AkzoNobel, one of the largest suppliers of automotive refinish coatings to collision repair shops, reported higher operating income and a fifth consecutive quarter of adjusted EBITDA margin expansion for the second quarter of 2026, according to results published July 22 by the company.
AkzoNobel reported organic sales growth of 2% in the quarter, driven by pricing, with stable volumes. Total revenue declined 1% to €2.589 billion ($2.95 billion), down from €2.626 billion ($2.99 billion) in the second quarter of 2025. Chief Financial Officer Maarten de Vries said on the company's earnings call that the divestment of AkzoNobel's liquid coatings businesses in India reduced revenue by 3%, while foreign exchange translation had only a slight negative impact in the quarter, according to a transcript of the call.
Operating income rose to €251 million ($286 million) from €214 million ($244 million) a year earlier, a 17% increase on a reported basis and 22% on a comparable basis, AkzoNobel said. Adjusted EBITDA climbed to €398 million ($454 million) from €393 million ($448 million), with the adjusted EBITDA margin rising to 15.4% from 15.0%, a 40-basis-point improvement the company said marks its fifth straight quarter of margin gains.
AkzoNobel CEO Greg Poux-Guillaume said in the release that the company had another strong quarter, with organic sales, operating income and adjusted EBITDA all increasing. He added that robust pricing and a focus on cost efficiency continued to support performance. On the earnings call, Poux-Guillaume said the company "did what we said we would do" in the quarter, pointing to stable volumes and pricing gains that protected margins, according to a transcript of the call.
Merger with Axalta on track for August vote
Poux-Guillaume said the merger with Axalta, first announced in November 2025 as a $25 billion all-stock deal, is progressing as planned, with a shareholder vote scheduled for Aug. 5 and closing expected in late 2026 or early 2027. On the earnings call, Poux-Guillaume said the merger's F-4 registration statement became effective and the proxy was filed in late June, and he described the combination as compelling, citing more than $600 million in identified cost synergies, with about 90% expected within three years of closing, and 100 to 200 basis points of potential revenue synergy, according to a transcript of the call. An Axalta spokesperson said earlier this year that current pricing and distribution structures for customers would remain unchanged until the deal closes, and representatives from both companies said they would continue to operate independently until then, with nothing changing in how they work with suppliers and business partners, according to earlier remarks from AkzoNobel and Axalta representatives.
During the earnings call, Poux-Guillaume said AkzoNobel's disposal strategy has not changed, and that the company is evaluating options specifically for its Decorative Paints Southeast Asia business because that unit is growing, which he said makes it more attractive. He said AkzoNobel is not a seller of its other businesses outside that evaluation, according to a transcript of the call.
Segment and cash flow details
Poux-Guillaume said on the call that AkzoNobel's automotive and specialty coatings volumes were up in the mid-single digits in the quarter, with aerospace continuing to drive growth, and that the company's vehicle refinish business returned to growth overall while stabilizing further in North America, according to a transcript of the call. De Vries said coatings overall delivered volume growth of 2% with 2% pricing. Decorative paints volumes fell 4%, mainly in Europe, the Middle East and Africa, where a slower do-it-yourself season in Western Europe was only partially offset by stronger performance in Southern Europe, Poux-Guillaume said on the call. De Vries said softer DIY volumes in Europe were tied to consumer confidence, particularly in the United Kingdom, while a real estate market downturn weighed on volumes in China, according to the same transcript.
Adjusted gross margin improved to 42.7%, up 70 basis points, and free cash flow totaled €108 million ($123 million), Poux-Guillaume and de Vries said on the earnings call. Trade working capital improved to 15.6% of revenue, a 140-basis-point improvement from a year earlier, and return on investment rose to 13.8%, de Vries said. Net leverage stood at 2.2 times, and the company issued a €750 million ($855 million) bond in June, which Poux-Guillaume said completed financing for a special dividend tied to the proposed Axalta merger, according to a transcript of the call.
AkzoNobel's marine and protective coatings segment faced project delays in the Middle East and vessels held up at sea due to high shipping day rates, which Poux-Guillaume characterized on the call as related to shipping conditions rather than a structural issue with the business.
First-half results and outlook
For the first half of 2026, AkzoNobel reported flat organic sales growth and a 5% decline in revenue, which the company attributed to adverse currency effects, according to the media release. Operating income for the half rose to €428 million ($488 million) from €406 million ($463 million), and the adjusted EBITDA margin improved to 14.9% from 14.3%.
Looking ahead, AkzoNobel said it expects to deliver €100 million ($114 million) of adjusted EBITDA improvement in constant currencies for the full year, putting 2026 adjusted EBITDA at or above €1.47 billion ($1.68 billion) based on year-end 2025 exchange rates and adjusted for the India divestment, the company said. AkzoNobel's mid-term targets call for an adjusted EBITDA margin above 16% and return on investment between 16% and 19%. The company expects leverage of around 2 times net debt to adjusted EBITDA by the end of 2026.
De Vries said on the call that the company's assumptions for the fourth quarter remain consistent with its overall trajectory, with cost savings and pricing expected to offset raw material costs, and noted easier year-over-year comparisons in the fourth quarter following a weak prior-year period, according to a transcript of the call.
De Vries said on the call that AkzoNobel's Russian entities were placed under temporary state administration and that the company deconsolidated its Russian activities as of July 13. Poux-Guillaume said the change is not material to full-year results because the Russian business represents less than 2% of AkzoNobel's sales, according to a transcript of the call.
Separately, Poux-Guillaume said on the call that AkzoNobel reached its target of cutting Scope 1 and 2 carbon emissions from its operations by 50%, four years ahead of its original 2030 goal, according to a transcript of the call.
The Q2 results follow AkzoNobel's first-quarter 2026 report, when the company posted adjusted EBITDA of €345 million ($404 million) and Poux-Guillaume said U.S. refinish demand had not yet recovered.
