Dulux owner AkzoNobel plans shake-up as profits soar
AkzoNobel has beaten expectations with record profits and unveiled plans to overhaul the business as it continues to bat away a takeover attempt from a US rival.
The Dulux paint maker chalked up a 13% rise in earnings to 376 million euros (£314 million) in the first quarter of this year, with revenues climbing 7% to 3.7 billion euros (£3.1 billion) over the period.
The announcement came as the Dutch firm said it would return 1.6 billion euros (£1.3 billion) to shareholders in 2017 through a new strategy that will lead to the creation of two separate firms by hiving off its Specialty Chemicals business from its paints and coatings arm.
AkzoNobel , which employs 3,000 staff across the UK, is hoping the new plan will win the favour of investors left disgruntled by the firm's decision to snub talks with PPG Industries following its second takeover tilt worth 22.4 billion euro (£19.5 billion).
Maelys Castella, AkzoNobel's chief financial officer, said the company was committed to increasing returns to shareholders and had launched a 150 million euro (£125 million) share repurchase plan during the first quarter.
She said: " Our record performance continued this quarter, showing the substantial growth momentum we have across the business.
"Significant progress continues across all our business areas, reflecting both our strong customer focus and great portfolio of brand."
The company also hiked its full-year outlook, with earnings now expected to be 100 million euro (£84 million) higher than 2016.
Focusing on the new strategy, chief executive Ton Buchner said: "Our commitment to substantial shareholder returns reinforces our belief that the plan we are outlining today will create a step-change in value creation, generating significant shareholder value in the short, medium and long term.
"It will be delivered at pace, with a clear timeline and is in the best interest of all stakeholders."
In an open letter on Monday, Pittsburgh-based chemicals manufacturer PPG ramped up the pressure on AkzoNobel, claiming its vision to stay independent was risky and would create less value than if the two companies combined.
It follows calls from a ctivist investor Elliott Advisor, which holds more than 3% of the Dutch firm, for an extraordinary general meeting (EGM) where investors can vote to remove AkzoNobel chairman Antony Burgmans.
Known for its strong-arm tactics, Elliott has previously warned it would attempt to oust AkzoNobel's managers if the company refused to commence talks with PPG.
The Dutch company rejected the request for the EGM earlier this month in a bullish response that saw it accuse Elliott Advisors of sharing ''price sensitive information''.
The Polycell manufacturer reported the investment company to the Dutch Authority for the Financial Markets (AFM) and urged Elliott to outline its relationship with PPG Industries.
Elliott and other shareholders, including Columbia Threadneedle and Henderson, have urged the paint maker to engage with PPG, but AzkoNobel has said the offer undervalues the company.
AkzoNobel announced plans earlier this year to build a 12.6 million euro (£10.7 million) innovation hub near Gateshead, safeguarding 270 jobs.
The firm is also looking to launch a 110 million euro (£93.7 million) Dulux paint factory in Ashington, Northumberland.