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Capital Markets Day: On track to deliver 2015 targets

March 11, 2014

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2 Capital Markets Day 2014

1. Introduction – Ton Büchner

2. Decorative Paints – Ruud Joosten

3. Performance Coatings – Conrad Keijzer

Coffee break

4. Specialty Chemicals – Werner Fuhrmann

5. Financial Topics – Keith Nichols

6. Conclusion – Ton Büchner

Questions

Agenda


Introduction Ton Büchner

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Our proposition: Leading market

positions delivering leading performance


AkzoNobel has gone through a significant amount of

strategic change over the past five years

Today, the company has

• Excellent portfolio of businesses

• Good long term growth potential on the basis of end-user segment growth

• Strong positions in high growth markets (44% of revenue)

• Leadership positions in many markets

• Clear leader in sustainability

• Track record of delivering sustainable innovations and products

• Strong brands, both in consumer and industrial markets

Clear focus to deliver on our significant potential

• Improved returns and cash flow

• Leveraging scale

• Simplification and standardization

• Continued innovation

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8.9 9.6

14.0

0

4

8

12

16

2012 2013 2015

Return on sales

(Operating income/revenue)

%

5

Return on investment

(Operating income/average

12 months invested capital)

%

Capital Markets Day 2014

Net debt/EBITDA

x

Realistic 2015 financial targets focused on quality of earnings and value creation

On track to achieve 2015 targets

* 2012 excluding impairment (€2.1 billion) and after IAS19

5.9 6.6

9.0

0

4

8

12

2012 2013 2015

1.4 1.0

2.0

0

1

2

3

2012 2013 2015

* * <

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AkzoNobel strategy introduced in 2013

• Organic growth

• Operational excellence

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Strategy on a page

Strategic focus areas

• Care for the customer

• Reduction of product

and process complexity

• Cash and return on

investment

• Embedded safety

and sustainability

• Diverse and inclusive

talent development

Processes

• People, process and

product safety

• Operational

control cycle

• Continuous

improvement

• Innovation

• Procurement

• Talent management

Actions

• Deliver dependably

• Grow organically

• Innovate

• Simplify

• Standardize

• Continuously

improve

End-user segments

• Buildings and

Infrastructure

• Transportation

• Consumer Goods

• Industrial

7

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AkzoNobel today

8

• Revenue €14.6 billion

• 49,560 employees

• 44% of revenue from high growth markets

• Major producer of Paints, Coatings and

Specialty Chemicals

• Leadership positions in many markets

24%

28%

36%

12% PerformanceCoatings

DecorativePaints

SpecialtyChemicals

Other

43%

33%

24%

38%

28%

34%

Revenue by

Business Area

Operating income

by Business Area

Invested capital by

Business Area

6.6%

Return on sales

(operating income/revenue)

9.6%




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~44% of revenues

New Build Projects

Maintenance, Renovation & Repair

Building Products & Components

~16% of revenues

Automotive OEM, Parts and Assembly

Automotive Repair

Marine and Air Transport

~16% of revenues

Consumer Durables

Consumer Packaged Goods

~24% of revenues

Natural Resource and Energy Industries

Process Industries

9

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By end-user segment

2013, 100% = €80 billion


The global paints and coatings market is around €80 billion

By market sector

2013, 100% = €80 billion

Decorative

Paints

(42%)

Automotive

OEM

Protective

Vehicle

Refinish

Performance

Coatings

(58%)

General

Industrial

Powder

Wood

Marine

Coil Packaging

Aerospace

Yacht

Buildings and

Infrastructure

Transportation

Consumer

Goods

Industrial

10

Specialty

Finishes

Source: Orr & Boss; management analysis

Auto OEM excludes Automotive Plastics. Specialty Finishes includes both Auto and Non-Auto plastics


Consumer confidence levels in parts of Europe are rising while some emerging markets show decline

11 Source: Nielsen

115 111 110 95 94 85 84 77

51

0

20

40

60

80

100

120

India China Brazil Germany US Sweden UK Netherlands France

Consumer confidence, Q4 2013

Figures below 100 indicate some degree of pessimism

Upward trend compared to Q4 2012

Downward trend compared to Q4 2012

The majority of global manufacturing output is anticipating expansion


*Bubble size=manufacturing output, 2014e (US$bn: 2005 prices)

Sources: Oxford Economics, HSBC [China], Markit [US]

Purchase Managers’ Index (PMI)*

February 2014

China

Brazil

India

Germany

Japan

US

40

50

60

Ma

nu

factu

rin

g P

MI

Russia Australia

France

South Korea

Indonesia

Italy

Mexico

Spain

Canada

Turkey

Sweden

Taiwan Netherlands

UK

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Although coming down, growth rates in high growth markets remain attractive

*Source: EIU: GDP year on year growth in local currency at constant prices

Currently 44% of revenues from high growth markets

• High growth markets remain

relatively high growth and

our focus for investment

• In general, growth

expectations have fallen

since we published the

strategy in 2013

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High growth markets are 44% of revenue and their importance will increase

% of 2013 revenue

38%

Mature Europe

25%

Asia Pacific

3%

Other regions

11%

Latin America

15%

North America 8%

Emerging Europe

Share of revenues from high growth markets will increase over time

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2013 showed challenging market

conditions in most end-user segments

and geographical end markets

Key developments in 2013:

• Results of Performance Improvement program

(€545 millions savings) delivered one year ahead

of schedule and exceeded targets

• Divesting non-strategic and weaker market

positions

• New strategy, targets, team, remuneration and

company values

• All actions done in difficult market conditions with

currency headwinds

2014 market conditions are

not expected to improve significantly

• Focus will be on:

– Organic growth

– Operating income

– Return on capital

– Operating cash flow

• Continue building on our end-user segments

and strong high growth market positions

• Continue to address operational improvements

and a focus on sustainability

• Drive cultural change by continuing company

values roll-out

Economic environment remains fragile,

while improvement actions are ongoing

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0%

100%


Profit and loss breakdown*

% of total

In aggregate variable costs represent 53% of revenue

Decorative

Paints

Performance

Coatings

Specialty

Chemicals

AkzoNobel

Raw materials, energy and other variable costs

Fixed production costs

Selling, advertising, administration, R&D costs

EBIT margin

* Rounded percentages 16

• AkzoNobel is well positioned for

economic recovery

• Variable costs represent

53% of revenue,

down from 54% in 2012

• Decorative Paints is more

driven by personnel costs

in the distribution network, while

Specialty Chemicals has more

production costs


We are actively addressing all components of operating expenses

* All costs in € billion for 2013

Operating expenses

General &

Administrative Selling Expenses

Research,

Development &

Innovation

Global Business

Services Commercial Excellence Initiatives

Drives organic growth

€ 1.4 € 3.0 € 0.4

€ 4.7

Operating expense

components

Addressed by

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• Restructuring activities to continue into 2014, moving into continuous improvement

which will enable us to achieve the 2015 targets

– 2014 restructuring charges expected to total at least €250 million and will be more evenly spread over

the year and Q1 2014 will be higher than the same quarter last year

– Thereafter, more normalized levels of restructuring costs, around 1% of revenues

Ongoing initiatives in 2014:

Drive towards continuous improvement and commercial excellence

Capital Markets Day 2014 18

Commercial Excellence

• Delivering quality products and innovations to our customers at a lower cost

to serve

− Improve customer satisfaction

− Drive organic growth

− Improve margins

− Sales and marketing productivity

Global Business Services

• Streamlining corporate functions (Finance, HR, IM et cetera) by introducing

a new Global Business Services function responsible for implementing

standardized core functional processes throughout the organization

• Centers of Excellence, Shared Service Centers, Business Partnering

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Sustainability is business; business is sustainability

(Resource Efficiency Index)

A new indicator measuring how efficiently we generate value

(expressed as gross profit divided by cradle-to-grave carbon footprint)

of revenue by 2020 from products that are more sustainable for

our customers than the products of our competitors

more efficient resource and energy use across the entire value chain

by 2020 (measured by carbon footprint reduction)

AkzoNobel ranked #1 again in the Dow Jones Sustainability Index for the Materials Industry group

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AkzoNobel values drive cultural change

Leading performance; gaining momentum

• ROS below peers

• Not earning our cost

of capital

• Inadequate free cash

flow

• Operating expenses

too high

• Not leveraging scale

Historical

issues

DP

7.5%

12%

PC

12%

25%

SC

12%

15%

Vision

& Strategy

2015 Targets

& Incentives

Culture

& Values

• Organic growth

• Operational

excellence

• ROS 9%

• ROI 14%

• Operating income -

not adjusted EBITDA

• CO₂ & Eco-premium

products

• Cash flow

• Incentives aligned

• Customer Focused

• Deliver on

Commitments

• Passion for

Excellence

• Winning Together

Business Area

Strategies

Business Area

Expected Outcomes

ROS

ROI


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Introducing our three new Business Area Executive Committee members

Ruud Joosten

Decorative Paints

Conrad Keijzer

Performance Coatings

Werner Fuhrmann

Specialty Chemicals


Decorative Paints Ruud Joosten

• Business at a glance

• Decorative Paints market

• AkzoNobel in Decorative Paints

• Strategy

• Key actions and continuous improvement

• Financials

• Summary and conclusions

Agenda





• Strategy


• Financials


Business at a glance


49%

25%

14%

8% 4%

Mature Europe

Asia Pacific

Latin America

Emerging Europe

Other regions

Decorative Paints business at a glance

26 Capital Markets Day 2014 * Excludes a €198 million gain on the sale of Building Adhesives

Revenue by geographic spread

• We are the global leader in size in the attractive global

Decorative Paints market

• We are pursuing a vision of becoming the leading

global Decorative Paints company in size and performance

• Strategic priorities:

– Fix Europe

– Grow profitably in high-growth markets

€ million 2013

Revenue 4,174

EBITDA 362

Operating income 200*

Return on sales 4.8%*

Return on investment 6.9%*

Employees 16,240

Revenue by end-user

sub-segment

Decorative Paints key figures Key messages

84%

16% Maintenance,renovation and repair

New build projects




• Strategy


• Financials


Decorative Paints market


0,0

0,2

0,4

0,6

0,8

1,0

1,2

2013 2014 2015 2016 2017

13% p.a.

6% p.a.

11% p.a.

10% p.a.

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

2013 2014 2015 2016 2017

Th

ou

sa

nd

s


Total market maintenance and repair

$ trillion, output

New build construction

$ trillion, output

The outlook for Buildings and Infrastructure is positive

Source: IHS / Construction IC , January, 2014

13% p.a.

5% p.a.

12% p.a.

9% p.a

Europe China US Brazil, Russia, India

50

75

100

125

150

2009 2010 2011 2012 2013 2014 2015

Belgium France Netherlands Spain UK


Housing transactions

Indexed to 2013

Source: Oxford Economics

European housing markets show signs of ‘bottoming out’

0

10

20

30

40

50

2013 2014 2015

EMEA North America Latin America Asia Pacific


• Used for protection

as well as decoration

• Consumption per capita

driven primarily by the

frequency of repainting

• Demand growth

closely correlated

with GDP growth,

consumer expectations

• In high-growth markets,

tends to outstrip GDP growth

by up to 1.5x

Decorative Paints sales

€ billion

The global Decorative Paints market is attractive in terms of size and growth

Source: Orr & Boss 2012; AkzoNobel analysis


2010 2015

Paint market growth*

$ billion

0%

25%

50%

75%

100%

2010 2015

Economy Mid-market Premium

Paint market composition*

% of total, by value

High-growth markets are growing well and are increasingly ‘trading up’

Source: Orr & Boss, management estimates.

* includes China, India, other emerging Asia-Pacific, Brazil, Argentina, other emerging Latin America, Middle East and Africa

• Paint markets in high-growth markets are still showing significant opportunities for growth

• Spending power of the middle class in high-growth markets is increasing

8% p.a.




• Strategy


• Financials


AkzoNobel in Decorative Paints


We are the largest player globally in Decorative Paints


0

1

2

3

4

5

Decorative Paints revenue

€ billion, 2013 unless noted

* 2012 data

Source: Annual Reports; AkzoNobel analysis

In Decorative Paints we hold strong market positions across all regions

34

Geographic area Geographic size

(€ billion)

AkzoNobel

position

Europe* 12.2 1

South East Asia and Pacific 1.7 1

China and North Asia 6.4 2

Latin America 2.5 2

India and South Asia 2.8 3

* Europe includes Africa and Middle East Capital Markets Day 2014

We are strong in the premium segment, but also compete successfully elsewhere


AkzoNobel Decorative Paints revenue by segment

% of revenue

0%

25%

50%

75%

100%

Brazil China Indonesia South Africa

Economy Mid-market Premium


• Our well-known brands are one of our

key competitive advantages

• We have a number of powerful, relevant

brands occupying a number of positions

across different markets (consumer,

professional, and other such as

woodcare)

• Where possible, we have leveraged our

scale and created a single global identity

• We have rationalized our brand portfolio –

concentrating our investment behind

fewer, bigger, better brands

We have very strong brands linked by a global approach to branding

Co

ns

um

er

Pro

fes

sio

na

l

Oth

er

Revenue by channel

* Excludes Building Adhesives

In Europe, we are the clear regional market share leader

37 Capital Markets Day 2014 37

• Clear regional market share leader

• Strong brand portfolio

• Strong multi-national relationships with key large scale outlets

• Restructuring activities a major focus

• Timing of return to growth in mature Europe still uncertain

€ billion 2013

Market size where AkzoNobel is represented 12.2

AkzoNobel revenue* 2.4

Employees ~9,300

Owned stores ~510

Revenue by region

Europe, Middle East, Africa

(EMEA)

23%

50%

27% Large-scale outlets

Small-scale outlets

Own stores

35%

25%

21%

19% North

West

South

East and Africa

Key messages

• Strong positions in China, Indonesia, Vietnam

• Strong position in premium in India

• Strong recent organic growth trajectory, based in large part on

significant distribution expansion

• Strong financial performance

• Strong brand presence

€ billion 2013


AkzoNobel revenue 1.1

Employees ~4,700

Controlled, franchised or owned stores ~4,000

Asia Key messages

20%

80%

Project (Professional)

Trade (LSO and SSO)

Revenue by channel

53%

26%

21% China andNorth Asia

Southeast Asiaand Pacific

India andSouth Asia

In Asia, we have strong positions in the main high-growth markets


Revenue by region

• Strong positions in Brazil, Argentina, Uruguay

• Successful viral marketing campaign ‘Tudo de Cor’

• Strong mid-tier position in Brazil

• Strong innovation record

€ billion 2013


AkzoNobel revenue 0.6

Employees ~1,800

Latin America Key messages

Revenue by channel

12%

60%

28% Home centers

Paint shops

Other68%

21%

11% Brazil

Argentina

Other

In Latin America, we have strong positions where we compete


Revenue by region


Our manufacturing footprint is changing to address our market environment

Existing Plants

Plants under construction

Megaplants


Capital expenditure supporting growth and manufacturing footprint optimization

• Rationalization of manufacturing footprint started as part of

Performance Improvement Program and this will continue

into 2014 and 2015

• Focus on megaplants to produce large volume products

for a particular region, supported by local sites that

produce more complex portfolios

– Enable growth, enhanced delivery and stock reduction

– Automation to drive cost effectiveness

• Cementing our footprint in high-growth markets

– Gwalior (India) and Guangzhou (China) opened in 2013

• 2013 capital expenditure was €171 million, or 4.1% of revenues

(2012: €206 million, 6.6% of revenues)

• Investment projects for 2014/2015 include:

– Ashington (UK)

– Chengdu (China)

Accomplishments to date

42 Capital Markets Day 2014 * Related to Performance Improvement Program

Area

Beginning 2008

End 2013

Cost reductions* n/a > 200 million

Number of FTEs 25,800 16,240

Brands 100 59

SKUs >90,000 69,000

Factories 80 45

Warehouses 160 135

ERP systems >40 1

0

1

2

3

4


• Titanium dioxide (TiO2) accounts for roughly

20% of total Decorative Paints

raw material spend

• Pricing of TiO2 has been volatile

in recent years, but stabilized during 2013

• We are able to source TiO2 from

suppliers across the globe

including China

Titanium dioxide (TiO2) pricing

€ thousand/metric ton

We are benefiting from a stabilizing raw material environment and local sourcing

Source: ICIS

Q1

2011

Q1

2012

Q1

2013

Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4




• Strategy


• Financials


Strategy


45

Decorative Paints vision and targets

Decorative Paints vision

The leading global Decorative Paints company in size and performance

Expected outcomes (2015):

• Return on sales: 7.5%

• Return on investment: 12%


Actions Per the company agenda

Business area actions

• Fix Europe

• Grow profitably in high-growth

markets

• Leverage investments in

marketing, sales, innovation

• Improve supply chain

performance

• Generate more value with fewer

resources

Processes Per the company agenda

Business area capabilities

• Branding

• Distributor, wholesaler, retail

management

• Understanding and serving

professional painters

• Consumer inspiration

• Quality management

Strategic

focus areas Per the company

agenda

End-user

segments • Buildings and

Infrastructure

• Transportation

• Consumer Goods

• Industrial

46

Decorative Paints strategy on a page





• Strategy


• Financials


Key actions and continuous improvement



Fix Europe

Objectives:

• Improve performance by driving operational excellence

and changing the operating model in Europe

• Ensure that we are positioned for organic growth in

mature European markets when the market recovers

(e.g. UK)

• Pursue organic growth in select countries where there

are attractive opportunities today

(e.g. Turkey, Poland)


Fix Europe

Actions:

• Implement a central operating model and simplify

our organizational structure

• Consolidate our manufacturing and distribution footprint

• Develop and implement standardized and efficient

marketing and sales platforms

• Redesign back office processes to support back office

consolidation and restructuring

• Maintain a strong focus on customers and markets

through the transition period


Changing our operating model in Europe

Action

2012

2013

2014

2015

Integrate relevant European activities and management

Rationalize product portfolio and raw materials

Rationalize manufacturing footprint

Fully implement sales excellence

Outsource certain finance businesses

Implement central operating model

Leverage repeatable models globally


Grow profitably in high-growth markets

Objectives:

• Outgrow the market

• Ensure that we leverage our (global) scale to ensure

that we improve relative profitability while we grow

Actions:

• Develop profitable mid-market business model(s)

• Build and implement a robust distribution strategy framework

• Leverage global marketing and innovation scale to win locally

• Leverage our strong brands

• Create and implement a digital marketing strategy


We are pursuing country-specific plans for profitable organic growth (1 of 3)

China

AkzoNobel position

Extensive geographic coverage across all regions

Actions

• Drive further expansion outside the eastern region

with investments in manufacturing footprint:

– New plant opened in Guangzhou (2013)

– Plant under construction in Chengdu (West)

• Drive growth in project channel

• Continue to develop emerging channels such

as e-commerce and Easy Paint Services channels

• Continuously optimize our product range

– Launch of Dulux Ambiance in premium segment



Brazil

AkzoNobel position

• Strong market positions in Brazil through the Coral brand

• Strongest player in the mid-market segment and therefore

well-positioned to profit from mid-tier growth

Actions

• Grow aggressively in the premium segment

• Continue to add points of sale through exclusive distributors

• Continue our ‘Tudo de Cor’ viral marketing program



Indonesia

AkzoNobel position

The leading paints company in the Indonesian market with

a strong market share

Actions

• Continue to build our premium portfolio through strong brands

including Dulux Weathershield and Dulux EasyClean

• Extend the reach of our Dulux brand and bring it to the

mid-market segment through the launch of Dulux Catylac

• Leverage new forms of communication and activation such as

Let’s Color TV Show and YouTube as well as digital activation




• Strategy


• Financials


Financials


Key financials


€ million 2011 2012 2013

Revenue 4,201 4,297 4,174

EBITDA 389 284 362

Operating income 235 94 398

Return on sales 5.6% 2.2% 9.5%

Return on investment 4.7% 3.0% 13.7%

Employees 17,120 17,020 16,240

€ million 2011 2012 2013

Incidentals 2 14 (198)

Operating income excl. incidentals 237 108 200

Return on sales excl. incidentals 5.6% 2.5% 4.8%

PIP costs - 140 105

Operating income excl. PIP costs & incidentals 237 248 305

Return on sales excl. PIP costs & incidentals 5.6% 5.8% 7.3%

As reported*

Underlying*

Underlying performance

• Underlying return on sales,

adjusted for incidentals and

PIP costs has improved from

5.6% in 2011

to 7.3% in 2013

• Additional restructuring

initiatives will take place

in 2014

Expected 2015

financial outcomes

• Return on sales: 7.5%


* Excluding North America Decorative Paint




• Strategy


• Financials


Summary and conclusions


We will deliver our 2015 expected outcomes


• We are the global leader in Decorative Paints size-wise

• We can and will improve considerably in terms of performance in all regions

• We can expect good growth in high-growth countries but the recovery is still

uncertain in Europe

• Vision: the leading global Decorative Paints company in size and performance

• Strategic priorities:

– Fix Europe

– Grow profitably in high-growth countries

• All of this will lead to our expected 2015 financial outcomes:

– Return on sales: 7.5%

– Return on investment: 12%


Performance Coatings Conrad Keijzer


• Performance Coatings market

• AkzoNobel in Performance Coatings

• Strategy


• Financials


Agenda





• Strategy


• Financials




27%

20% 30%

8%

11% 4% Mature Europe

North America

Asia Pacific

Latin America

Emerging Europe

Other regions

24%

37%

25%

14% Buildings andInfrastructure

Transportation

ConsumerGoods

Industrial

Performance Coatings business at a glance

Key messages

• We have leading market positions

• Strategic priorities include:

– Performance improvement initiatives

– Differentiated growth strategies

Performance Coatings key figures

Revenue by end-user segment


€ million 2013

Revenue 5,571

EBITDA 663

Operating income 525

Return on sales 9.4%

Return on investment 21.3%

Employees 21,360


27%

24% 17%

32%

Marine & ProtectiveCoatings

Automotive & AerospaceCoatings

Powder Coatings

Industrial Coatings

2013 revenue by Business Unit

We are organized in four Business Units

Marine & Protective

Coatings

• Protective

• Marine

• Yacht

Automotive &

Aerospace Coatings

• Vehicle Refinishes

• Specialty Finishes

• Aerospace

Industrial Coatings • Wood

• Coil

• Packaging

Powder Coatings • Powder

Business Unit Market sectors




• Aerospace

Automotive &

Aerospace Coatings

• Protective

• Marine

• Yacht

Marine &

Protective Coatings

• Powder Powder Coatings

• Wood

• Coil

• Packaging

Industrial Coatings




• Strategy


• Financials


Performance Coatings market


The Performance Coatings market is based on twelve sectors

Performance Coatings market sectors

€ billion, 2013

Source: Orr & Boss 2011 for base data on market sectors; AkzoNobel analysis

AkzoNobel competes in these market sectors


0

1

2

3

4

5

6

72013 total market size ~ €50 billion

0

1

2

3

4

5

6

7

Protective VehicleRefinishes

Powder Wood Marine SpecialtyFinishes

Coil Packaging Aerospace Yacht

The five year outlook for most sectors is positive


€ billion, 2013

Source: Orr & Boss 2011 for base data on market sectors; AkzoNobel analysis

3-5 % (>GDP growth)

3% (at GDP growth)

See next slide


-5.7%

2007 08 09 10 11 12 13 14

Delivered On order

+18.4%

p.a.

-30.1%

The Marine new build market may have now reached the bottom of the cycle...

New build ship deliveries

Million deadweight tons, 2007 = 95

Source: Clarkson Research Services Limited, January 2014, AkzoNobel analysis Capital Markets Day 2014 67

Range of outcome

?




• Strategy


• Financials


AkzoNobel in Performance Coatings


AkzoNobel is the global market leader in Performance Coatings, excluding Automotive

Performance Coatings revenue

€ billion, 2013 unless noted

* 2012 data

Source: Annual Reports; AkzoNobel analysis Capital Markets Day 2014 69

0

1

2

3

4

5

6

Non-Automotive Automotive

0

1

2

3

4

5

6

7

Protective VehicleRefinishes

Powder Wood Marine SpecialtyFinishes

Coil Packaging Aerospace Yacht

AkzoNobel has many leading market sector positions in Performance Coatings


€ billion, 2013

AkzoNobel market share

position (by value) 2013 x

3

1

1

1/2

1

1 1

2

1/2 1

Capital Markets Day 2014 70 Source: Orr & Boss 2012 for base data on market sectors; AkzoNobel analysis

• Protective

• Coil

• Powder

• Wood Finishes

• Vehicle refinish

• Specialty finishes

• Powder

• Marine

• Aerospace

• Yacht

The Performance Coatings portfolio is balanced across the four end-user segments

• Powder

• Packaging

• Specialty finishes

• Wood finishes

• Protective

• Powder

71

24% 37% 25% 14%



Our paints and coatings can be found almost everywhere

We are well positioned globally in terms of revenue and manufacturing locations

BU manufacturing locations

Automotive & Aerospace

Marine & Protective

Industrial

Powder

Multi-BU site

27%

Mature Europe

31%

Asia Pacific

3%

Middle East

and Africa 9%

Latin America

19%

North America

11%

Emerging Europe


% of 2013 revenue

Manufacturing closures and room for further footprint consolidation

2011 Number of sites: 107

Closures:

• Brecksville (Powder)


Closures:

• Huizhou, Tianjin

(Specialty Finishes)

• Schramm Spain

(Specialty Finishes)

• Cologne (Wood)

• Nacka (Wood)


Closures:

• Birmingham, USA

(Coil)

• Isernhagen (Specialty

Finishes)

• Shanghai (Specialty

Finishes)

New sites:

• Chilca Peru (Wood)


2014-2015 Number of sites: 91

Intended closures:

• Elbeuf (Packaging)

• Romano (Powder)

• Nuremberg (Coil)

• Gamleby (Coil)

• Guarulhos (Coil, Wood)

• Suzhou (Powder)

• Ningbo (Powder)

• Singapore (Wood)

• Brisbane (MPC)


We successfully expanded our portfolio and global presence

* Adjusted for acquisitions

Acquisition Business Unit Year

Dow/Rohm & Haas Powder 2010

Lindgens Metal Decorating Coatings and Inks Industrial Coatings 2010

Changzhou Prime Automotive Paint Co., Ltd Vehicle Refinish 2010

Schramm & SCCP Automotive & Aerospace 2011

• Performance Coatings has made four bolt-on acquisitions over the last few years

that brought many benefits, including:

– Expanding our global reach

– Broadening our technology offering

– Taking leadership positions

– Extracting significant synergies, particularly in procurement

Continue to deliver strong and stable

return on investment

Improve return on sales

Grow volume organically

Room for improvement

over the next three years

What we have done

over the last three years


We have a strong business but there is room for improvement going forward

Grown the business in

a difficult market environment

• Bolt-on acquisitions

• Margin management actions

Reduced costs through the

performance improvement program

Delivered strong return on investment

on tight working capital management

and prudent capital expenditure




• Strategy


• Financials


Strategy


Performance Coatings vision and targets

78

Performance Coatings vision:

The leading coatings

company from a

performance

perspective

Expected outcomes 2015:

• Return on sales: 12%



End-user


Infrastructure

• Transportation

• Consumer Goods

• Industrial

Actions Per the company agenda


• Drive overarching performance

improvement initiatives

• Pursue differentiated growth

strategies

– Outgrow the market organically

– Improve performance by

driving operational excellence

Processes Per the company agenda


• Key account management

• Coatings technology and product

innovation

• Footprint in growth markets

Strategic


agenda

79

Performance Coatings strategy on a page





• Strategy


• Financials




Actions

Embed standard processes and continuous

improvement capabilities to achieve year-on-year

savings exceeding inflation impact

Roll out a common set of commercial processes

to deliver both organic growth and

commercial efficiency


Initiative

Drive performance improvement initiatives

Use a cross-business, cross-functional approach

to deliver complexity reduction and

year-on-year savings in external spend

Deliver further complexity reduction and

continuously reduce external spend

Continuously improve operational productivity

Drive commercial excellence to increase

sales effectiveness

• Cost to serve aligned with

customer segmentation

• Right sizing the

sales organization

Drive commercial excellence to increase sales growth and commercial efficiency

Actions

• Best practice and competency training will be

focused on business in growth markets

• Achieve profitable organic sales growth

Commercial excellence is a key

value driver in Performance Coatings

Sa

les f

orc

e

eff

ective

ne

ss

Sa

les f

orc

e

eff

icie

ncy


• Best practice selling processes

• Competency training

• Margin management

• Organizational efficiency will be focused on

businesses in lower growth markets

• Reduce sales and marketing cost

0%

100%

EBIT margin

Selling, advertising, administration, R&D costs

Fixed production costs

Raw materials, energy and other variable costs

Actions

Drive further complexity reduction:

• Harmonize recipes

• SKU reductions

• Standardize formulations

Use a cross-functional approach to deliver


• Aggregate commodity spend

• Develop and utilize alternate supply sources

• Utilize value engineering

• Develop local suppliers and localize raw materials

spend

Performance Coatings 2013

Complexity reduction and continuously reduce external spend

Profit and loss breakdown*

% of total

* Rounded percentages Capital Markets Day 2014 83

Actions

Drive further complexity reduction:

• Harmonize recipes

• SKU reductions

Use a cross-functional approach to deliver


• Aggregate commodity spend

• Develop and utilize alternate supply sources

• Utilize value engineering

• Develop local suppliers and localize raw

materials spend

Continuously improve operational productivity

Actions

Embed standard processes and continuous

improvement capabilities to achieve

year-on-year savings exceeding inflation impact

• Continue footprint optimization

• Embed continuous improvement at all sites

• Standardize and optimize sales and

operations planning

• Reduce logistics and warehousing costs

by leveraging synergy across AkzoNobel

Supply Chain performance is a key element for

success in Performance Coatings

• Supply Chain cost

(Manufacturing, logistics and warehousing)

• Inventory value



Outgrow the market organically

• Marine

• Protective

• Powder


Improve performance by

driving operational excellence

• Industrial (Wood, Coil, Packaging)


• Yacht

• Aerospace

Expected outcomes

• Improved market share

• Costs don’t grow as fast as revenue

• Improved return on sales

in percentage terms

Expected outcomes

• Growth with the market

• Reduced absolute operating expenditure

• Improved return on sales based on

cost reduction

Pursue differentiated growth strategies

Market outlook

• Strong growth potential based on strong

end-user segment growth outlook

AkzoNobel position

• Global number 1 position

• Technology leadership

• High reputation brands

• Specification selling

Key actions

• Extend specification selling

• Further develop presence in growth regions

• Continued product innovation

‘Outgrow the market organically’ in Protective Coatings


‘Drive operational excellence’ in Coil Coatings

Market outlook

• Reasonable growth globally

• Pressure on margins, particularly in Europe

and Asia

AkzoNobel position

• Global number 1 position, with a strong

position in Asia/China

• Strong reputation in high-performance

architectural applications

• Leading innovator: Chrome-free technologies;

Cool ChemistryTM (Heat reflective coatings)

Key actions

• Footprint optimization in Europe

• Complexity reduction in formulas and in

low cost resin development

• Focus on margin management and cost to serve





• Strategy


• Financials


Financials


Key financials

€ million 2011 2012 2013

Revenue 5,170 5,702 5,571

EBITDA 572 673 663




Employees 21,960 21,310 21,360

Expected 2015 financial

outcomes



€ million 2011 2012 2013

Incidentals 2 0 0



PIP costs 0 90 102

Operating income excl. PIP costs & incidentals 456 632 627

Return on sales excl. PIP costs & incidentals 8.8% 11.1% 11.2%

As reported

Underlying


• Sustained performance

• Underlying return on sales* has

improved from 8.8% in 2011 to

11.2% in 2013

• Additional restructuring

initiatives in 2014

*Adjusted for incidentals and PIP costs Capital Markets Day 2014 89




• Strategy


• Financials





A world leading performance coatings company

• Leading market positions

• Reference customers in all segments

• Balanced portfolio in terms of end-user segments

• Over 50% of revenue from high growth markets

• Strong brands built on strong product technologies

New strategy based on

• Overarching performance improvement initiatives

• Differentiated growth strategies

This will deliver our expected 2015 outcomes





Specialty Chemicals Werner Fuhrmann


• Specialty Chemicals market

• AkzoNobel in Specialty Chemicals

• Strategy


• Financials


Agenda





• Strategy


• Financials






Key messages

• Serving attractive markets, growing over the cycle

• Leading positions in five main platforms

• 56% of revenues generated outside of mature Europe

• Significant expansion investments now operational

• Driving functional excellence

Specialty Chemicals key figures

Revenue by end user segment


18%

6%

19%57%

Buildings and

infrastructure

Transportation

Consumer

goods

Industrial

44%

22%

17%

10%

5%2%

Mature Europe

North America

Asia Pacific

Latin America

Emerging Europe

Other regions

€ million 2013

Revenue 4,949

EBITDA 726

Operating income* 418

Return on sales* 8.5%

Return on investment* 11.6%

Employees 10,430

* Excludes incidentals




• Strategy


• Financials


Specialty Chemicals market



• $3.5 trillion market

• Solution provider for society

– manufacturing

– food production

– climate change

• Continuous growth

• Strong growth in China

1990 2000 2012 2020

Other

China

Asia Pacific

North America

Western Europe

0.9

1.3

3.4

6.3

Chemicals industry over time, by geography

$ trillion

The chemical industry is large and growing

Source: McKinsey

6.6%

%

6.8%

%

7.4%

% CAGR (nominal)

Purchasing Managers’ Index is good indicator for Chemical industry dynamics

Source: Markit, Institute of Supply Management. China data is from the HSBC/Markit survey

Brazil Eurozone US

30

40

50

60

70

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

Purchasing Managers’ Index (Manufacturing)

Figures above 50 represent some optimism; figures below 50 represent some pessimism

China



Middle East:

Moving downstream based on

low cost petrochemicals

US:

Shale gas impacting ethylene prices

Middle East and US build on raw material strengths

Products

Chemical

value parks

Intermediates

C4s

Pygas

Pyoil

Ethylene oxide

Ethane

Naphtha

Petro-

chemical

parks

Polyols

Polyethylene

Isocyanates

Propylene glycol

Amines

Glycol ethers

Elastomers Conversion

parks

Europe vs. US ethylene price differential

€/ton

-300

-200

-100

0

100

200

300

400

500

600

1995 2000 2005 2010

Source: Market Reports

Specialty and consumer chemicals

extra-EU chemicals trade surplus

continue to grow


Europe is largest trader in Chemicals… and value enhancer

Source: Eurostat and Cefic Chemdata International (2013),

Unless specified, chemical industry excludes pharmaceuticals, Unless specified, EU refers to EU 27

EU chemicals sector posted a record

trade surplus in 2012

* North American Free Trade Agreement

** Rest of Europe includes Switzerland, Norway, Turkey, Russia and Ukraine

*** Asia excluding China and Japan




• Strategy


• Financials


AkzoNobel in Specialty Chemicals


Salt-chlorine chain

100% of Industrial Chemicals

Ethylene Oxide Network

40% of Functional Chemicals

Surfactants

85% of Surface Chemistry

Bleaching Chemicals

60% of Pulp & Performance chemicals


Our Business Units Our Platforms

Five well positioned platforms in their industries

Industrial Chemicals

Pulp & Performance chemicals

Surface Chemistry

Polymer Catalysts

40% of Functional Chemicals

Functional Chemicals

• Sodium chlorate

• Hydrogen peroxide

• Ethylene oxide

• Ethylene amines

• Cellulosics

• Organic peroxides

• Metal alkyls

• Ethyoxylates

• Natural oil and fat based nitrogen surfactants

• Energy/Salt

• Chlorine

Platforms operate world scale plants based on advanced technologies

• Monochloroacetic acid

• Chloromethanes

Our main chemical platforms Key products

Salt-chlorine chain

Bleaching chemicals

Ethylene oxide network

Polymer catalysts

Surfactants

• Chelates

• Micronutrients


Major projects and timing of spend

• Capital expenditure peaked at 8.7%

of revenue in 2012

• Infrastructure is now in place and ready to take

on additional demand

0

100

200

300

400

500

2010 2011 2012 2013

Capital Expenditure Depreciation and Amortization

BA Specialty Chemicals capital expenditure

€ million

We have invested in the recent past and are well-prepared for future growth

Investment project 2010 2011 2012 2013 2014 2015

Ningbo multisite

Frankfurt membrane

Brazil Eldorado

Brazil Suzano

Boxing


Global manufacturing network serves both regional and global customers

Asia Pacific

17%

Latin America

10%

Emerging Europe

5%

North America

22%

Mature Europe

44%

Middle East and

Africa

2%

Multi-site

Site

% of 2013 global revenue


Accomplishments to date


Area 2010 2013 Delta

Number of operations integrated with customers 15 17 +13%

Sales per FTE (k€) 445 467 +5%

Capacity expansions (>10%) 12 units

Number of manufacturing sites 109 102 -7%

Sales/site (€ million) 42.6 48.5 +14%

Renewable energy usage n/a 31%

Waste (ton/€ million sales) 15.8 12.0 -24%

Number of ERP systems 9 3 -67%

Cost reductions (€ million)* n/a 142

Number of FTEs 11,100 10,430 -6%

*Related to Performance Improvement Program




• Strategy


• Financials


Strategy


Specialty Chemicals vision:

Delivering leading

performance based on

sustainable chemical

platforms driving

profitable growth in

selected markets

Expected outcomes (2015):



Specialty Chemicals vision and targets


Actions

Per the company agenda


• Drive functional excellence

– Supply chain and operations

– Commercial excellence

– Talent management

• Reduce organizational complexity

• Strengthen product & process

innovation

• Capitalize on industry changes

• Build on our strong chemical

platforms to deliver profitable

growth in selected markets

Processes

Per the company agenda


• Understanding customer needs

• Management of integrated value

chains

• Continuous technological

advancement

• Engineering and project

management

Strategic


agenda

End-user


Infrastructure

• Transportation

• Consumer Goods

• Industrial

109

Specialty Chemicals strategy on a page





• Strategy


• Financials





Four operational improvement initiatives

Improve

productivity of

supply chain and

operations

• Asset optimization

• Production system

roll out

• Lean six sigma

• Industrial IT platform

• Yield, waste

and quality focus

Strengthen

commercial

excellence

• Customer value

creation

• Organic growth

• Margin management

• Sales force

productivity

Reduce

organizational

costs

• Restructuring

• Organization

delayering

• Restricted

recruitment

Enhance product

and process

innovation

• New applications

and products

• Variable cost

reduction

• Process

intensification

• Standard processes

Improve performance by driving

operational excellence

~50% of portfolio

Main platforms

• Salt-chlorine chain

• Polymer catalysts

• Ethylene oxide network


Outgrow the market organically

~ 50% of portfolio

Main platforms

• Bleaching chemicals

• Surfactants

Actions

• Reduce costs and further

improve productivity in

operations

• Improve raw material

(cost) position

Differentiated strategies per platform

Actions

• Capitalize on investments

• Grow by successfully

commercializing products

for attractive applications

Bleaching Chemicals: Creating value from Chemical Islands



Market

• Stable and growing market

• Packaging materials is growth

driver

• Geo shift to South America

Customers

• Domtar, Georgia Pacific, Stora

Enso

AkzoNobel strengths

• Technology leader

• Chemical island concept creates

high value for stakeholders

• Sustainable manufacturing

footprint

Actions going forward

• Capitalize on current chemical islands

• Pursue new opportunities

• Reduce costs through process

improvements and automation

Bleaching chemicals: Growth via integration with customers


Salt-Chlorine chain: Right at the heart of the customer base

* Pipelines transporting crude oil (RAPL), nafta (PALL), industrial gasses, ethylene and

propylene

Refinery Steam cracker

Pipelines*

Refinery & olefin producer Olefin consumer


Market

• Flat

• Industry consolidation

Customers

• Bayer, Huntsman, Shin-Etsu

AkzoNobel strengths

• Number 1 in Northwest Europe in

chlor alkali and salt

• Linked to key players in the industry

• Number 1 globally in MCA and

chloromethanes

• Relatively low dependency on

ethylene


• Continue cost/technology

leadership improvements

• Further reduce dependency on gas

• Exploit full potential of

Frankfurt investment

Salt-chlorine chain: Leveraging an advantaged asset base


Patented dosing technology

• 20 -30 % higher reactor output

• Improved safety and quality

Implemented by plastic producers:

• Vinnolit GmbH & Co. - Germany

• Ercros SA - Spain, JSC

• Kaustik - Russia

• Mexichem - Mexico

Polymer catalysts: Reaping the benefits from innovation


Market

• Global plastics market

consistently growing

• Shift from Europe to Asia and

Middle East

Customers

• BASF, Dow, Shin-Etsu

AkzoNobel strengths

• Market and technology leader

• Global manufacturing network

• Combination of organic peroxides

and metal alkyls


• Restructure European footprint

• Exploit investments in China

• Expand customer base with

on site dosing technology

Polymer catalysts: Leadership through operational excellence

Ethylene oxide network: Capitalizing on China investments

Site plan

Hydrogen

Cyanide Organic

Peroxides

Ethylene

Amines Cellulosics

Surfactants

Chelates Bio-treatment

facility

Ethylene

Oxide



Market

• Diverse end markets, many of which

are low cyclicality

Customers

• Air Products, AkzoNobel Decorative

Paints, Yara

AkzoNobel strengths

• Integrated clusters close to end

markets

• Recent investment in all technologies

in China, creating a new network hub

• Cost reductions delivered in

manufacturing and support functions


• Capitalize on investments by further

expanding in Asian markets

• Optimizing product supply across

the value chain

• Successfully market Stimwell and

cellulosics

Ethylene oxide network: Optimize value chains of integrated clusters

Surfactants: Growing with attractive end markets

Oilfield

Mining

Lubricants

Agriculture



Market

• Mix of markets with steady and high

growth patterns

• Some markets actively demanding

further product innovations

Customers

• Baker Hughes, Lubrizol, Monsanto

AkzoNobel strengths

• Leader in nitrogen surfactant

technology

• Global production network

• Strong innovation pipeline


• Allocate resources to most attractive market

(agricultural, mining applications, oilfield,

fuel and lubricants)

• Capitalize on and expand our position

in China

• Leverage global leadership in nitrogen

surfactants

Surfactants: Broad and innovative application spectrum

Our platforms build on value chains

Raw materials

Base chemicals

Chemical inter-mediates

Performance/ functional chemicals

‘End’ products

123

Bleaching chemicals

Salt-chlorine chain


Polymer catalysts

Surfactants


Our platforms build on value chains

Raw materials

Base chemicals

Chemical inter-mediates

Performance/ functional chemicals

‘End’ products

124

Bleaching chemicals

Salt-chlorine chain


Polymer catalysts

Surfactants


Serving plastics industry

Ethoxylation chemistry

Electrochemistry




• Strategy


• Financials


Financials


Key financials


€ million 2011 2012 2013

Revenue 5,335 5,543 4,949

EBITDA 909 830 726




Employees 11,510 10,750 10,430

Expected 2015

financial outcomes



€ million 2011 2012 2013

Incidentals 6 24 121



Restructuring charges - 42 74

Operating income excl. restructuring charges & incidentals 628 566 492

Return on sales excl. restructuring charges & incidentals 11.8% 10.2% 10.0%

As reported

Underlying


• Challenging market conditions

• Recent investments positioned

for further growth

• Continue the focus on

productivity improvements




• Strategy


• Financials






Our business

• Serving attractive markets

• Leading in 5 platforms

• 56% of revenues outside mature Europe

• Expansion investments operational

What we will do

• Grow selectively

• Exploit manufacturing clusters

• Continuously improve productivity

• Functional excellence

All of this will lead to our expected 2015 financial outcomes:




Financial Topics Keith Nichols

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Summary 2013 results


€ million FY 2013 Δ%

Revenue 14,590 -5

Operating income 958 6

Ratio, % FY 2013 FY 2012*

Return on sales 6.6 5.9

Return on sales (excluding incidentals and PIP costs) 8.5 8.2

Moving average return on investment 9.6 8.9

Increase

Decrease

-4% -5%

+1% 0%

-2%

Volume Price/Mix Acquisitions/divestments

Exchange rates Total

Revenue development FY 2013 vs. FY 2012

130 * 2012 excluding impairment (€2.1 billion)

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Foreign currency developments


-6

-2

2

6

Decorative Paints Performance Coatings Specialty Chemicals AkzoNobel

Quarterly foreign exchange rate development in % year-on-year revenue

-7% -5% -5% -4%

2012

2013

131

• Adverse currency effects, particularly impacting 2H 2013, were visible in all business areas and

largely driven by our exposure to high growth markets

• To a large extent revenues and costs are geographically matched giving a natural hedge to

translational impact

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Capital expenditure will be more in line with depreciation and amortization


• 40-50% of capital expenditure is

growth related

• Going forward, capital expenditure will be

around 4% of revenues, in line with

depreciation and amortization

2013

€ 666

€ 826

4.6%

2012

5.4%

2011

€ 708

2010

4.5%

3.7%

€ 534

Other

Decorative Paints

Performance Coatings

Specialty Chemicals % of revenues

Capital Expenditures (millions €)

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Performance improvement actions release cash in Operating Working Capital


1.834 1.572 1.384

12.9%

10.7% 9.9%

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

500

1.000

1.500

2.000

2.500

2011 2012 2013

Operating Working Capital OWC as % of LQ revenue*4

Operating Working Capital

€ million

• Operating Working Capital

as % of revenue has

reduced towards 9.9%

• Significant seasonality occurs

during the year with peak

requirement in the summer

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0,0

0,5

1,0

1,5

2010 2011 2012 2013

2015 target: net debt to EBITDA ratio of less than two


Net debt/EBITDA

x

• We have a strong liquidity position to support

business needs: net cash and cash equivalents

€2.1 billion*

• Undrawn revolving credit facility of €1.8 billion

(2018) €1.5 and $3 billion commercial paper

programs, backed by revolving credit facility

• 2013 improvement in Net Debt / EBITDA

• Maintain investment grade rating of BBB+

* At the end of Q4 2013

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Continuously reducing costs of long term bonds


Debt maturities

€ million

Average cost of long term bonds

%

7.29 6.35 5.62 4.89

0

2

4

6

8

2010 2011 2012 2013

825 622

800 750

306 379

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

€ bonds £ bonds $ bonds

• Debt duration 3.6 years

• Improving cash flow and

divestments enabled full

repayment of two maturing

bonds without refinancing

Repaid

5.62%

7.75%

7.25%

8.00%

4.00% 2.62%

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Cash flow sources and uses


• Restructuring and pension

top-ups consume a significant

proportion of cash

• Performance improvement

focus starts to address

cash challenge

• Remuneration metrics

include cash generation

• Positive cash in 2013 driven by

divestments of Decorative

Paints North-America and

Building Adhesives

On track to deliver cash positive after dividend in 2015

2012 2013

Source Use Source Use

Dividends

Divestments** EBITDA

Other* OWC

CapEx

Provisions

Pensions

* Including interest and tax ** Including acquisitions, divestments and discontinued operations

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Proactively managing or removing pension liabilities


Interest rate /

Inflation hedging

• ICIPF’s active management of interest rate and inflation

exposure, with around 80% of defined benefit obligation

(DBO) risks hedged to date

Longevity hedging • Courtaulds (CPS) longevity swap with Swiss Re in 2012

(€1.75billion)

Captive insurance • Considered to be too complex

Divestments

• Sale of Decorative Paints Canada in 2013 (DBO

reduced by €301 million)

• Sale of National Starch in 2011 resulted in substantial

DBO reduction

Cash out /

Sleeper management

• US plan deferred members offered a cash out in 2013

(red. €85 million)

• UK CPS cash out in 2013 (DBO reduced by €39 million)

Buy-in / Buy-out

• USA buy-out with MetLife in 2013 (DBO reduced by

€493 million)

• Sweden buy-out in 2008; substantial DBO reduction

Retain and

Manage Risk

Remove Risk

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Pension cash flow guidance


• Top-ups relate mainly to the 2 big UK plans, the ICI Pension Fund

and the CPS Pension Scheme

• Top-ups are based on prudent actuarial valuation of liabilities,

which differs from accounting liability

• Actuarial pension deficit of the 2 big UK plans is estimated at

€1.5-2 billion

• The next triennial funding review for the ICI Pension Fund is

expected to be completed in 2015 and in 2016 for the CPS Scheme

• The forward looking estimates make no allowance for changes

in the funded status at future actuarial valuations or for additional

contributions to de-risking such as the 2013 MetLife transaction

in the US

Defined benefit pension cash top-ups

€ million

2013 actual* 311

2014 -17 est.** ~330/year

2018 est.** ~100

*Excludes one-off contribution of €127 million to our US plan to part-finance the transfer of pensioners to MetLife in December 2013

** Based upon currently agreed deficit contribution schedules for the UK plans

Make sure line weight is

consistent

Regular contributions

€ million 2014 estimated

Defined benefit 110

Defined contribution 180

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Dividend policy unchanged


• Our dividend policy is to pay a stable to rising

dividend each year

• An interim and final dividend will be paid in

cash unless shareholders elect to receive a

stock dividend

0.33 0.33

2013 2012

1.12 1.12

2011

0.33

1.12

2010

0.32

1.08

2009

0.30

1.05

Final dividend Interim dividend

Dividends paid (€)

Financial summary

• We are delivering performance improvement with our strategy:

− Underlying return on sales and return on investment improving

− Net debt and cost of borrowing significantly reduced

− Performance Improvement Program finalized early

− Further pension de-risking with the US MetLife buyout

• Cash challenge being addressed

• Capital expenditure levels are lower, more in line with depreciation and amortization

• Restructuring costs will continue in 2014; expected to be greater than

€250 million and will be more evenly spread over the year and Q1 2014

will be higher than the same quarter last year

• Foreign exchange movements are expected to continue to have an impact

on our results



Conclusion Ton Büchner

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Expected 2015 outcomes per business area


Return on sales


%

%

7.5

12.0 12.0

0

2

4

6

8

10

12

14

Decorative Paints Performance Coatings Specialty Chemicals

12.0

25.0

15.0

0

5

10

15

20

25

30

Decorative Paints Performance Coatings Specialty Chemicals

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8.9 9.6

14.0

0

4

8

12

16

2012 2013 2015

Return on sales

(Operating income/revenue)

%

143




%


Net debt/EBITDA

x

2015 financial targets focused on quality of earnings and value creation

*2012 excluding impairment (€2.1 billion) and after IAS19

5.9 6.6

9.0

0

4

8

12

2012 2013 2015

1.4 1.0

2.0

0

1

2

3

2012 2013 2015

* * <

On track to achieve 2015 targets

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We will deliver our 2015 targets

What has been done

• New strategy, targets, team, remuneration and company values

• Performance Improvement Program successfully completed

• Delivering in line with guidance despite difficult market conditions

with currency headwinds

• Underlying return on sales and return on investment improving

What are we doing

• End-user segment focus providing direction for our market initiatives

and innovation spend

• Driving continuous improvement through restructuring, cost reduction

and delivering organic growth

• Focus on operating income, return on investment and

cash generation

• Drive cultural change with company values roll-out

• We remain on track to deliver our 2015 targets


Questions

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Safe Harbor Statement


This presentation contains statements which address such key issues as

AkzoNobel’s growth strategy, future financial results, market positions, product development, products in

the pipeline, and product approvals. Such statements should be carefully considered, and it should be

understood that many factors could cause forecasted and actual results to differ from these statements.

These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw

material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative,

fiscal, and other regulatory measures. Stated competitive positions are based on management estimates

supported by information provided by specialized external agencies. For a more comprehensive discussion

of the risk factors affecting our business please see our latest Annual Report, a copy of which can be found

on the company’s corporate website www.akzonobel.com.

146

http://www.akzonobel.com/


Appendices

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Variable costs analysis


29%

3%

5%

6%

15%

2%

10%

17%

7%

6%

2013 (excluding Decorative Paints North America)

* Other variable costs include variable selling costs (e.g. freight) and products for resale ** Other raw materials include cardolite, hylar etc.

*** Chemicals and intermediates include caustic soda, acetic acid, tallow, ethylene, ethylene oxide, sulfur, amines etc.

Energy & other variable costs*

Raw materials

Other raw materials**

Titanium

dioxide

Coatings’ specialties

Resins

Pigments

Additives

Solvents

Packaging

Chemicals and

intermediates***

148

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Both short & long term incentives have been aligned with our priorities


• More than 600 executives are affected by this change

• Alignment of priorities

• Return on investment incentive brought closer to relevant management levels

Executive short term incentive 2013

STI

Element

Metric

20% Return on investment

20% Operating income

30% Operating cash flow

30% Personal targets – related to

performance improvement

plan

LTI

Element

Metric

35% Return on investment

35% Total Shareholder Return

30% Sustainability / SAM - DJSI

Executive long term incentive 2013

Key Features

• Premium waterborne with excellent finish

• Very fast drying – 2 hours between coats

• High blocking resistance “same day” concept

• Low VOC emission - >60% less than

previous formulation

Growth potential

• Launched in Brazil and extended into Argentine

market – reduced marketing complexity in LATAM

• Scope for introducing quality improvements and

cost savings into the European and Asian markets

• Potential to deliver sustainability targets of VOC

emissions and eco–premium sales

New waterborne enamel with superior performance for the LATAM decorative market

Customer Benefits

• Odorless, quick drying and non-yellowing

• Improved open time – better spreading and

levelling

• Easier cleaning of application tools (brush, roller &

spray-gun)

• An affordable enamel – great value for money

Innovation Pipeline 2014 Decorative Paints – Coral Coralit Zero


151

Key Features

• High-gloss wood coating for luxury interiors based

on proprietary technology (joint Lufthansa Technik/

AkzoNobel patent)

• Unsurpassed aesthetics originating from smooth,

high-clarity, high-gloss finish

• Compliant with fire retardancy requirements for

aircraft and the International Maritime

Organization

Customer Benefits

• Market-leading finish setting the industry

benchmark

• Exclusivity to Lufthansa Technik for use in the VIP

jet market

• Easy and secure application

• Reduced refit time for VIP jets

Growth Potential

• Exclusive to Lufthansa Technik for the VIP jet

market

• Significant growth opportunities identified for the

luxury yacht market (launch in 2014)

Innovation Pipeline 2014 Wood Finishes – Duritan® fire retarding, high-gloss system

A fire retarding, high-gloss coating system for wooden interiors of luxury jets and yachts


Innovation Pipeline 2014 Industrial Chemicals – Ecosel®AsphaltProtection

Key Features

• Additive to de-icing brine in small amounts

• Prevents formation of hard ice inside

asphalt pores

• Reduces frost damage to roads substantially

• Harmless to people and nature

• Eco-premium product

Customer Benefits

• Up to 50% less winter damage to

road surface

• Substantial savings on road

maintenance and repair

• Asphalt lifetime extended

• Contribution to traffic safety

Growth Potential

• Product to be launched in Q1-2014

• Global potential: all roads subject to

wintry conditions


Reducing frost damage to roads

Documents

Text Bk D2 On track to deliver 2015 targets Text Bk L2 Color 1… · 2012 2013 2015 Return on sales (Operating income/revenue) % 5 Return on investment (Operating income/average 12