By Dimitri Rhodes
(Reuters) -Dulux paint maker Akzo Nobel (OTC: AKZOY ) on Wednesday said it sees a manageable cost impact from the tariff war between the U.S. and China and reported a first-quarter profit beat, citing cost reductions and higher pricing.
"Our local-for-local and procurement derisking strategic principles continue to largely shield us from direct impacts on our cost base or our ability to deliver," CEO Greg Poux-Guillaume said in statement.
The Dutch paints and coatings maker said it sees a manageable annualized EBITDA cost from the tariff war between the U.S. and China, with U.S. exports impacted by 25 million euros ($28.44 million) and U.S. imports impacted by 10 million euros, given the current tariffs.
"Between the U.S. and China, we’re able to substitute pretty much all our flows," Poux-Guillaume told Reuters.
Currently, around 98% of products sold in the U.S. and China are locally produced. Were the tariffs to increase further, the company would be able to replace the remaining flows, the CEO added.
Akzo sells decorative paints and specialised coatings, with each unit relying respectively on consumer confidence and GDP, and the former waning in both the Euro zone and the U.S.
"If people don’t feel confident about the economy or if companies start holding back on investments, then that will impact us indirectly," Poux-Guillaume told Reuters.
"And consumer confidence has kind of leveled off. People are a little bit worried about what’s happening to the world and their economy. But it hasn’t collapsed. So the market is okay, but not great," he added.
The Amsterdam-listed company posted a 1.7% drop in adjusted EBITDA to 357 million euros, as higher prices and strong cost reductions compensated for lower volumes and inflation.
This came above the 345 million euros expected by analysts in a Vara consensus provided by the company.
($1 = 0.8790 euros)