Annual Report 1978
Total Page:16
File Type:pdf, Size:1020Kb
Annual Report 1978 Contents The annual meeting of stockholders will be held at the RAI Congress Center, Europaplein, Amsterdam, on Page Tuesday, May 15, 1979, at 10 a.m. 2 Report of the supervisory council Agenda 3 Financial highlights Opening 4 Report of the board of management 2 Report of the board of management for the financial 4 General review year 1978 8 Results of operations 13 Financing and capital expenditures 3 Approval of the annual accounts and consideration 15 Personnel policy and social developments of the proposal, contained therein, to omit the 18 Research and engineering dividend 19 Safety and the environment 20 Man-made fibers 4 Determination of the number of members of the 24 Chemical products supervisory council; appointment of members of the 28 Coatings supervisory council 29 Pharmaceuticals 31 Consumer products 5 Appointment of a member of the board of 33 Miscellaneous products management 34 Management 6 Annual decision concerning issues as required by the London Stock Exchange* 36 Akzona, the North American member of the Akzo Group 7 Any other business 41 Financial statements * annually recurring agenda item in re compliance with the requirements of the 42 Consolidated financial statements of the London Stock Exchange concerning the listing of Akzo shares on that stock Akzo Group exchange 50 Effect of price rises on Group equity and income 52 Financial statements of Akzo N.V. 54 Auditors' report 55 Ten-year financial summary 60 Principal companies of the Akzo Group Akzo N.V. common stock is listed on the following stock exchanges: the Netherlands: Amsterdam West Germany: Frankfurt, Dusseldorf and West Berlin Belgium: Brussels and Antwerp United Kingdom: London France: Paris Norway: Oslo Austria: Vienna Switzerland: Zurich, Basel and Geneva Akzo Translation Akzo N.V., 82 IJssellaan 6800 LS Arnhem, the Netherlands The symbol ® indicates trademarks registered in one or Phone (085) 65 19 11 Telex 45438 more countries. Supervisory council and board of management Supervisory council Akzo J.R.M. van den Brink, chairman Akzo is an international group of companies with 160 G. Kraijenhoff, deputy chairman operations in 50 countries. The Group employs more Y. Scholten, deputy chairman than 83,000 people, and its invested capital totals S.C. Bakkenist Hfl 6 billion. In 1978, sales aggregated Hfl 10.7 billion. P.M.H. van Boven The Group was formed in 1969 through a merger of A. Herrhausen AKU and Koninklijke lout-Organon, both of which were H.L. Merkle operating internationally. The products comprise H.J. Schlange-Sch6ningen man-made fibers, salt, commodity and specialty Mrs. K. Schudel-van lwanenberg chemicals, coatings, pharmaceuticals, consumer W.F.G.L. Starrenburg products, and miscellaneous industrial products. J. de Vries Akzo's sales are realized by seven organizational O. Wolff von Amerongen entities. The divisions, Enka (mainly man-made fibers), Akzo lout Chemie, Akzo Chemie, Akzo Coatings, Akzo Board of management Pharma, and Akzo Consumenten Produkten, operate on a worldwide scale. In North America our interests are A.G. van den Bos, president incorporated in the Group company Akzona. AA Loudon, deputy president In some countries a national organization exists which JA Wolhoff, deputy president renders services to local Akzo companies. H. van Doodewaerd A. van Driel In a world which is growing ever more complex, Akzo H. Kramers recognizes the importance of good communications H.J. Kruisinga regarding its policies and activities with those who are J. Veldman directly or indirectly involved with the Group. It accepts H.J.J. van der Werf the codes of conduct for companies established by the M.D. Westermann Organization for Economic Cooperation and H.G. lempelin Development (OECD) and the International Labor Organization (lLD). Adviser: W.K.N. Schmelzer Secretary J.P. Huges Photographs The photographs in this report show some of our employees in their daily work. These men and women are representative of all those who through their dedication and skills in large measure determine the Group's resilience and performance. Photographs marked» are by Paul M.M. Hoedemaekers. Report of the supervisory council 2 Changes in supervisory council and board of J. de Vries and O. Wolff von Amerongen, whose terms management of office are due to end, are eligible for re-appointment. A proposal will be submitted to stockholders to fix the At the annual meeting of stockholders held May 10, council's membership at eleven. 1978, Mrs. K. Schudel-van Zwanenberg, F.H. Ulrich and Having reached the mandatory retirement age, L. Vaubel, whose terms of office had ended, resigned H. Kramers will resign on May 31, 1979, as member of from the supervisory council. the board of management especially responsible for Mrs. Schudel-van Zwanenberg was re-appointed. research and technological development. At the annual Mr. Ulrich and Mr. Vaubel had announced that they were meeting, stockholders will be asked to appoint not available for re-appointment. Their numerous M.W. Geerlings to the board with effect from June 1, valuable services to the Company were gratefully 1979. acknowledged. At the meeting, stockholders adopted the proposal to Supervision fix the council's membership at twelve and appointed to the council A. Herrhausen, G. Kraijenhoff and The supervisory council regularly obtained oral and H.J. Schlange-Sch6ningen. written reports on the progress and results of the Effective May 10, 1978, the supervisory council restructuring measures in some sectors of the Group. decided to appoint Mr. Kraijenhoff a deputy chairman of It is gratifying that, due in part to the effect of these the council, in addition to Y. Scholten. measures, it was possible to conclude 1978 with a net result that was positive, if still insufficient. We agree with Simultaneously with their appointment to the the board of management that it is essential to continue supervisory council, Mr. Kraijenhoff and energetically the efforts to improve earnings perfor- Mr. Schlange-Sch6ningen resigned, respectively, as mance. We support the board in their endeavors to president and as deputy president of the board of restrict the social consequences of the requisite management. The meeting expressed great appreciation measures as much as possible. for their contributions. Mr. Kraijenhoff completed a distinguished career of We herewith submit to you the financial statements for almost twenty years, during which he made a major the financial year 1978, comprising the balance sheet contribution to the development of Koninklijke and statement of income, with notes, inclusive of the Zwanenberg-Organon, of Koninklijke Zout-Organon and, consolidated statements of the Group, prepared by the after 1969, of Akzo. board of management. These financial statements have The name of Mr. Schlange-Sch6ningen is associated been examined by Klynveld Kraayenhof & Co., with the valuable services he rendered to the Group, and Registeraccountants. Their report appears on page 54. especially with the competent and stimulating way in We approve these financial statements, in which the which he contributed to the development of our net income of Hfl 24.3 million has been reserved under man-made fiber operations, first with Enka and then in a article 38, paragraph 2, of the articles of association. coordinating position with the Company. We propose that you also approve the financial statements, thus discharging the responsibility of the Effective May 10, 1978, the supervisory council members of the board of management for their conduct appointed A.G. van den Bos president of the board of of the business and of the members of the supervisory management and AA Loudon a deputy president, in council for their supervision. addition to JA Wolhoff. The president and the two deputy presidents form the executive committee. The meeting further appointed M.D. Westermann a member of the board of management; Mr. Westermann Arnhem, March 29, 1979 is president of the board of Akzo Chemie. For the supervisory council, At the annual meeting of stockholders on May 15, 1979, W.F.G.L. Starrenburg will resign from the J.R.M. van den Brink, supervisory council, having reached the age limit. chairman Financial highlights on an historical-cost basis 1978 1977 3 in Hfl million sales 10,666 10A33 value added 3,905 3,620 operating income 421 240 net income (loss) before extraordinary items 49 (52) net income (loss) after extraordinary items 24 (166) funds from operations (see page 44) 659 539 property, plant and equipment capital expenditures 434 409 depreciation 486 494 stockholders' equity 2,231 2,325 per common share of Hfl 20 par value, in Hfl net income (loss) before extraordinary items 1.66 (1.75) net income (loss) after extraordinary items 0.82 (5.63) dividend stockholders' equity 75.35 78.52 on a current-value basis (see pages 50 and 51) in Hfl million operating income 269 104 net income (loss) before extraordinary items (31) (126) stockholders' equity 2,803 2,870 per common share of Hfl 20 par value, in Hfl net income (loss) before extraordinary items (1.05) (4.26) stockholders' equity 94.69 96.95 number of employees 83,200 84,400 Report of the board of management General review 4 Encouraging recovery: net income Hfl 24 million Difficult market situation We are gratified that after having suffered losses for In the early seventies, the expansion of capacity in the three years in succession the Group was able to restore man-made fiber and chemical industries was based on profitability in the year under review. Although, at forecasts of higher market growth than has actually Hfl 24 million, net income is modest, this does not occurred so far. This resulted in overcapacities, which diminish our satisfaction over the Group's achievement. caused under-utilization losses and downward pressure The increase in net income before extraordinary items on prices.