AkzoNobel earnings for the third quarter of 2026 showed a sixth consecutive quarter of margin expansion as price increases offset weaker volumes. The paints and coatings company reported adjusted EBITDA of €388 million on October 21, while forecasting around €1.47 billion for the full year and advancing asset sales ahead of its proposed Axalta merger.
Key Takeaways
- Organic sales rose 2%, driven by 5% pricing despite lower volumes and an unfavorable sales mix.
- Adjusted EBITDA margin increased to 15.3%, but the reported operating loss widened.
- Southeast Asian paint-sale agreements are expected to support deleveraging; the Axalta merger remains subject to regulatory approvals.
Table of Contents
- AkzoNobel earnings separate pricing gains from demand
- Paints margins improve despite weaker volumes
- Cash generation faces transaction costs
- Annual outlook remains separate from Axalta plans
- Conclusion
AkzoNobel earnings separate pricing gains from demand
AkzoNobel’s third-quarter results announcement showed revenue of €2.538 billion, broadly flat against €2.547 billion a year earlier. Adjusted EBITDA increased 1% on a reported basis, or 4% at comparable scope and constant currencies.
The organic sales increase came from pricing rather than higher demand. Prices rose 5%, while volumes declined 2% and mix reduced growth by one percentage point. Changes in business scope reduced reported revenue by 5%, while foreign exchange added 3%.
Adjusted EBITDA margin rose 20 basis points to 15.3%. However, the reported operating loss widened to €73 million from €29 million, with operating income affected by the deconsolidation of Russian operations and the Pakistan divestment. The adjusted improvement therefore did not represent an improvement across all profit measures.
| Item | Details |
|---|---|
| Q3 net cash from operating activities | €187 million, compared with €331 million in Q3 2025 |
| Trade working capital | 15.7% of revenue, improving by 130 basis points year over year |
| Return on invested capital | Increased to 13.7% |
| Southeast Asian disposal scope | Just over €300 million in annual revenue; regional Coatings operations remain |
| Medium-term profitability target | Adjusted EBITDA margin above 16% |
Paints margins improve despite weaker volumes
Decorative Paints organic sales increased 1%, with 5% pricing offset by a 3% volume decline and a one-percentage-point negative mix effect. Its adjusted EBITDA margin nevertheless increased by 200 basis points to 19.4%. Coatings organic sales rose 3%, combining 5% pricing with 2% lower volumes.
Management described continued weakness in automotive and general construction markets. North American vehicle-refinish volumes remained at a trough, while aerospace delivered double-digit growth and data-center construction supported demand for protective coatings.
CFO Maarten de Vries said raw-material inflation was in the high single digits in the quarter, with a similar trend expected in the fourth quarter. Management’s fourth-quarter assumptions include flat volumes, pricing slightly ahead of raw-material inflation and planned operating-expense savings.
Cash generation faces transaction costs
Free cash flow totaled €119 million in the third quarter and €83 million for the first nine months, with the year-to-date figure weighed down by €69 million in transaction costs. Management expects full-year merger-related cash outflows of roughly €100 million.
Leverage stood at 2.1 times at quarter-end, close to the company’s target of around two times. Binding agreements to sell the Southeast Asian Decorative Paints businesses to Nippon Paint value those operations at €1.2 billion, or $1.35 billion. Expected net cash proceeds are around €900 million.
De Vries said the disposal proceeds would support faster deleveraging and a return to normal capital allocation. Management did not commit to a specific 2027 leverage ratio or an accelerated share-buyback timetable.
Annual outlook remains separate from Axalta plans
AkzoNobel expects full-year 2026 adjusted EBITDA of around €1.47 billion, based on year-end 2025 exchange rates and adjusted for divestments of its liquid coatings businesses in Asia. The outlook is on a standalone basis and excludes effects from the proposed Axalta merger.
The merger is expected to close in early 2027, subject to regulatory approvals. Management said roughly two-thirds of approvals had been secured and maintained its $600 million cost-synergy target despite planned regulatory divestments.
CEO Greg Poux-Guillaume said the synergy calculation had already allowed for likely remedies. Those planned disposals cover AkzoNobel’s European vehicle-refinish business and Axalta’s North American wood business; management expects around 90% of the cost synergies within three years of closing.
Conclusion
The next operating test is whether fourth-quarter pricing and cost savings can sustain margins with volumes expected to be flat. Separately, regulatory approvals and required divestments remain milestones toward the proposed Axalta merger’s expected early-2027 closing.
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