Sheryl Stokes – Investor Relations Ton Buchner – Chairman and Chief Executive Officer Maëlys Castella – Chief Financial Officer

Paul Walsh – Morgan Stanley Peter Clark – Société Générale Marcus Diebel – Citigroup Patrick Lambert – Nomura Tony Jones – Redburn Partners Jean-Francois Meymandi – UBS Mutlu Gundogan – ABN AMRO Michael Rae – Goldman Sachs Markus Mayer – Baader Bank Christian Faitz – Kepler Cheuvreux Jaideep Pandya – Berenberg

Good morning, everybody, and welcome to the AkzoNobel 2014 third quarter earnings call. I am Sheryl Stokes.

And today, we have our CEO Ton Buchner and our CFO Maëlys Castella to guide you through our Q3 results. This morning, we will also be referring to a results presentation, which you can either download from our website, www.akzonobel.com, or you can follow it on the screen at the same site.

A replay of this call will also be made available. There will be a Q&A session after the prepared statements.

For any additional information, you can contact Investor Relations after the call. Before we start, I need to remind you of the Safe Harbor statement that is contained in the back of the presentation.

Please note that this statement is also applicable to this conference call and the answers to your questions. With this, I would to hand you over to Ton, who will start with the Q3 highlights on slide three of the presentation.

Thank you Sheryl. Good morning and welcome to our third quarter 2014 results call.

I am really happy to be here with Maëlys Castella, our new CFO. Maëlys joined us as CFO just over a month ago and also now as a member of the Board of Management recently appointed at the October 8 Extraordinary General Meeting.

Although Q3 is for AkzoNobel typically a CFO Analyst call, Maëlys and I will conduct this call together. In the future, Q1 and Q3 will revert back to what we normally do and being CFO led quarters.

Now let’s jump into the results. Let’s look at the highlights.

Q3 volumes were up 1% but they were more than offset by currency effects and divestments and that resulted in revenues being down 2%. Operating income €335 million, up 11% versus prior year, and that reflects the benefits from the improvement actions and lower restructuring charges.

This is resulting in a return on sales at 9.1%, up from 8% in 2013. Excluding restructuring cost of €55 million, down €20 million versus prior year, the return on sales is 10.6%, which was up from 10% in 2013 and this represents consistent improvements over the last five quarters, this is the fifth quarter that our return on sales is increasing in comparison to the same quarter of the previous year.

Net income attributable to shareholders was €205 million, 2013 was €155 million and that’s due to the higher operating income and lower financing expenses. The adjusted EPS increased with 24% to €0.92.

Interim dividends of €0.33 declared and the net cash inflow from operating activities was €489 million. We are with what we see in the markets today on track to deliver the 2015 targets despite the continued fragile economic environment.

If we look at Slide number 5, we see the results for the third quarter in a quick glance. Overall, positive volume was offset by adverse currency effects, price mix and divestments bringing the revenue down 2% compared to the Q3 last year.

Driven by benefits from improvement actions and lower restructuring the operating income at €335 million was as mentioned 11% ahead of prior year. The Q3 restructuring charges were €20 million lower at €55 million and note the full table of restructuring charges by quarter can be found in the Appendix of this presentation.

In line with previous guidance, we anticipate 2014 restructuring charges to total at least €250 million for the year. Longer-term, we would expect to see average restructuring charges equivalent to around 1% of revenue as part of what we call ongoing operations.

In Q3, return on sales improvement continues as the growth for the quarter is 9.1% which is up from 8% in the same period last year. Excluding restructuring cost 10.6 as mentioned from 10 last year, it’s a steady return on sales improvement that continues as evidenced now both before and after restructuring charges for the fifth consecutive quarter.

As well as moving average return on investments for Q3 2014 improved to 10.5% from 8.6% for the same period last year, there were also continued to be improving our return on the capital employed. Turning now to Slide 6, we see the quarterly volume and price mix development.

The continued fragile economic environment is impacting all business areas and the market continues to remain challenging. Volume in decorative paints was flat compared to last year as growth in Asia is offset by continued challenging Latin American and partially also some of the European markets.

Similar to Q2, price mix was down 3% in the quarter, but this is not the intrinsic business as much as the biggest portion of this is largely attributable to the distribution channel change in Germany moving from our own stores to selling via independents. This is the biggest impact in that minus 3 and we will continue for a few quarters to go until the sale date of Germany is a year behind us.

Performance Coatings volume was up 2%, so growth was clear in Performance Coatings driven by our Marine and Protective and our Powder businesses. Overall price mix is down 1% for the quarter.

Specialty Chemicals Q3 volumes were in line with 2013, with growth being offset by some planned maintenance outages in the chain as well as industrial action in one of our facilities in Rotterdam in the Netherlands. Price mix was up 1% in the quarter with favorable price mix effects in Surface Chemistry and pulp and performance chemistry offset by continuing caustic price pressure.

Even though caustic price pressure was significant is being overcompensated in the positive way by the other price mix. Now, if we focus for a short minute on the exchange rate effects, we can see those effects are significantly less than it been in the past.

They have not turned positive yet. There is still minus 1%, but they are nowhere near the 5% or 6% that you’ve seen in the individual business areas in the last four quarters.

So there are less of a headwind in Q3, adverse currency effects impacting age 1 2014 were visible in all business areas and the loss income related to this in terms of translation losses is not envisaged to come back with significant positive exchange rate effects going forward. But we’ve seen leveling off of the effects, it was only a minus 1% and therefore much less of an issue than it was previously.

Represented on this slide, the majority of our foreign exchange effects is translational as we’ve mentioned before whereby most of our revenues are naturally hedged. We do have some smaller areas where specifically on the raw materials side, we have some transactional foreign exchanges when we import dollar-denominated raw materials into countries like Brazil, India, Turkey and Southeast Asian countries, where the local currencies have actually changed so much that into domestic markets it precedes even that some of these raw materials have gone up.

Stepping to slide number 8, we are going into the individual segments. Buildings and infrastructure, as you know is our most important segments at around 44% of revenues.

Overall leading indicators around consumer confidence very, very strongly per region and have a clear influence on our end-user consumer buying decisions related to housing, cars, furniture, consumer goods and alike. Industrial is our second most important segment around 24% of revenues and then we generally look at the PMI data and the ones that have been released in October 2014 indicate that output remained on the growth side but are slightly eased compared to the previous three months.

In Brazil, Russia and India, the PMI indicators are still disappointing as they’ve been in France. China is flat to neutral, whereas the US remains strong, although the rate of expansion eased.

Europe also eased to neutral with mixed results, Germany stick into contraction is a concern not necessarily specifically for the country itself, but the potential impact it may have on a broader European environment. The Netherlands, Italy and Sweden, saw some recovery as did France, but France has still a long way to go before reaching the neutral stage when it comes to purchasing manager indexes.

The overall picture remains one of weakness. With continued concern around the Eurozone and warnings in particular around Germany’s industrial output, combined with slowing emerging economies, the global economic forecast have generally reduced and we do expect of course that, we see that coming through some of the market segments that we are active in as well.

While our markets have clearly remained challenging, we continue to also focus on the operational improvements on the organic growth that we can generate from within to continued improvement and to deliver on the targets that we’ve communicated. If we step to Slide 9, we have some specifics around the Decorative Paints business and its financial highlights.

Revenues in the quarters were down 8% primarily due to the divestments of buildings and adhesives and some adverse price mix effects as mentioned primarily driven by the German change in distribution channel. Buildings and adhesives divestment was completed on October 1, 2013.

So it’s now 12 months behind this and that means that the impact will become less visible going forward. The sale of the building had an impact of €47 million on the revenues and €3 million on the operating income in the quarter.

For reference, the 2014 quarterly revenue and operating income divestment impacts for decorative paints can be found in the appendix of this presentation. Q3 volumes in decorative paints were flat with higher volumes in Asia offset by a very slight decline in Europe and continued weakness in Latin America.

In China, volume continued with healthy growth. Europe volumes fell slightly, down 1% with mixed regional performance.

Growth continues in the UK offset by declines in some of the European continental countries in the quarter. Latin America continues to be a challenging environment for the Decorative Paints business.

Price mix impact is largely due to our distribution channel change in Germany. Our German store divestment was completed at the end of March this year.

Exiting the stores had a negative price mix impact on revenues as we are now selling to independent wholesalers instead of directly to customers and also the non-paint related sales is not part of our portfolio anymore. In Q3, various operational efficiency improvements continued to lower the cost base.

Although restructuring charges for the quarter were not very high that’s primarily a timing issue and it’s important to note that further restructuring actions will continue through to the yearend 2014. Mainly due to the low restructuring expense and effects from the restructuring programs contributing, Q3 operating income of €113 million is up 6%.

Reported return on sales for the quarter was 10.8%, up from 9.8% for the same period last year. Adjusted for restructuring cost return on sales was 10.8%, up from 10.1% last year.

During the quarter, AkzoNobel broke ground on its new Decorative Paints side in Chengdu, the capital city of Sichuan Province in China which is a similar thing for the Powder business in Performance Coatings and the two of them are in the same area benefiting from the growth that still takes place in the west of China where some other areas are clearly seeing a reduction in growth. Stepping to Performance Coatings on Slide number 10.

Quarterly revenues in Performance Coatings were flat with positive volumes offset by negative price mix and adverse currency effects. Overall volumes were up 2% primarily from higher volumes in Marine and Protective and the Powder businesses.

Powder Coatings volumes from all regions were positive in the quarter. Marine saw increased volumes in deep sea maintenance and new construction over the prior years.

But we do check the backlogs of the various ship yards and we do see that they are not growing as fast anymore as they did in the first half of this year. In line with previous guidance, Q3 restructuring initiatives picked up as we announced a strategic reorganization by delayering the organization.

The Q3 restructuring cost for Performance Coatings were specifically were €41 million and therefore €32 million higher than in the same quarter last year. Due to higher restructuring activities, Q3 operating income of €135 million was 16% lower versus previous year, accordingly, the return on sales came in at 905% from the quarter, but if you look at the underlying excluding restructuring return on sales, growth was actually up at 12.4% compared to 11.9% for the same period last year.

So underlying up and because of restructuring, actually the face value return on sales down for the quarter. During the quarter, construction of a new coatings site of AkzoNobel Automotive and Aerospace in Changzhou has been completed adding an additional 25 million liters per year and as we mentioned we broke ground on a powder coating facility in the west of China.

Slide number 11 shows you the parts that we did as part of the restructuring for Performance Coatings. Now we’ve simplified the structure – the management structure of Performance Coatings and it’s due to become fully operational in January 2015 and it significantly reduces the number of global management layers.

That has a number of advantages in terms of proximity to the markets, direct decision-making, agility and directness. Performance Coatings will move away from a dual business unit to sub-business unit structure to be managed straight through seven strategic market units that focus on specific customer segments and technologies.

The SMUs, as we call them, Strategic Market Units will be Marine Coatings, Metal Coatings, Powder Coatings, Protective Coatings, Specialty Coatings and Vehicle Refinishes and Wood Coatings, you have seen us comment on each of these individual parts in previous quarters as well and we are now going to directly steer through the BA these particular SMUs. This planned reduction in management layers will not only enhance decision-making efficiency, but it will also create an organization that is more customer-focused, agile and lean.

We consider these to be key elements with regard to driving leading performance, because in addition to delivering on our organic growth and operational excellence strategy, the changes will also improve our profitability and help to deliver our 2015 targets and beyond. The costs associated with this reorganization are partially included in our third quarter restructuring charges in Performance Coatings and is in line with previous overall restructuring guidance for the full year.

Looking at Specialty Chemicals on Slide 12. Revenue in Specialty Chemicals were down 1% primarily due to the adverse currency effects and divestments.

The divestments include smaller companies and activities such as primary aimings and pure aid businesses that were completed in Q4 2013. Volumes during the quarter were flat compared to the previous year with growth in our Functional Chemicals and Bleaching businesses being offset by some planned maintenance outages in the chain as well as an industrial action at our Rotterdam site mentioned before.

Continuous improvement measures continue in all businesses. Q3 restructuring cost of €600 million are significantly lower than the €21 million last year in the same period when we initiated several restructuring actions in Functional Chemicals from which we see the benefits clearly during the course of this year.

Operating income was up on last year by 46% at a €156 million largely due to these lower restructuring costs, but also the cost control associated with it and the improved price mix coming through. Return on sales is 12.6%, up 8.5% last year excluding the restructuring cost; return on sales is 13.1% for the quarter improved from 12.2% for the same period last year.

I will now hand over for the financial section to Maëlys; she will present the two financial slides in the presentation.

Thank you, Ton and good morning everybody. I would like first to express how delighted I am to have joined AkzoNobel and my first month was very positive.

Moving to the P&L on Slide 14, there are few lines to note. We are reporting no incidentals in the quarter as most restructuring costs and non-recurring items are now included in operation and as mentioned by Ton, you will find the detail in the appendices.

Financing expenses decreased by €18 million to €38 million for the quarter. We continue to see lower financing expenses as a result of bond repayment end of the last year and beginning of this year which carried high interest rate and lower net debt level.

The year-to-date effective tax rate is 27%. Net income attributable to shareholders was €205 million for the quarter, up plus 32% from previous year’s quarter of €155 million.

Adjusted earnings per share were €0.92 for Q3 2014, up plus 24% from prior year at €0.74 on gains. Turning now to cash flow on Slide 15, we can see the Q3 2014 results in an operating cash inflow of €489 million.

Working capital movements resulted in an inflow of €137 million, representing normal seasonal patterns. Q3 2014 operating working capital as a percent of revenue came in at 12.1%, in line with Q2 2014, but from Q3 2013 at 11.8%.

Q3 CapEx was €137 million, in line with same period last year, while year-to-date CapEx is down versus prior year. 2014 full year CapEx trending towards around 4% of revenues and closer to depreciation and amortization levels ongoing.

Net debt at the quarter decreased to €1.8 billion, down from €2.1 billion in Q2 2014 mainly due to net cash from operational activities. Overall to note, we have declared an interim dividend of €0.33 that will be paid in Q4.

At the intended sale of petrochemicals to Kemira is expected to close in early 2015 subject to regular consultation with employee representative and regulatory clearance. I would like to express that for me cash flow is key and we will continue to focus on improvement and keep it as an important priority.

I would like now to hand back to Ton for the conclusion.

Thank you, Maëlys and in conclusion on Slide number 17, this is the fifth consecutive quarter of improvement in return on sales at Group level and the underlying return on sales improvement is visible in all of the business areas. Our continuous improvement programs are ongoing in all businesses and we expect to finish the year with at least €250 million in restructuring costs, as well, and that is maybe not directly a financial topic, but we are very proud to have retained our first place in the Annual Dow Jones Sustainability Index in our sector, where we were placed first out of more than 350 companies in the metals, materials, and chemicals group.

This is a great endorsement of our planet possible initiative to do more with less and to continuously improve our sustainability performance. This continuing investment in sustainability and innovation will have to further enhance our operational efficiency and stimulate organic growth and it will also boost our market-leading positions.

We are on track to deliver the 2015 targets despite a continued fragile economic environment. Based on what we see today in the markets, we are on track to deliver them.

With that, this concludes our formal presentation and we would be happy to take your questions. Thank you.

Thanks very much. Morning, Ton, morning, Maëlys.

And I’ve got three questions if I can please. Firstly, can you talk about the raw material build, obviously deflationary pressures beginning to manifest themselves, can you tell us how that’s likely to turn up in your business and the extent to which that’s going to put pressure on pricing and do some relief to gross margin and what you are expecting for next year?

Second question, the pickup in profits in spec chems looked fairly substantial sequentially in Q3, can you talk about what the main drivers are there and how sustainable that is going forwards is there any reason to believe that’s one-off or not? And then just lastly, your working capital inflows weren’t quite as strong in the third quarter of this year and I am just wondering why that was given lower revenues?

Thanks very much.

Thank you, Paul. I forgot to say something at the end of my presentation that you are going to be benefiting from because we are going to ask everybody to restrict themselves to two questions, but I’ll answer your three.

So, let me start with them.

Sorry about that.

No worries, it was my mistake here. So, raw material build, what we’ve seen in 2014 is that has been relatively benign.

So it’s been quite on the titanium dioxide front, no significant movements and the oil price has been reasonably flat and has recently shown a decline. Now we buy a lot of oil derived commodities in specialties.

They each have their own dynamics. They certainly have not been going up in any very significant ways if you look at the global environment and with a certain delay, if the oil price would stay at the present levels, we would also see that in the oil-derived purchases that we do.

But overall, if I would predict which is of course a hard thing to do is it’s definitely a benign environment towards the back-end of the year with no significant changes probably in the first quarter and I will hesitate to predict any further in the present economic environment that shows the volatility that it does. The pickup of the profit in spec chem is driven by a lot of the restructuring that we announced in the Q3 and Q2 results of 2013.

So we do see a combination of some growth returning in some regions combined with significant cost take outs and efficiency increases and across the board cost control. But overall we also have headwinds such as caustic price pressures and alike.

So, it’s a combined aspect and it is definitely a strong development. Overall, spec chem will continue to be a strong performer in the portfolio.

The sustainability aspect of it we’re doing everything to make the improvements as sustainable as possible. Working capital, if you look at the developments, during the course of the year they’ve been, quarter-wise they’ve been slightly different compared to previous year.

Overall, the changes that you’ve seen specific to the third quarter do not concern us at this point in time yet. It continues to be as Maëlys said a high focus topic for AkzoNobel.

Cash is one of the priorities than I’ve communicated at the very start of the launch of this strategy and it continues to be a focus area.

Thanks a lot guys. Thank you.

If I could ask people to restrict themselves to two questions, we will get more people the opportunity to ask questions. Thank you.

Yes, good morning. Welcome Maëlys.

Dulux could prove a bit more exciting than nitrogen we don’t know yet. But let’s see.

I am just going forward on the Marine business. You pointed to the backlog building and it’s not being – a bit tougher than the beginning of the year.

PPG earlier were pointing perhaps a three or four year recovery window on that business in the new build. Just wondering on your thoughts on that and related to the profit hay you saw, because I calculate it was perhaps as much as €40 million or €50 million of EBIT you lost in that particular business than you will in Marine.

And then also the second question is, looking at the new structure for packaging, sorry, new structure for the Performance Coatings and within that something like packaging, presumably that fits within the Metal Coatings primarily, but how that would work on the basis of it being quite a global market, quite consolidated to customer base within the new structure and I presume the focus as you say on the metal side within that new structure. Thank you.

Thank you, Peter. Specifically, your first question on the Marine business, we actually indicated in Q2 that we saw a recovery of volume and backlogs and that was a Q2 statement that we make.

I can’t refer to other people’s statement. What we do is, we look at the backlogs of the shipyards around the world.

We did see significant uptick during the first half of this year. We see it continuing to grow, but it grows at lower growth levels.

And so, again that’s not an indication of our business. Our business generally has a 12 to 18 months delay on what the backlog of the individual shipyards is, but I was just indicating that it continues to grow but grows at a lower rate than it did before.

And generally that’s an indication of 12 to 18 months later for our businesses as such. It’s still on the recovery track albeit with a slightly slower growth level.

If we look at the new structure, what we’ve done is, we’ve actually in many ways, taken a layer out between the individual businesses such as packaging or coil or wood and the head of the Performance Coatings area. So, now, it’s going to be, there is one layer left between the head of Performance Coatings and the customer or it’s one layer left between me and the customer if you want to express it that way.

It allows for more direct feedback, more direct decision-making, higher level of agility, and that’s not just specific to the metal coatings which indeed includes the packaging coating, but it is for all the businesses involved and it creates a much more direct communication on the operational monthly reviews that we do when we talk about customers, competitors, market trends and the operational efficiency.

Thank you. Can I just quickly follow-on the Marine thing, from what you are saying then, I mean, it won’t be a reflection in terms of the recovery, it won’t be a V shape.

It took three, four years to come down, it could well be slower coming up again. You are seeing the slow recovery but it’s probably not recovering as fast as it came down?

Yes, but we basically, I guess, you can see on the basis of the backlog of the ship yards, when the coming down takes place, significantly advance of it occurring. We saw quite a nice uptick in the first half of the year of this backlog and that uptick grow slower so indeed.

It’s not going to be a V shape back to the level where it was at the beginning of 2007, 2008, 2009.

Thank you.

Next question please.

And the second question from me following up from Paul, it’s on pricing, I mean, in both deco and coatings we see a negative pricing. How should we think about pricing going into next year given that raw material prices are likely to come down?

All right, thank you for the question. If you look at Europe in general, it’s of course a combination of 30 plus countries that we are active in, in the aggregate and even in individual countries, we’ve not seen any notable market share changes among the key players in the industry.

So overall, whether it’s UK, Continental Europe market share developments which we watch carefully have not shown any incredibly exciting or terribly negative pictures. It basically remained as we’ve seen it in the recent past.

When it comes to pricing, it’s a price mix combination that you are looking. The price mix combination as we said in deco is largely driven by a change of distribution channel.

So that really has not in any significant way been a negative factor. It is also not related to raw materials or alike.

Basically it’s been very benign in the market which in the aggregate has remained quite challenging and a similar change is the case for performance Coatings. You, of course also look at mixes that are related to how big is the wood business compared to the Marine business.

How big is the Packaging business compared to the Protective business and it’s one of the slightly lower margin business that grows that faster than the others and that’s what you see in that mix effect. So, overall, at this point in time, we don’t see concerning effects and the mix effects either.

Okay, thank you.

Next question please.

Hi, good morning. Thanks for taking my two questions.

Regarding Performance Coatings, the price mix has been answered and I guess nothing dramatical, could you quantify a little bit expectation on the benefits of restructuring in Performance Coatings going forward? And the second, that mix use on the aerospace, I think on one point you said, that was down, but on the segments basically volumes in aerospace grew, can you comment a little bit more on this quicker but – we’ve seen a pretty decent backlog on aerospace too pretty strong.

If I can get your outlook on that? Thanks

Okay, the benefits of the program are included in the targets that we aim to achieve. So we put a long-term plan down and say we want to achieve the targets for 2015.

So, if you look at the profitability of Performance Coatings, there is a continued step forward as we are trying to develop in other areas. So the actual deliverables of these savings which are likely to take place more in 2015 and very few of them in 2014 because the execution phase is still ongoing.

So the benefits are 2015 and they are part of the target that we’ve communicated. If I specifically answer your aerospace volumes, it actually grew.

The aerospace backlog of Airbus and Boeing is still very healthy and it continues to be healthy for us as well as a key supplier to these two including other air plane suppliers such as Bombardier or Embraer. So, we actually see a positive development, I do have to say that the aerospace segment for Paints and Coatings is relatively small.

Thanks.

Next question please.

Yes, good morning. I’ve got two questions please.

One is again, going back to the working capital point. It looks like inventories have gone up about €100 million.

Inventories on the balance sheet have gone up about €100 million and as Paul was saying, top-line has been down year-on-year in Q3 and in a benign raw material environment, I would have thought that the value per unit wouldn’t have gone up. So can you maybe talk about operating rates while you’re been through the quarter and how you are thinking about Q4 given the comments you’ve made on leading indicators being slowing down, so can you maybe talk about what you are thinking on operating rates and how you are going to manage the inventory number into year end?

And the second question is on the dividend, you kept the interim dividend flat, I am just wondering if that could be an indication of your thinking for the full year as most of us assuming a small dividend increase for the total dividend for this year? Thank you.

Thank you for your questions, (Inaudible). On the working capital side, as I said, the individual fluctuations within the quarter, we study them carefully, we are – on top of this specifically in the present market environment, we don’t only look at our inventories, we even look at inventories in the chain further down to our customer base.

Overall, what we see normally in the fourth quarter which I think is the important part of your question is that, we see a clear seasonal unwind of working capital. So, we are going to focusing very much on what certainly looks like an increase for now that we can take a lot of that out during the seasonal unwind during the back-end of the year.

On the working capital performance as such, I do believe that this is one of the parameters where we are clearly not bad compared to our peers, but we are on it specifically because, cash flow is such a big theme at AkzoNobel, not only for myself but also for Maëlys who has expressed that earlier. From a dividend perspective, these of course are supervisory board decision in terms of proposing them.

So I will be unable to walk ahead of what the full year dividend will be, that will be decided, I guess somewhere towards April next year. But at this point in time, we are working on improving our cash flows in such a way that we can pay our dividends out of our operational cash flows that has not been the case at the time then I arrived at the company and it is a focus and that is something that is a driver for the way we actually deal with the dividend when it comes to increases, but I really do not want to walk ahead on decisions that are the management decisions as such but very much the shareholder decisions in April.

I hope that answers your question.

No, just on that point, in between the lines, does it mean that you would want to cover the existing dividend with cash flow before you think of increasing it.?

It’s certainly, the focus is to pay our dividends out of our own operational cash flows and we have a policy that says, we are stable to rising. You’ve seen a very stable dividend and that should show you the confidence that we have in achieving that target.

Thank you.

Next question please.

Good morning. Two questions from me.

Firstly, with the trading environment continuing to be very challenging in some markets, what is the scope for deeper restructuring? And then secondly on deleveraging and you have a bond which is due to be refinanced next year on fairly high coupon rates, and could you maybe talk about at what rate you think you could refinance on, because I just had a quick look at and it looks like you could benefit from lower financing charges around about €25 million €230 million.

Thank you.

So, the trading environment, what we do not expect is a significant improvement in the trading environment compared to what we’ve seen which was fairly a challenging Q3 in the industry overall. We therefore have tried to include everything that we believe we need to do.

Overall, if there is a need for additional measures, we’ve always said, we are committed to making those targets and barring very significant discount annuities into the markets, we will basically double up when we need to. Overall, the trading environment assessment as such is that with the envisaged restructuring of at least 250 this year and around 150 next year, we believe that we are on track to make the targets for 2015.

But that’s basically on what we see at this point in time. If we look at our coupon first quarter next year, it is a 7.25% coupon.

Whatever we do with this coupon, the cost will be lower and they will be quite significantly lower and again, I am not going to confirm the calculation that you made, but it is quite obvious that the rates at this point in time for similar bonds with similar duration, or even longer durations would be significantly below that 7.25%.

Thank you very much.

Next question please.

Hi, Francois Meymandi from UBS. First question, sorry to come back on the last and last point on the working capital.

I would like to know, if a build-up or let’s say the slightly less good results than anticipated where in your three divisions would you see higher than normally working capital. It would relate also to my second question, well, stronger results in Specialty Chemicals how do you see, did you see volumes in September?

Some of your competitors were saying that September has been less strong than anticipated and therefore could be a leading indicator for lower Q4 what do you see there especially on the seasonality in Specialty Chemicals? Thank you.

All right. On the working capital, I think it is, we don’t normally provide the specifics on which particular business area the various developments are in excess to what you see in the quarterly reports.

So you do see the changes which basically if you look at year-on-year, deco is down as a percentage – flat and the increase that you’ve seen is in the Specialty Chemicals business. So, overall, if you don’t compare it to the end of the year which includes to unwind but if you really do it on a year-on-year environment, you have two that are flat or down and one that’s up.

So if there is an issue that we are jumping on is specifically into the Specialty Chemicals area. But it is a kind of the normal seasonal pattern, it’s kind of an end of a month and end of a quarter.

This is not something that we necessarily look at on a day-by-day or quarter-by-quarter basis. We want the long-term trend to be right and we are working very hard on it.

You asked about the developments in the third quarter. I am already having so much in the quarterly reporting that I wouldn’t want to change it into monthly.

But from a volumes perspective, from a market perspective what I can say is that the third quarter with all the things that you’ve seen on the stock market and the volatility that you’ve seen there. You’ve also seen kind of all kinds of developments in individual weeks I would say, that I wouldn’t trend into higher or lower.

It’s been a challenging quarter for many of the players in the industry overall. I don’t expect a significant improvement or a lower volatility in Q4.

It will continue to be challenging and that I think is about the specifics that I can give on Q3 volume development.

Thank you.

Next question please.

Yes, good morning everyone. First question on deco Europe, could you give us the organic growth for the quarter excluding the impact of the German stores and preferably in volumes and price mix?

And then secondly, on your 2015 targets, you’ve said yourself several times that the macro picture indeed has deteriorated in the last couple of months. Can you share with us what kind of organic revenue growth you need to get to the 9% return on sales?

I think that you talked about that you assumed trading conditions to be not materially different than Q3, i.e. does it mean that you expect zero percent organic growth going forward?

All right, if you look at the volume of Europe, it is basically very dotted over the various 30 plus countries that we have. In the aggregate it’s been slightly down and I think we indicated that in the report as well.

So from a volume perspective it is slightly down. But it is incredibly varied across the region and it is not constant if I would look at various quarters in a row.

So the countries that are been growing in the second quarter are actually showing different developments in the third, so there is no constant pattern in what goes better or what goes wrong. Although we do see if there is one pattern, the UK is starting to get more and more healthy over time and we do see some recovery in the periphery, but the third quarter has shown some jitters in the Eastern European environment on the basis of the Ukrainian, Russian developments.

Price mix, I can repeat what I mentioned, which the largest portion of that price mix effect is the German stores which implies that the real price mix effect excluding the German stores has been very small. Then if you look at the 2015 targets and the organic growth assumed well I guess, for those of you who were at the Strategy Meeting in 2013, we actually built in our plans an organic growth level of 3%, 4% for the individual businesses that has clearly not occurred and you’ve seen us adapting to that environment continuing to be committed to the 2015 targets and at this point in time, we believe we have the measures in place barring any significant discount annuities taking place during the Q4 2015 environment.

Okay. Thank you.

Next question please.

Yes, hi there. Thanks for taking my two questions.

Firstly, can you quantify the EBIT impact of the industrial action in Rotterdam in Specialty Chemicals in 3Q and also is there any kind of hangover effect in 4Q there? And then the second one, I mean, you've already touched on this, but, is it possible at this stage of the year to just give a more defined figure on what the restructuring charges will be in total?

Thanks.

The EBIT impacts of the Rotterdam part, let me quickly elaborate for those who are not in details. Basically, we have a workforce of 260 people in Rotterdam, of which 45 people have gone on strike and they basically have asked for a 10% salary increase.

We have said that that we precede that to be slightly unreasonable. That is why the situation is going on at the moment.

The impact on the Q3 numbers have been immaterial. So they’ve been very small.

Now the industrial action continues in October. So, yes, there is a hangover and there will also be an effect in Q4.

Our approach is that we much prefer this to be solved in a constructive way with reasonable discussions and we hope we get there very soon. So our hope is that we can solve that soon.

But we are one of the two parties that are part of this discussion and we are not in full control of what they can place. We can believe that the request that they’ve put on the table are not reasonable request in a close to deflationary environment in Europe including the Netherlands and some parts.

So, a defined figure, at least €250 million is what we’ve communicated and at this point in time, that’s really the specificity of what we are saying.

Okay. Thank you.

Yes, good morning. Also, thank you for my two questions.

Coming back to – sorry, on the restructuring costs, so, as you said, worsening of environment in particular than on the construction materials or building end-markets and you have said that costs then for 2015 are around about €150m and therefore in line with your old guidance. Does this mean that you potentially have to spend more than in Q4 that you previously have planned for?

That's my first question. And secondly, on this delayering of the Performance Coatings, is this already also an indication that there could be portfolio changes in this division as well?

Thanks.

To start with the last one, we basically are committed to the businesses in Performance Coatings. So you should not expect any significant portfolio changes in Performance Coatings.

On the restructuring costs, basically, we’ve looked at all the preparations that we’ve done. As you know, when you do significant restructuring, it will take a while for the benefit to come through.

So, at this point in time, I do understand the concern of significantly worsening environment. We are watching it very carefully ourselves.

If expert things need to be done and that’s right for the business, we will not hesitate doing so and we will openly communicate it. But at this point in time, we remain with the guidance that we’ve given which is €250 million and €150 million for 2014 and 2015.

If things need to be done, I think you can trust that we will embark on doing so. Whatever is right for the business, we will do.

Perfect. Thanks.

Yes, thanks. Christian Faitz from Kepler Cheuvreux.

Just one question left, a quick one in deco Latin America. This was surprisingly stable in Q3, especially compared to their previous quarters.

What happened there? Is it just self-help as you mentioned in your earnings release or did you also capture some market share?

Thank you.

Latin America, tough environment, exciting around the World Cup, but everybody was in front of the TV and not painting houses. We also had of course the elections going on, tough environment to operate in.

We’ve done, we’ve seen some of the contraction in the past but we have actually indeed done well. And I guess, it’s a combination of pricing and volume actions that were there and a lot of cost control that we put in, in time in anticipation of the expectation of the market slowing down.

So, we really – we very much were early in doing the right things in Latin America because we saw this slowdown coming. It’s come exactly as we expected it to come and as a result we feel that we are positioned very sound in the country.

I am unable or I guess, we are not really commenting on market share developments in the individual areas. But, Latin America in this tough environment in our organization has done well.

Okay. Thanks.

Yes, thank you. Good morning.

One question left on Performance Coatings. I tried to get a better understanding of the underlying current profitability and adjusted for the PIP charges, it seems to me that the operating income is down and that the operating income margin is down more than 120 basis points on the second quarter.

Can you give me a better understanding of what has happened here in the third quarter besides the restructuring charges we discussed already? Thank you.

Again, I guess, we’ve been very much comparing it with same quarter last year in all of our assessment as such. We have seen that the two central quarters are not always consistently the same and that has to do with market developments.

It has to do with significant site holidays in Europe which take out a significant amount of the trading days and activity. Compared to the previous year, it has clearly been up.

It’s just compared to the second quarter, which is a very active quarter in the season without a significant number of holidays, that different. So overall, this comparison with Q2 is not a concern to us.

We are continuously improving profitability relative to the same quarter in the previous year.

Thank you.

Thanks. Just on Specialty Chemicals, can you give us a bit more color on Pulp and Performance, because if I adjust for the divestment and FX, it seems like you had very nice organic growth there.

So, if some more color on what is going on there and also when have the chemical islands that you were talking about in the past, have they already been operational in Brazil? So that's the first question and the second question is, if I just look at your Group P&L, I mean, SG&A as a percentage of sales has remained fairly stable around 30%, 31%.

So once you are done with all the restructuring, where do you see this sort of long-term in two years and more on a short-term basis, there was a swing in the other line, minus 13% versus plus 19% in Q3. What was that related to please?

Thank you.

All right. If you, look at the Pulp and Performance business indeed the Brazilian chemical islands have come on stream.

They have started to produce, one is producing in full, the other one actually ramping up its production in line with the customer ramping up with this site. These have been very positive developments.

We’ve done these investments which are being very significant in the 80 plus million euro kind of magnitude to get this organic growth going. So, if it would not have come, it would have really concerned us, we are happy, it does come.

They are running, they are on stream and they have seriously driven the organic growth in the Pulp and Performance business and again, that is being quite countered to the general Brazilian environment, because most of that is going for exports into the various regions in the world. When it comes to the SG&A and we have our global business services project going on, what we are transferring a lot of the functional activities into a more centralized and standardized processes, that is ongoing as we speak.

You see some of those restructurings that are taking place in functions such as finance and HR and IM and others in this SG&A cost as well. The biggest block in the SG&A is clearly the S and therefore, that’s of course the part that drives our organic growth price.

But we are working very hard on the G&A and to really drive that G&A down. The others, and the others in others and the others in others is really something that is not specific in addition to what we actually have specified in the quarterly reports.

It’s certainly not a concerning number. It’s a whole mix of impacts that is in that particular number.

Sorry, just the €80 million you are talking about is for both plants or for one plant?

Per plant, investments are in the order of magnitude of €80 million.

Okay. Thank you so much.

And they’ve been part of historical CapEx. So they have done their finished.

None of that CapEx is forward into the system and it’s all been done they are being commissioned, they are producing and they are actually generating money.

Thank you.

Hi, got two quick follow-ups. The first one on performance improvement costs.

When we look at the quarterly developments, it is quite fluctuating in between divisions. Can you talk a bit through Q4 what do you see and longer-term, let's say at least 2015, where – which area would you like to focus on, the first one.

And the second one, in Specialty Chemicals how do you see the maintenance shutdown cycle in your company? Would you do some exceptional shutdowns or longer or completely normal cycle there?

Okay, to start with your last question, the maintenance plant shut downs that we talked about earlier in the call, they are what I would call smaller maintenance stops, they are planned stops. They happen every year.

Sometimes they happen in the China plant. Sometimes they happen in a Swedish plant or in an American plant.

These are completely normal. They are part of the regular course of business and we only raise them because it’s kind of, they happen sometimes in a Q2 or Q3 or Q4 and then impact the Specialty Chemicals numbers.

So the maintenance, the plant maintenance stops you’ve seen this year are nowhere near as big as the one that we had in Q1 last year, in the Netherlands only when they are extraordinary, we will highlight them. What you’ve seen in Q3 is basically regular course of business is I may call it that way.

But for Q4?

Q4, again, only regular course of business, maintenance stops, we don’t have a very, very significant one planned. That would be needed to be raised here at this point in time.

If I look at the quarterly developments of costs, I guess, we will continue with Performance Coatings having a significant part of the further execution of their delayering and we also have decorative paints kind of coming back to more normal levels compared to Q3 where they have had a very low level of restructuring. So, decorative paints will come up compared to Q3 and Performance Coatings will continue to be quite high, Specialty Chemicals, as we indicated also in Q2 is expected to be the one that has the lower restructuring cost for Q4.

Into 2015, we are certainly in the beginning also still expect Performance Coatings to continue with their delayering activity, but it should taper out towards the back end of the year. I have been signaled that we have time for one more question.

Good morning again. Yes, it's a follow-up on the deco business, what you were saying on market shares, no big shift across Europe.

Obviously, the problem market you face particularly has been France. The market is still declining here according to your big competitor over there.

You were losing share, I think earlier this year and certainly last year. Just wondering if you're now with the market or you're still slightly worse from a market in France because I know you've done some remodeling, you're quite happy about how that's gone, but presumably that's not all of the stores; it's some of the stores in France.

Thank you.

I can confirm that France is a tough place to be at this point in time for the Decorative Paints business. We clearly have still a very much strong number one position in the Consumer side of the business.

I have in previous calls also referred to the fact that if there has been a kind of a knocking of the heads going on, it’s been on the trade side, we have not perceived to lose market share in the recent period.

Okay, thank you.

Good, then allow me to thank you very, very much for your interest, for all being in the call today and I wish you a very nice remaining part of the day. Bye-bye.