Dutch chemical group Akzo Nobel NV has said the US and European economic slowdown was starting to bite, hitting shares even as it raised its target for cost savings from the takeover of Britain’s ICI, reports Reuters.

“The economic slowdown continues to be more evident in our retail businesses in the US and Europe and, as indicated in 2007, within performance coatings in our industrial coatings business,” Akzo told shareholders at its annual meeting.
Rival US paint makers like PPG Industries have been hit by the sagging US housing market and weakening global economy, the news agency said.
“The comments were not very hopeful,” Petercam analyst Jan van de Bossche said. “We have heard some worries from PPG Industries and Sherwin-Williams and now Akzo has joined them.”
Akzo, the world’s biggest paints maker known for its Dulux and Sikkens brands, said it was still confident it would outgrow its markets and further improve the bottom line.
It said its marine and protective coatings continued to perform strongly, while specialty chemicals was also doing well despite higher energy costs.
Akzo also said it saw cost savings from its ICI acquisition at 340 million euros ($538.6 million), up from an initial estimate of 280 million, with 85 per cent of savings expected to be realised by 2010. Four of six analysts surveyed by Reuters had expected Akzo to raise its estimate for yearly post-acquisition gains, ranging from 300 million to 400 million euros.
“The new outlook was at the lower end of my expectations and it is a disappointment that there is no change in the timeline Akzo has indicated. Some of the savings could have been brought forward,” Van den Bossche said.
Akzo finalised its purchase of ICI for 8 billion pounds ($15.8 billion) in January to give it a market-leading position in paint and allow it to retain its lead in industrial coatings, under threat from PPG Industries, which has bought SigmaKalon.
Akzo said it expected to save 180 million euros from its decorative paints unit, 85 million euros from corporate savings and 75 million euros from procurement costs. Other non-cost related and one-time synergies remained at 375 million euros.
The combined Akzo-ICI businesses had pro forma revenue of around 14.4 billion euros in 2007, earnings before interest, taxes, depreciation and amortisation (EBITDA) of 1.9 billion and an EBITDA margin of 12.9 per cent.
Excluding ICI, Akzo’s 2007 EBITDA margin was 10.8 per cent.
Akzo said ICI will be discontinued as a corporate name as a study showed that the Akzo Nobel brand was stronger. Brand names such as the Dulux and Glidden will remain, it said.
Akzo shareholders approved a 3 billion euro ($4.75 billion) share buyback, which was announced last year. Akzo has already started with the buyback of the first 1 billion euros in March under an existing mandate. The shares will be cancelled.