It's been a rough ride for Akzo Nobel since it paid £8bn for ICI at the peak of the business cycle in 2008. It may be the world's largest coatings company, but decorative paints have been bad business for the Dutch firm and there are question marks over its strategy. However, a new chief executive with a big reputation starts next month and massive cost savings will drop through this year. Things may be about to change.
IC TIP:
Buy
at
45.24€
Tip style
Speculative
Risk rating
High
Timescale
Long Term
Bull points
- Big cost savings earmarked
- Pricing benefits to come
- New CEO with reputation for change
- High growth markets comprise 40 per cent of sales
Bear points
- Decorative paints doing badly
- Exposed to European recession
Of course, it won't happen overnight. The ICI deal should have marked a turning point for Akzo. Instead, profit margins have been eroded, the US decorative paints (deco) business is losing money and profits are falling elsewhere in North America and in Europe.