Akzonobel Report 2015 OCHRE GOLD Color of the Year 2016

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Akzonobel Report 2015 OCHRE GOLD Color of the Year 2016 AkzoNobel Report 2015 Report15 OCHRE GOLD Color of the Year 2016 www.akzonobel.com/colorfutures Scan and explore Our Report 2015 is enriched with Layar, an app for smartphones. It brings paper to life and gives you access to extra digital content. Step 1 Download the free Layar app via the App Store or Android Market. Step 2 Open the app and hold your smartphone above any page with the Layar icon. Step 3 Touch “tap” to view. Step 4 The application will open on your phone. Enjoy! Interactive print Download the free Scan the page Discover Layar app interactive content Our Report 2015 is also available online (www.akzonobel.com/report) and as an iPad app (http://bit.ly/ANApp). The digital versions include integrated videos, an interactive chart generator, data comparison feature, animated charts and diagrams and search-as-you-type capabilities. AkzoNobel creates everyday essentials to make people’s lives more liveable and inspiring. As a leading global paints and coatings company and a major producer of specialty chemicals, we supply essential ingredients, essential protection and essential color to industries and consumers worldwide. Backed by a pioneering heritage, our innovative products and sustainable technologies are designed to meet the growing demands of our fast-changing planet, while making life easier. Headquartered in Amsterdam, the Netherlands, we have approximately 45,000 people in around 80 countries, while our portfolio includes well-known brands such as Dulux, Sikkens, International, Interpon and Eka. Consistently ranked as a leader in sustainability, we are dedicated to energizing cities and communities while creating a protected, colorful world where life is improved by what we do. Report15 AkzoNobel in 2015 at a glance Key regions (by revenue) North America Mature Europe Emerging Europe 17% 36% 7% €14.9 billion revenue €2.1 billion EBITDA €1.6 billion operating income €3.95 earnings per share 80+ countries 45,600 employees Latin America Other countries 10% 3% Our businesses Asia Pacific 27% Decorative Paints Performance Coatings Specialty Chemicals Whether our customers are professional We’re a leading supplier of performance As a major producer of specialty chemicals decorators or keen DIY-ers, they want great coatings with strong product technologies with leadership positions in many markets, paint that gives a great finish. We supply a and brands. Our high quality products we make sure that industries worldwide are large variety of quality products for every are used by customers across the world supplied with high quality ingredients and situation and surface, including paints, to protect and enhance everything from process aids for the manufacture of lacquers and varnishes. We also offer a ships, cars, aircraft, yachts and architectural life’s essentials. range of mixing machines, color concepts components (structural steel, building and training courses for the building and products, flooring) to consumer goods Main business operations: renovation industry, while our specialty (mobile devices, appliances, beverage cans, • Functional Chemicals (including Ethylene coatings for metal, wood and other critical furniture) and oil and gas facilities. and Sulfur Derivatives and Polymer building materials lead the market. Chemistry) Main business operations: • Industrial Chemicals Main business operations: • Automotive and Specialty Coatings • Pulp and Performance Chemicals • Decorative Paints Europe, • Marine and Protective Coatings • Surface Chemistry Middle East and Africa • Industrial and Powder Coatings • Decorative Paints Asia Brands include AkzoNobel, Bindzil, Biostyle, • Decorative Paints Latin America Brands include Awlgrip, International, Dissolvine, Ecosel, Eka, Expancel, Jozo and Interpon and Sikkens. Kromasil. Brands include Coral, Dulux, Flexa, Hammerite, Sadolin and Sikkens. Some of our customers: Airbus, Boeing, Some of our customers: BASF, Bayer, Dow, Bosch, Dell, IKEA, Philips, Samsung, Shell, GE, Huntsman, Momentive, Monsanto, P&G, Some of our customers: thousands of paint Toyota and Whirlpool. Shin-Etsu, Stora Enso and Unilever. distributors around the world and large retail outlets such as B&Q, Leroy Merlin and OBI. Decorative Paints 2015 revenue breakdown by Performance Coatings 2015 revenue breakdown Specialty Chemicals 2015 revenue breakdown end-user segment in % by end-user segment in % by end-user segment in % D A A D B C C A A B A Buildings and Infrastructure 100 A Buildings and Infrastructure 24 A Buildings and Infrastructure 19 B Transportation 0 B Transportation 40 B Transportation 6 C Consumer Goods 0 C Consumer Goods 22 C Consumer Goods 28 D Industrial 0 D Industrial 14 D Industrial 47 Featured content WE CREATE EVERYDAY ESSENTIALS TO MAKE PEOPLE’S LIVES MORE LIVEABLE AND INSPIRING Essential ingredients Essential protection Making the planet more Essential color sustainable 10 12 – 17 18 2 Contents AkzoNobel in 2015 at a glance Cover flap How AkzoNobel performed in 2015 4 How AkzoNobel created value in 2015 6 CEO statement 8 Our purpose 10 Strategic performance 25 Business performance 61 Leadership 99 Governance and compliance 115 Financial information 141 Sustainability statements 195 Index 254 Financial calendar 255 Glossary 256 Bringing energy and Using creativity and invention inspiration to urban areas to meet life’s challenges 20 22 How AkzoNobel performed in 2015 Financial targets 9.0% 14.0% <2.0 Return on sales (ROS) Return on investment (ROI) Net debt/EBITDA Achieve return on sales Achieve return on investment Maintain net debt/EBITDA (operating income/revenue) (operating income/average lower than 2.0 by 2015 of 9.0 percent by 2015 invested capital) of 14.0 percent by 2015 Financial progress 2015 10.6% 15.0% 0.6 4 How AkzoNobel performed in 2015 | AkzoNobel Report 2015 Sustainability targets 20% 25-30% Eco-premium solutions Carbon emissions Resource Efficiency Index Increase revenue from Reduce our carbon emissions Monitor gross margin divided by downstream eco-premium across the value chain by carbon emissions across the solutions to 20 percent of 25 to 30 percent per ton value chain, as an indicator for revenue by 2020 by 2020 (2012 base) resource efficiency Sustainability progress 2015 19% 3% 113 AkzoNobel Report 2015 | How AkzoNobel performed in 2015 5 How AkzoNobel created value in 2015 Economic value: Input Organization By bringing more value to our customers, €7.0 billion €14.9 billion €651 million investors, employees and society in general, group equity revenue capital expenditures we can better position ourselves for growth and achieve our strategic vision of leading market positions delivering €2.6 billion €1,573 million €9.8 billion leading performance. borrowings operating income invested capital at year-end We are actively working to reduce our We invested in 2015 to keep our facilities carbon footprint across the value chain €347 million €1,136 million in good shape, as well as expanding our – to improve our resource efficiency and research and development expenses cash flow from operations manufacturing capability. reduce our environmental footprint – as well as creating social value by developing our employees and being active in the communities where we operate. And by continuing to innovate in order to supply more sustainable products and solutions for our customers, we create economic, environmental and social value. Environmental value: Input All these initiatives contribute to our financial performance and ultimately lead to more 38% 11% 9.7 million tons economic value for our investors. renewable energy renewable raw materials as % upstream CO2(e) emissions of organic materials 95,000 TJ €0.7 billion energy use energy spend Social value: Input Organization Employee and supervised contractors 45,600 1.6 total reportable rate of injuries employees at year-end 2015 total reportable rate of injuries Target: <2.0 (2015) 16,400 2.4 2.3 1.8 number of volunteers for Community 1.6 Program projects (cumulative since 2005) 2012 2013 2014 2015 6 How AkzoNobel created value in 2015 | AkzoNobel Report 2015 Outcomes Revenue breakdown by Business Area Revenue breakdown by end-user segment in % in % €261 million 10.6% ROS income tax paid A D C A €281 million 15.0% ROI dividend paid C net debt B B 0.6 /EBITDA A Decorative Paints 27 A Buildings and Infrastructure 43 RD&I investments have resulted in B Performance Coatings 40 B Transportation 17 19 percent of revenue derived 19% C Specialty Chemicals 33 C Consumer Goods 18 from eco-premium solutions with of revenue from eco-premium solutions with D Industrial 22 customer benefits. customer benefits Organization Outcomes 3.8 million tons 155 kilotons 24.6 million 3% CO2(e) emissions own operations total waste own operations tons decrease CO2(e) per ton of sales from 2012 CO (e) emissions cradle-to-grave cradle-to-grave carbon footprint 2 23% 11.1 million 113 REI reduction in operational eco-efficiency in Resource Efficiency Index tons footprint (since 2009) downstream CO2(e) emissions Outcomes 19% €2.7 billion 4.03 2,385 female executives employee benefits employee engagement score Community Program projects (cumulative since 2005) 16% high growth markets executives AkzoNobel Report 2015 | How AkzoNobel created value in 2015 7 “I TAKE GREAT PRIDE IN THE FACT WE CONTINUED TO BE SUCCESSFUL DOING WHAT WE DO BEST” Scan and explore 8 CEO statement | AkzoNobel Report 2015 CEO statement As I look back on 2015, I take great pride in the fact we segments. New financial guidance for 2016-2018 has also agreement to buy sustainably generated steam from Dutch continued to be successful doing what we do best – creating been communicated (see the Strategic performance section). energy provider Eneco at our Delfzijl site. It will help reduce everyday essentials to make people’s lives more liveable our CO2 emissions by over 100,000 tons a year. and inspiring. This is the purpose that drives us. It sparks We have been relatively cautious with regard to acquisitions our creativity, gives us energy, enables us to deliver for our in recent years, choosing to concentrate on performance After launching in 2014, our global Human Cities initiative customers and, ultimately, generates value for our business.
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