AKZO NOBEL 2021-22 Annual Report Analysis

Tue, 12 Jul

AKZO NOBEL has announced its results for the year ended March 2022. Let us have a look at the detailed performance review of the company during FY21-22.

AKZO NOBEL Income Statement Analysis

• Operating income during the year rose 30.0% on a year-on-year (YoY) basis.
• The company's operating profit increased by 27.1% YoY during the fiscal. Operating profit margins witnessed a fall and stood at 13.7% in FY22 as against 14.0% in FY21.
• Depreciation charges increased by 0.5% and finance costs increased by 40.8% YoY, respectively.
• Other income grew by 3.8% YoY.
• Net profit for the year grew by 39.7% YoY.
• Net profit margins during the year grew from 8.6% in FY21 to 9.2% in FY22.

AKZO NOBEL Income Statement 2021-22

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Net Sales	Rs m	24,214	31,486	30.0%
Other income	Rs m	239	248	3.8%
Total Revenues	Rs m	24,453	31,734	29.8%
Gross profit	Rs m	3,401	4,324	27.1%
Depreciation	Rs m	755	759	0.5%
Interest	Rs m	103	145	40.8%
Profit before tax	Rs m	2,782	3,668	31.8%
Tax	Rs m	706	767	8.6%
Profit after tax	Rs m	2,076	2,901	39.7%
Gross profit margin	%	14.0	13.7
Effective tax rate	%	25.4	20.9
Net profit margin	%	8.6	9.2

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AKZO NOBEL Balance Sheet Analysis

• The company's current liabilities during FY22 stood at Rs 12 billion as compared to Rs 11 billion in FY21, thereby witnessing an increase of 7.2%.
• Current assets rose 1% and stood at Rs 18 billion, while fixed assets rose 6% and stood at Rs 24 billion in FY22.
• Overall, the total assets and liabilities for FY22 stood at Rs 41 billion as against Rs 40 billion during FY21, thereby witnessing a growth of 3%.

AKZO NOBEL Balance Sheet as on March 2022

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*	% Change
Networth	Rs m	12,883	12,595	-2.2
Current Liabilities	Rs m	11,045	11,838	7.2
Long-term Debt	Rs m	0	0	0.0
Total Liabilities	Rs m	39,947	41,331	3.5
Current assets	Rs m	17,478	17,604	0.7
Fixed Assets	Rs m	22,462	23,718	5.6
Total Assets	Rs m	39,947	41,331	3.5

AKZO NOBEL Cash Flow Statement Analysis

• AKZO NOBEL's cash flow from operating activities (CFO) during FY22 stood at Rs 1 billion on a YoY basis.
• Cash flow from investing activities (CFI) during FY22 stood at Rs 2 billion on a YoY basis.
• Cash flow from financial activities (CFF) during FY22 stood at Rs -3 billion on a YoY basis.
• Overall, net cash flows for the company during FY22 stood at Rs 59 million from the Rs -1 billion net cash flows seen during FY21.

AKZO NOBEL Cash Flow Statement 2021-22

Particulars	No. of months	12	12	% Change
	Year Ending	Mar-21	Mar-22
Cash Flow from Operating Activities	Rs m	2,832	1,214	-57.1%
Cash Flow from Investing Activities	Rs m	-2,249	2,304	-
Cash Flow from Financing Activities	Rs m	-1,737	-3,459	-
Net Cash Flow	Rs m	-1,154	59	-

Current Valuations for AKZO NOBEL

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 63.7, an improvement from the EPS of Rs 45.6 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,880.0, stands at 29.5 times its trailing twelve months earnings.
• The price to book value (P/BV) ratio at current price levels stands at 6.8 times, while the price to sales ratio stands at 2.7 times.
• The company's price to cash flow (P/CF) ratio stood at 26.7 times its end-of-year operating cash flow earnings.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Sales per share (Unadj.)	Rs	531.7	691.4
TTM Earnings per share	Rs	45.6	63.7
Diluted earnings per share	Rs	45.6	63.7
Price to Cash Flow	x	37.1	26.7
TTM P/E ratio	x	50.6	29.5
Price / Book Value ratio	x	7.5	7.7
Market Cap	Rs m	97,229	97,594
Dividends per share (Unadj.)	Rs	50.0	75.0

Ratio Analysis for AKZO NOBEL

• Solvency Ratios

Current Ratio: The company's current ratio deteriorated and stood at 1.5x during FY22, from 1.6x during FY21. The current ratio measures the company's ability to pay short-term and long-term obligations.

Interest Coverage Ratio: The company's interest coverage ratio deteriorated and stood at 26.3x during FY22, from 28.0x during FY21. The interest coverage ratio of a company states how easily a company can pay its interest expense on outstanding debt. A higher ratio is preferable.

• Profitability Ratios

Return on Equity (ROE): The ROE for the company improved and stood at 23.0% during FY22, from 16.1% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 30.3% during FY22, from 22.4% during FY21. The ROCE measures the ability of a firm to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

Return on Assets (ROA): The ROA of the company improved and stood at 7.4% during FY22, from 5.5% during FY21. The ROA measures how efficiently the company uses its assets to generate earnings.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-21*	12 Mar-22*
Current ratio	x	1.6	1.5
Debtors’ Days	Days	62	57
Interest coverage	x	28.0	26.3
Debt to equity ratio	x	0.0	0.0
Return on assets	%	5.5	7.4
Return on equity	%	16.1	23.0
Return on capital employed	%	22.4	30.3

To see how AKZO NOBEL has performed over the last 5 years, please visit here.

AKZO NOBEL Share Price Performance

Over the last one year, AKZO NOBEL share price has moved down from Rs 2,282.1 to Rs 1,880.0, registering a loss of Rs 402.1 or around 17.6%.

Overall, the S&P BSE SENSEX is up 2.5% over the year.

(To know more, check out historical annual results for AKZO NOBEL and quarterly results for AKZO NOBEL)

Read: Latest Annual Report Analysis of AKZO NOBEL