For more analysis of AkzoNobel, please consult the credit rating exclusively available on investor platform ScopeOne. 

AkzoNobel will have to confront tight demand for raw materials in Europe for the remainder of the year. However, the situation looks less acute than in the US. Disruption from Hurricane Ida has contributed to the pressure pushing up prices of petrochemicals and commodity chemicals just as demand from some sectors for specialty chemicals, such as the auto sector, has fallen due to supply-chain bottlenecks.

In this context, the AkzoNobel benefits from its relatively modest reliance on the US market from where it derives only around 20% of revenues. AkzoNobel’s roots as a Dutch company partly explain why the bulk of its revenues are still generated in Europe. In addition, the company has considerable industry-wide price setting power. Prices for paints and coatings rose in the first quarter. AkzoNobel has aimed to raise prices further through 2021.

The company reported strong financial results in H1 2021. For the full year, management has said that leverage (net debt/EBITDA) should remain in the range of 1.0x to 2.0x. To achieve this, AkzoNobel could pause its current share buyback programme and put further ones on hold if trading conditions worsen. Under the current programme, the company plans to buy back up to EUR 1.0bn in stock until end-March next year.