,025 3

201 197 (2) WoodFinishesandAdhesives 591 586 (1)

251 248 (1) AutomotiveandAerospaceCoatings 738 772 5

222 236 6 PowderCoatings 574 705 23

235 275 17 IndustrialCoatings 660 776 18

(4) (5) Other/intragroupeliminations (11) (20)

1,239 1,295 5 Total 3,548 3,844 8

Before incidentals

166 157 (5) EBITDA 500 470 (6)

13.4 12.1 EBITDAmargin(in%) 14.1 12.2

140 129 (8) EBIT 421 386 (8)

11.3 10.0 EBITmargin(in%) 11.9 10.0


After incidentals





In € millions

147

166

143

Q1 11

170

157

Q2 11 Q2 11Q3 10 Q4 10

In € millions

Q1 11 Q2 11 Q3 11Q3 10 Q4 100

300

600

900

1200

1500

1,2371,312 1,295

1,239 1,238

which provides benefits in areas with highlevelsofhumancontact,especiallyinhygienesensitive areas such as the medical andcatering industries. Inaddition,anewprimerthat can be cured at low temperatureswaslaunched in the automotive wheel market,enabling customers to reduce curingtemperaturesbyatleast68degreesFahrenheit(20 degrees Celsius), thus increasingproductivitybyupto10percent.

Industrial CoatingsIndustrial Coatings experienced a strongquarterwithrevenueup17percentover lastyear. The growth was mainly attributable tohigher volumes, pricing actions, and impactfrom an acquisition — offset by negativecurrency. Themain driver of the growth hasbeen Coil Coatings, which continues to bestronginallregions,especiallyintheAmericas.Packaging Coatings’ food and beveragebusiness also experienced another strongquarter, supported by European and Asianmarkets and the impact of the Lindgens’acquisition. Specialty Plastics’ revenuedecreasedinthequarter,mainlyduetolowerrevenue inwireless and IT segments inAsiaandpartiallyoffsetbyastrongrevenueincreasein the automotive segment. The pressure ofthe raw material prices continues to be feltthroughout the business. The acquisition ofSchramm Holding AG was finalized in earlyOctober.

Keybrands



Volume AcquisitionsPrice/mix Exchangerates

Total

-1%

-1%+8%+6%

Increase Decrease

1012

02

-2

4680%

All of our business units contributed to the6percentincreaseinrevenue.Volumesinthequarterwere slightly down, but year-to-dateare still 2 percent ahead of last year. Thestrength in manufacturing and industrialproduction, particularly in Asia and NorthAmerica, resulted in stable demand acrossmost of our business lines, with someexceptionswhereweseedecreaseddemandand uncertainty in ordering patterns. Thedemandintheresidentialconstructionrelatedbusinessesremainedweak.Theescalationofinput costs (largely driven by petrochemicalderivatives and energy), combined withnegativecurrencyeffectsandalessfavorablesupplyanddemandbalance,haveloweredouraverage margins. However, in most of ourbusinesses these input costs stabilizedthroughoutthecourseofthethirdquarter.Weregainedpartofthelostmarginsinthesecondpartofthequarterduetopriceincreases.Ourfocusremainsonmarginmanagement,marketshare and cost optimization. Cost controlmeasuresareinplaceandadditionalEBITDAimprovements havebeendeveloped. In July,

we announced the intention to furtherstrengthenourleadershippositioninspecialtysurfactantsbyacquiringBoxingOleochemicals.BoxingistheleadingsupplierofnitrileaminesandderivativesinChinaandthroughoutAsia.

Functional ChemicalsOurearningsdevelopmentinthethirdquarterdid not materially change compared to Q2,andwecontinuetoseeamixedpicture.Weseesignsthatdemandisweakeninginsomeof our businesses. The building andconstruction markets remain down andplastics’applicationsforluxurysegments(likeboats) are down as well. In general, ourcustomers are more cautious andunpredictable in their ordering pattern.Alongside this, the supply/demand balancehasimprovedformostproductlinesduetoourown and competitor expansions as well asbetter availability of worldwide productioncapacitiesduetofewerinterruptionsthisyear.The deterioration in results compared to lastyear is most noticeable in Ethylene Amines,Performance Additives, Cross-linking

Peroxides,ThermosetChemicalsandPolymerAdditives and Chelates, and clear marginmanagementactionsareongoinginall thesesegments.We see increased results inHighPolymers,mainlyduetofurthergrowthintheHigh Purity Metalorganics business. Marginmanagementactionsareongoinginall thesesegments. Both Salt Specialties and SulfurDerivatives are performing similarly to thepreviousyear.Industrial Chemicals Industrial Chemicals delivered a solidperformance in the quarter although resultswereslightlybelowthelastyear’slevel,asQ32010 includedmorerevenuefromsecondaryuseofsaltcaverns.SalesvolumesforchlorineinQ3wereslightlybelow lastyear,drivenbythemaintenancestopofakeyaccountintheRotterdam-Botlek cluster along with lowercapacityduetomaintenanceintheRotterdamelectrolyses plant. Demand for salt,chloromethanesanddimethylether improvedcompared to previous year. The Energybusiness remains under pressure as thespreads are low due to overcapacity in theNetherlandsenergymarket.

Specialty Chemicals• Revenueincreased6percent,basedonstablevolumes;EBITDAdecreased6percent

• Priceincreasesarebeingimplementedtooffsetincreasedinputcostsandunfavorablecurrencyeffects

• Stabledemandoverallthisquarter,butwithsomeexceptions• EBITDAmarginwas17.6percent(2010:20.0percent)•Additionalcostandcashsavingsprogramsinitiated


In € millions

220241

254

221

Q1 11 Q2 11

238

Q3 11Q3 10 Q4 10

In € millions

Q2 11 Q3 11Q3 10 Q4 10 Q1 110

300

600

900

1200

15001,351 1,350 1,349

1,272 1,259

Revenue

EBITDA

Surface ChemistryRevenue in Surface Chemistry increased by11percentcomparedtolastyear.Theincreaseis primarily from higher pricing driven byincreasingrawmaterialcostsforfatsandoils.Demand improved slightly compared to agoodQ3lastyear.Allgeographicregionsarecontributingand the improvement is inmostmarket sectors. Compared to last year, wehave good growth in the agriculture,miningand the petroleum segments with somecontinuedweakness intheconsumer-relatedapplications.

Pulp and Paper Chemicals The performance of our Pulp and PaperChemicals’business in the thirdquarterwasslightlyaheadofthethirdquarterof2010.Allregions have been affected by plannedseasonal maintenance stops, but the orderinflowpickedupafterthemaintenanceperiod.Demand for pulp and paper chemicalscontinues to be strong, especially in SouthAmerica. During Q3, the increase in rawmaterialcostsleveledout.However,therearedifferencesperregion:AsiaandSouthAmericashowdecreasingrawmaterialpriceswhereasNorthAmericaiscopingwithincreasedenergyandfreightcosts.

Chemicals PakistanTradingconditions in theChemicalsPakistanbusiness remain difficult. Domesticdownstream market conditions remainedsubduedthroughoutthequarterandpolyestermarkets were depressed by rising polyesterstaple fiber prices and volatility in feedstockandcottonmarkets.TherisingseverityofgasshortagesandtheongoingeconomiccrisisinPakistanhascreateduncertaintyregardingthedirection of the market. Gas outages haveforcedanincreaseintheuseofmoreexpensivefurnace oil in our Soda plant. Downstreamindustries continued to face natural gasshortages throughout the quarter, whichimpacted demand. Despite these difficultcircumstances,profitabilitywasclosetoprioryear.

Keybrands

Revenue


2010 2011 ∆% in€ millions 2010 2011 ∆%

464 481 4 FunctionalChemicals 1,352 1,460 8

276 291 5 IndustrialChemicals 788 880 12

219 243 11 SurfaceChemistry 647 725 12

272 290 7 PulpandPaperChemicals 774 840 9

73 81 11 ChemicalsPakistan 223 249 12

(32) (37) Other/intragroupeliminations (100) (104)

1,272 1,349 6 Total 3,684 4,050 10

Before incidentals

254 238 (6) EBITDA 718 699 (3)

20.0 17.6 EBITDAmargin(in%) 19.5 17.3

188 169 (10) EBIT 524 494 (6)

14.8 12.5 EBITmargin(in%) 14.2 12.2


After incidentals






Condensed financial statements

Consolidated statement of comprehensive income3rdquarter January-September

2010 2011 in€ millions 2010 2011

260 167 Profit for the period 658 601

Other comprehensive income

(449) 108 Exchangedifferencesarisingontranslationofforeignoperations 629 (261)

65 6 Cashflowhedges 66 (33)

(18) (4) Taxrelatingtocomponentsofothercomprehensiveincome (19) 16

(402) 110 Other comprehensive income for the period (net of tax) 676 (278)

(142) 277 Comprehensive income for the period 1,334 323

Comprehensive income attributable to

(145) 239 Shareholdersofthecompany 1,244 284

3 38 Non-controllinginterests 90 39

(142) 277 Comprehensive income for the period 1,334 323

Consolidated statement of income3rdquarter January-September

2010 2011 in€ millions 2010 2011

Continuing operations

3,867 4,051 Revenue 11,020 11,910

(2,277) (2,511) Costofsales (6,442) (7,247)

1,590 1,540 Gross profit 4,578 4,663

(853) (857) Sellingexpenses (2,484) (2,539)

(275) (293) Generalandadministrativeexpenses (789) (887)

(89) (87) Researchanddevelopmentexpenses (251) (258)

8 (2) Otheroperatingincome/(expenses) 6 27

381 301 Operating income 1,060 1,006

(70) (70) Netfinancingexpenses (271) (197)

9 9 Resultsfromassociatesandjointventures 21 24

320 240 Profit before tax 810 833

(81) (74) Incometax (210) (246)

239 166 Profit for the period from continuing operations 600 587

Discontinued operations

21 1 Profitfortheperiodfromdiscontinuedoperations 58 14


Attributable to

238 149 Shareholdersofthecompany 592 545

22 18 Non-controllinginterests 66 56



Shareholders'equityShareholders'equityasattheendofQ32011increased to €9.1 billion, due to the neteffectof:• Netincomeof€545million.• Decreasedcumulativetranslationreservesby

€239millionduetothestrengtheningeuro.• Dividendpaymentsof€253million.

Dividend policy Weareaimingtopayastabletorisingdividend.Followingrequests inourAGMinApril,wewillintroduce a stock dividend option with cashdividendasdefault.Detailsofthepaymentdatesarefoundonthelastpageofthisreport.Givenourstrongfundamentalsandasasignalofconfidence in our ability to deliver theperformance improvement program inchallengingmarkets,the2011interimdividendwillbeincreasedby3percentto€0.33pershare.Ourintentionistogrowthe2011totaldividendbyaround€0.05pershare(asimilarincreaseaswas made for the 2010 dividend), aimingtowardsatotal2011dividendof€1.45pershare.

Condensed consolidated balance sheetin€ millions December31,

2010September 30, 2011

Assets

Non-currentassets

Intangibleassets 7,308 7,099

Property,plantandequipment 3,384 3,430

Otherfinancialnon-currentassets 1,977 2,118

Total non-current assets 12,669 12,647

Currentassets

Inventories 1,678 1,889

Tradeandotherreceivables 2,788 3,105

Cashandcashequivalents 2,851 1,704

Othercurrentassets 108 86

Total current assets 7,425 6,784

Total assets 20,094 19,431

Equity and liabilities

Total equity 9,509 9,589

Non-currentliabilities

Provisionsanddeferredtaxliabilities 2,444 2,291

Long-termborrowings 2,880 2,771

Total non-current liabilities 5,324 5,062

Currentliabilities

Short-termborrowings 907 528

Tradeandotherpayables 3,305 3,342

Othershort-termliabilities 1,049 910

Total current liabilities 5,261 4,780

Total equity and liabilities 20,094 19,431

Changes in equity

in€ millions Subscribed share capital

Additional paid-in capital

Cashflow hedge

reserve

Revaluation reserves

Cumulative translation

reserves

Other reserves

Shareholders’ equity

Non-controlling interests

Total equity

Balance at January 1, 2010 465 2 (6) 7 (777) 8,084 7,775 470 8,245

Profitfortheperiod – – – – – 592 592 66 658

Othercomprehensiveincome – – 47 – 605 – 652 24 676

Comprehensive income for the period – – 47 – 605 592 1,244 90 1,334

Dividendpaid – – – – – (245) (245) (61) (306)

Equity-settledtransactions – – – – – 23 23 – 23

Issueofcommonshares 2 4 – – – – 6 – 6

Acquisitionsanddivestments – – – – – (7) (7) (4) (11)

Balance at September 30, 2010 467 6 41 7 (172) 8,447 8,796 495 9,291

Balance at January 1, 2011 467 9 29 7 (43) 8,515 8,984 525 9,509

Profitfortheperiod – – – – – 545 545 56 601

Othercomprehensiveincome – – (22) – (239) – (261) (17) (278)

Comprehensive income for the period – – (22) – (239) 545 284 39 323

Dividendpaid – – – – – (253) (253) (29) (282)

Equity-settledtransactions – – – – – 26 26 – 26

Issueofcommonshares 1 14 – – – – 15 – 15

Acquisitionsanddivestments – – – – – – – (2) (2)

Balance at September 30, 2011 468 23 7 7 (282) 8,833 9,056 533 9,589


15.314.1 13.9

Operating working capitalIn % of revenue

Q1 11

14.5

Q2 11

14.9

Q3 11Q3 10 Q4 10

Invested capital InvestedcapitalattheendofQ32011totaled€13.2 billion, €0.5 billion higher than atyear-end2010.Investedcapitalwasimpactedbytheneteffectof:

• Foreigncurrencyeffectsonintangiblesand property,plantandequipment,duetothestrengtheningeuro.Intotal,investedcapitaldecreasedby€0.3billionduetothecurrencytranslationimpact.

• Anincreaseof€0.2billionoflong-termreceivablesrelatedtopensionfundsinassetposition.

• Anincreaseofoperatingworkingcapitalduetoseasonality,moreexpensiverawmaterialsandactionstoensuresupplyoftitaniumdioxide.Expressedasapercentageofrevenue,operatingworkingcapitalwas14.9percent(Q32010:14.1percent;year-end2010:13.9percent).

• Paymentsofaccruedinterestof€148million.

PensionsThefundedstatusofthepensionplansattheendofQ32011wasestimatedtobeadeficitof €0.7billion(year-end2010:€1.0 billion;Q22011:€0.4billion).Themovementcomparedtoyear-end2010isdueto:• Top-uppaymentsof€346millioninto

certaindefinedbenefitpensionplans• Lowerdiscountratesincreasingthe

pensionobligation• LowerinflationinUKdecreasingthe

pensionobligation• Higherassetreturns.

WorkforceAtSeptember30,2011,weemployed56,350staff(year-end2010:55,590employees).Thenetincreasewasdueto:• Adecreaseof740employeesdueto

ongoingrestructuring• Anetdecreasefromacquisitionsand

divestmentsof160employees• Anincreaseof1,660employeesdueto

newhiresandseasonalactivity.

Cash flowsOperating activities in Q3 2011 resultedin a cash inflow of €409 million (2010:€378million).Thechangeisduetoaneteffectof:• Lowerprofitfromcontinuingoperations• Lowercashflowsfromoperatingworking

capital• Lowerpaymentsrelatedtoprovisions• Lowerpaymentsfortaxandinterest.

Compared to 2010, year-to-date changes inworkingcapitalaremainlydueto:• Ahigherautonomousincreaseinoperating

workingcapital• Fairvaluechangesandcashsettlementsfor

foreigncurrencyhedgingactivities.

Invested capital

in€ millions September30,2010

December31,2010 September 30, 2011

Tradereceivables 2,269 2,101 2,432

Inventories 1,621 1,678 1,889

Tradepayables (1,699) (1,763) (1,888)

Operating working capital in Business Areas 2,191 2,016 2,433

Otherworkingcapitalitems (1,055) (1,203) (1,128)

Non-currentassets 12,327 12,669 12,647

Lessinvestmentsinassociatesandjointventures (190) (175) (197)

Deferredtaxliabilities (596) (589) (561)

Invested capital 12,677 12,718 13,194

Operating working capital

in€ millions,%ofrevenue September30,2010 December31,2010 September 30, 2011

DecorativePaints 710 12.9 651 14.3 848 14.8

PerformanceCoatings 787 15.9 714 14.4 853 16.5

SpecialtyChemicals 694 13.6 651 12.9 732 13.6

Total 2,191 14.1 2,016 13.9 2,433 14.9


Medium-term ambitionsWehavetheaspirationtobetheworld’sleadingCoatings and Specialty Chemicals company.Our medium-term ambitions are to grow to€20 billion revenue, increase EBITDA eachyear while maintaining a 13 to 15 percentmargin,reduceOWCpercentofrevenueyear-on-yearby0.5percenttowardsa12percentlevel,andpayastabletorisingdividend.

The sustainability ambitions are to remaina top three leader in our industry, to be topquartile in our peer group in terms of safetyperformance,diversity,employeeengagementand development, and eco-efficiencyimprovementrates.

Amsterdam, October 20, 2011The Board of management

Net debt Net debt increased from €936 million atyear-end2010to€1,595millionattheendofQ3,mainlydueto:• Operatingcashinflowof€55million• Capitalexpendituresof€452million• Paymentsofdividendof€282million

InSeptember2011,werenewedourfiveyearmulti-currency syndicated revolving creditfacilityfor€1.8billion(previously:€1.5billion).

Condensed consolidated statement of cash flows3rdquarter January-September2010 2011 in € millions 2010 2011

1,472 1,194 Cash and cash equivalents at beginning of period 1,919 2,683

Adjustments to reconcile earnings to cash generated from operating activities

239 166 Profitfortheperiodfromcontinuingoperations 600 587

176 157 Amortization,depreciationandimpairments 474 460

105 41 Changesinworkingcapital (182) (553)

(128) (27) Changesinprovisions (631) (455)

(14) 72 Otherchanges (17) 16

378 409 Net cash from operating activities 244 55

(109) (158) Capitalexpenditures (336) (452)

23 5 Acquisitionsanddivestmentsnetofcashacquired (4) 29

50 3 Otherchanges 54 6

(36) (150) Net cash from investing activities (286) (417)

(80) – Changesfromborrowings (29) (550)

(24) (10) Dividends (306) (282)

3 (3) Otherchanges 6 7

(101) (13) Net cash from financing activities (329) (825)

241 246 Net cash used for continuing operations (371) (1,187)

(1) (7) Cashflowsfromdiscontinuedoperations – 4

240 239 Net change in cash and cash equivalents of total operations (371) (1,183)

(82) 20 Effectofexchangeratechangesoncashandcashequivalents 82 (47)

1,630 1,453 Cash and cash equivalents at September 30 1,630 1,453


Quarterly statistics

2010 2011

Q1 Q2 Q3 Q4 Fullyear in€ millions Q1 Q2 Q3 Year-to-date

Revenue

1,056 1,401 1,372 1,139 4,968 DecorativePaints 1,196 1,461 1,435 4,092

1,049 1,260 1,239 1,238 4,786 PerformanceCoatings 1,237 1,312 1,295 3,844

1,154 1,258 1,272 1,259 4,943 SpecialtyChemicals 1,351 1,350 1,349 4,050

(13) (12) (16) (16) (57) Otheractivities/eliminations (22) (26) (28) (76)

3,246 3,907 3,867 3,620 14,640 Total 3,762 4,097 4,051 11,910

EBITDA

82 205 198 63 548 DecorativePaints 90 191 148 429

143 191 166 147 647 PerformanceCoatings 143 170 157 470

207 257 254 221 939 SpecialtyChemicals 241 220 238 699


399 614 574 377 1,964 Total 437 551 507 1,495

12.3 15.7 14.8 10.4 13.4 EBITDA margin (in %) 11.6 13.4 12.5 12.6

Depreciation

(29) (32) (31) (32) (124) DecorativePaints (30) (30) (33) (93)

(19) (21) (20) (21) (81) PerformanceCoatings (21) (21) (21) (63)

(52) (53) (54) (55) (214) SpecialtyChemicals (55) (56) (56) (167)


(105) (110) (107) (113) (435) Total (108) (110) (114) (332)

Amortization


(6) (7) (6) (7) (26) PerformanceCoatings (7) (7) (7) (21)

(11) (12) (12) (11) (46) SpecialtyChemicals (12) (13) (13) (38)

– 1 (2) (1) (2) Otheractivities/eliminations – – (1) (1)

(36) (38) (39) (42) (155) Total (40) (40) (41) (121)

EBIT

34 153 148 8 343 DecorativePaints 39 141 95 275




258 466 428 222 1,374 Total 289 401 352 1,042

7.9 11.9 11.1 6.1 9.4 EBIT margin (in %) 7.7 9.8 8.7 8.7

Operating income

19 146 136 (26) 275 DecorativePaints 37 137 57 231




224 455 381 159 1,219 Total 277 428 301 1,006


20102011

Q1 Q2 Q3 Q4 Fullyear in€ millions Q1 Q2 Q3 Year-to-date

Incidentals per Business Area


(17) (10) (11) (15) (53) PerformanceCoatings (9) 13 (15) (11)

(18) 3 (24) (36) (75) SpecialtyChemicals (1) (4) – (5)

16 3 – 22 41 Otheractivities/eliminations – 22 2 24

(34) (11) (47) (63) (155) Total (12) 27 (51) (36)

Incidentals included in operating income

(17) (21) (53) (29) (120) Restructuringcosts (9) (20) (47) (76)

(9) 8 – (48) (49) Resultsrelatedtomajorlegal,antitrustandenvironmentalcases

1 21 2 24

1 1 15 16 33 Resultsonacquisitionsanddivestments

– 26 (5) 21

(9) 1 (9) (2) (19) Otherincidentalresults (4) – (1) (5)

(34) (11) (47) (63) (155) Total (12) 27 (51) (36)

Incidentals per line item

(16) (20) (37) (53) (126) Costofsales (4) (5) (25) (34)

(5) (3) (7) (28) (43) Sellingexpenses (3) (9) (20) (32)

(7) 1 (3) (4) (13) Generalandadministrativeexpenses

(1) (4) (1) (6)

– – (2) 1 (1) Researchanddevelopmentexpenses

– – (1) (1)

(6) 11 2 21 28 Otheroperatingincome/(expenses) (4) 45 (4) 37

(34) (11) (47) (63) (155) Total (12) 27 (51) (36)

Reconciliation net financing expense

12 12 16 11 51 Financingincome 14 17 14 45

(67) (72) (53) (48) (240) Financingexpenses (61) (63) (49) (173)

(55) (60) (37) (37) (189) Net interest on net debt (47) (46) (35) (128)

Other interest movements

(25) (26) (26) (23) (100) Financingexpensesrelatedtopensions

(16) (13) (15) (44)

(8) (29) (6) 4 (39) Interestonprovisions (5) (12) (13) (30)

– 2 (1) – 1 Otheritems 5 7 (7) 5

(33) (53) (33) (19) (138) Net other financing charges (16) (18) (35) (69)

(88) (113) (70) (56) (327) Net financing expenses (63) (64) (70) (197)

Quarterly net income analysis

5 7 9 4 25 Resultsfromassociatesandjointventures

7 8 9 24

(18) (26) (22) (17) (83) Profitattributabletonon-controllinginterests

(16) (22) (18) (56)

141 349 320 107 917 Profitbeforetax 221 372 240 833

(53) (76) (81) 40 (170) Incometax (73) (99) (74) (246)

88 273 239 147 747 Profitfortheperiodfromcontinuingoperations

148 273 166 587

38 22 25 (37) 19 Effectivetaxrate(in%) 33 27 31 30


2010 2011Q1 Q2 Q3 Q4 Fullyear Q1 Q2 Q3 Year-to-date

Earnings per share from continuing operations (in €)

0.30 1.06 0.93 0.55 2.85 Basic 0.57 1.07 0.63 2.27

0.30 1.05 0.92 0.55 2.83 Diluted 0.56 1.07 0.63 2.25

Earnings per share from discontinued operations (in €)

0.05 0.11 0.09 0.14 0.38 Basic (0.02) 0.07 – 0.06

0.05 0.11 0.09 0.14 0.38 Diluted (0.02) 0.07 – 0.06

Earnings per share from total operations (in €)

0.35 1.17 1.02 0.69 3.23 Basic 0.55 1.14 0.63 2.33

0.35 1.16 1.01 0.69 3.21 Diluted 0.54 1.14 0.63 2.31

Number of shares (in millions)

232.7 233.3 233.4 233.5 233.2 Weightedaveragenumberofshares

233.6 233.9 234.0 233.8

233.2 233.4 233.5 233.5 233.5 Numberofsharesatendofquarter 233.7 234.0 234.0 234.0

Adjusted earnings (in € millions)

141 349 320 107 917 Profitbeforetaxfromcontinuingoperations

221 372 240 833

34 11 47 63 155 Incidentalsreportedinoperatingincome

12 (27) 51 36

36 38 39 42 155 Amortizationofintangibleassets 40 40 41 121

(71) (97) (107) (4) (279) Adjustedincometax (88) (107) (100) (295)

(18) (26) (22) (17) (83) Non-controllinginterests (16) (22) (18) (56)

122 275 277 191 865 Adjusted net income for continuing operations

169 256 214 639

0.52 1.18 1.19 0.82 3.71 Adjusted earnings per share (in €)

0.72 1.09 0.91 2.73


Net debt isdefinedas long-termborrowingsplus short-term borrowings less cash andcashequivalents.

Operating income isdefined inaccordancewith IFRS and includes the relevantincidentalresults.

Operating ROI iscalculatedasEBITbeforeamortizationofthelasttwelvemonthsdividedby average invested capital excludingintangibleassets.

Operating working capital is defined asthesumof inventories,tradereceivablesandtradepayables in theBusinessAreas.Whenexpressedasaratio,operatingworkingcapitalis measured against four times lastquarterrevenue.

Revenueconsistsofsalesofgoods,services,androyaltyincome.

Safe Harbor StatementThisreportcontainsstatementswhichaddresssuch key issues as AkzoNobel’s growthstrategy, future financial results, marketpositions, product development, products inthe pipeline and product approvals. Suchstatements should be carefully considered,anditshouldbeunderstoodthatmanyfactorscouldcauseforecastandactualresultstodifferfromthesestatements.Thesefactorsinclude,but are not limited to, price fluctuations,currency fluctuations, developments in rawmaterial and personnel costs, pensions,physicalandenvironmentalrisks,legalissues,and legislative, fiscal, and other regulatorymeasures. Stated competitive positions arebasedonmanagementestimatessupportedbyinformationprovidedbyspecializedexternalagencies. For a more comprehensivediscussion of the risk factors affecting ourbusiness,pleaseseeourlatestAnnualReport.

Brands and trademarksInthisreport,referenceismadetobrandsandtrademarks owned by, or licensed to,AkzoNobel. Unauthorized use of these isstrictlyprohibited.

Accounting policies This interim financial report is in compliancewithIAS34"InterimFinancialReporting".Thisreportisunaudited.

Theaccountingprinciplesareasapplied inthe2010financialstatements.

SeasonalityRevenueandresults inDecorativePaintsareimpacted by seasonal influences. Revenueandprofitabilitytendtobehigherinthesecondand third quarter of the year as weatherconditions determine whether paints andcoatings can be applied. In PerformanceCoatings, revenue and profitability vary withbuilding patterns from original equipmentmanufacturers. In Specialty Chemicals, theFunctional Chemicals and the SurfaceChemistry businesses experience seasonalinfluences. Revenue and profitabilityare affectedbydevelopmentsintheagriculturalseasonandtendtobehigherinthefirsthalfoftheyear.

The "other" categoryIn the category "other" we report activitieswhicharenotallocatedtoaparticularbusinessarea. Corporate costs are the unallocatedcostsofourheadofficeandsharedservicescenter in the Netherlands. Pensions reflectspensioncostsafter theeliminationof interestcost (reported as financing expenses).Insurances are the results from our captiveinsurancecompanies.Otherincludesthecostof share-based compensation and companyprojects, the results of treasury and legacyoperationsaswellastheunallocatedcostofsomecountryorganizations.

GlossaryAdjusted earnings per share are the basicearningspersharefromcontinuingoperationsexcluding incidentals in operating income,amortization of intangible assets and tax ontheseadjustments.

Comprehensive income is the change inequity during a period resulting fromtransactionsandothereventsotherthanthosechanges resulting from transactions withshareholdersintheircapacityasshareholders.

Constant currencies information excludesforeigncurrency translationeffectsassumingforeign currency exchange rates have notchanged between the prior year period andthecurrentperiod.

EBIT isoperatingincomebeforeincidentals.

EBIT marginisEBITas percentageofrevenue.

EBITDA is EBIT before depreciation andamortization and refers to EBITDA beforeincidentals.

EBITDA margin isEBITDAas percentageofrevenue.

Emerging Europe: CzechRepublic,Estonia,Hungary, Poland, Romania, RussianFederation,Slovenia,TurkeyandUkraine.

Incidentalsarespecialchargesandbenefits,results on acquisitions and divestments,restructuring and impairment charges, andchargesrelatedtomajorlegal,anti-trust,andenvironmentalcases.EBITDAandEBITbeforeincidentalsarekey figuresweuse toassessourperformance,asthesefiguresbetterreflectthe underlying trends in the results of theactivities.

Interest coverage is operating incomedividedbynetinterestonnetdebt.In2010,weused thedefinitionoperating incomedividedby net financing expenses and includednon-cash itemssuchas interestonpensionsandprovisions.Wehavechangedthedefinitionstarting 2011. The 2010 figure has beenadjustedtoalignwiththe2011definition.

Invested capital is total assets (excludingcash and cash equivalents, investments inassociates, assetsheld for sale) lesscurrentincometaxpayable,deferredtaxliabilitiesandtradeandotherpayables.

Mature markets compriseofWesternEurope,theUS,Canada,JapanandOceania.

Moving average ROI iscalculatedasEBITofthe last twelve months divided by averageinvestedcapital.

Notes to the condensed financial statements

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www.akzonobel.com

AkzoNobelisthelargestglobalpaintsandcoatingscompanyandamajorproducerofspecialtychemicals.Wesupplyindustriesandconsumersworldwidewithinnovativeproductsandarepassionateaboutdevelopingsustainableanswersforourcustomers.OurportfolioincludeswellknownbrandssuchasDulux,Sikkens,InternationalandEka.HeadquarteredinAmsterdam,theNetherlands,weareaGlobalFortune500companyandareconsistentlyrankedasoneoftheleadersintheareaofsustainability.Withoperationsinmorethan80countries,our55,000peoplearoundtheworldarecommittedtoexcellenceanddeliveringTomorrow’sAnswersToday™.©2011AkzoNobelN.V.Allrightsreserved.“Tomorrow’sAnswersToday”isatrademarkofAkzoNobelN.V.

Akzo Nobel N.V.Strawinskylaan2555P.O.Box757301070ASAmsterdam,theNetherlandsTel:+31205027555Fax:+31205027666Internet:www.akzonobel.com

Formoreinformation:TheexplanatorysheetsusedduringthepressconferencecanbeviewedonAkzoNobel’scorporatewebsitewww.akzonobel.com

AkzoNobelCorporateCommunicationsTel:+31205027833Fax:+31205027604E-mail:[email protected]

AkzoNobelInvestorRelationsTel:+31205027854Fax:+31205027605E-mail:[email protected]

Financial calendarEx-dividenddateof2011interimdividendOctober24,2011Recorddateof2011interimdividendOctober26,2011Electionperiodcashorstockinterimdividend October27,2011- November18,2011Paymentdateofcashdividendanddeliveryofnewshares November24,2011Reportfor2011andthe4thquarter February16,2012Reportforthe1stquarter2012 April19,2012AnnualGeneralMeeting April23,2012Reportforthe2ndquarter2012 July19,2012Reportforthe3rdquarter2012 October18,2012

2011… · akzonobel i report for the third quarter of 2011 3 operating roi % moving average roi %...

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