Lloyd Midwinter - Director, IR Antony Burgmans - Chairman Thierry Vanlancker - CEO Maelys Castella - CFO Hans De Vriese - Group Controller

Tom - Citi Paul Walsh - Morgan Stanley Tony Jones - Redburn Peter Clark - Societe Generale Jeremy Redenius - Bernstein Patrick Lambert - Raymond James Mutlu Gundogan - ABN AMRO Jeff Herr - UBS Chetan Udeshi - JPMorgan

Hello and welcome to the Akzo Nobel investor update for the half year and Q2 2017. I'm Lloyd Midwinter, Director, Investor Relations.

Today are Chairman, Antony Burgmans will start with a brief update regarding shareholder engagement initiative; then our CEO, Thierry Vanlancker and CFO, Maelys Castella will provide an update on our strategy announced in April and guide you through the results for the half year and Q2. Our General Counsel, Sven Dumoulin, and Hans De Vriese, our Group Controller are also on the call.

We will refer to a presentation, which you can follow on screen and download from our website, Akzonobel.com. A replay of the call will also be made available.

There will be an opportunity to ask questions after the call. For additional information, please contact Investor Relations.

Before we start, I would like to remind you about the disclaimer at the back of this presentation. Please note this statement is also applicable to the conference call and the answers to your questions.

I’ll hand over to Antony Burgmans, who will start on Slide 3 of the presentation.

Thank you, Lloyd. Good morning, everyone and thank you for joining us on this call.

Now as you know, Akzo Nobel values it's relationships with shareholders and takes this responsibility very seriously. In recent months, this relationship especially with a particular group of shareholders has been somewhat impacted by events surrounding the country.

During the past six months, we've held 50% more meetings and calls than the same period last year. We have intensified this dialogue to actively solicit the view to shareholders to create a plan to strengthen our relationship.

We have been seeking and leasing to feedback. In June, we held more than twice the number of meetings and calls with investors compared to the same month last year, and shareholders survey received input for more than 42% of the total shareholders including those shareholders who have recently challenged the Company.

The Board of Akzo have thoroughly reviewed and considered the feedback received from shareholders in order to determine appropriate additional next steps. So, I'm now announcing the next steps.

The Company today announces a number of initiatives with purpose of improving shareholder relations. We will conduct a program of meetings to introduce our new CEO, Thierry Vanlancker.

On September 8, we will host an EGM to provide further insight into our strategy and decision in respect all PPG proposals. We have also appointed David Mayhew and team from JPMorgan Cazenove as advisors to a newly established Supervisory Committee on shareholder relations.

Moreover, senior executive remuneration will be totally aligned to the new financial plan, as we announced in April. And we will augment our ongoing program of engagement activities with specific webcast and events to analysts and investors.

All are stakeholders as you know are important and we look forward to an open and constructive dialogue to shareholders as we deliver on our strategy to accelerated growth and value creation. I now hand over Thierry who will provide an update on our strategy announced in April.

Thank you, Anthony, and good morning to everyone. This is the maiden call, so I'm really looking forward to getting to know you all in the near future.

It is truly a privilege to be now the CEO of Akzo Nobel, the Company that is full of great and highly engaged people and are constantly focused on delivering the best product to our customers every day. In my previous role as a member of the Executive Committee, I was deeply involved in developing a strategy to accelerate growth and value creation which we announced in April and as summarized on Slide 5 of this presentation.

We will continue to deliver on our plans for the creation of two focused highly performing businesses Paints & Coatings and Specialty Chemicals. We have a strong financial and operational foundation in place and we are making good headway.

All of this underpins our confidence on delivering in our commitments for 2017 and the years to come including increased shareholder returns. Turning now to Slide 6, we are progressing our strategy to accelerate sustainable growth and value creation.

So major developments during the first half of the year include capacity expansions to serve customers demand from key markets, and for growing product lines, the launch of premium Decorative Paints product lines in hydro markets, and two targeted acquisitions to strengthen our performance coatings business. Today we also announced a new structure for our Executive Committee including the appointment of Ruud Joosten as Chief Operating Officer and elevating of our Integrated Supply Chain Leader, David Allen.

This change is designed to drive operational excellence, increase customer focus, and build further momentum and speed. It is all about execution.

We're also making good progress with regard to the separation process. I’ll now provide some more details on the next slide.

We are fully on track to create two focused high performing businesses, Paints & Coatings on the one side and Specialty Chemicals on the other. The alignment of our leadership and organization structure is underway and the works council engagement process is ongoing.

Detailed roadmaps are already being implemented for critical transitions including legal and IT. All external advisors have been appointed and are working seamlessly with the Akzo Nobel internal teams, following a dual track process to maximize value.

Due-diligence is also taking place by appointed third-parties. The separation process is fully on track for completion by April 2018 as we indicated earlier.

Turning now to Slide 8, during the past two years we have delivered year-on-year cost savings of more than €200 million from continuous improvement and operational excellence. Our ALPS continues improvement program continues to be rolled out to more of our manufacturing side and we have made significant progress with implementing our GBS model for the support functions.

Savings are running at a similar rate for the first half year of 2017 and we expect to generate savings of €150 million to €200 million for the full year. Taking into account the higher raw material prices in an inflationary environment, we are taking the appropriate measures including putting in place a structure to step and drive operational excellence and additional cost control.

We aim to be at the high end of our guidance. So continuous improvement really is and will continue to be part of our [DNA].

We will now guide you to the operational and financial review for the first half year and the second quarter of 2017 starting on Slide 10 of the presentation. During the first half year 2017, we have seen growth continue in many markets, while conditions have remained challenging in other segments.

Volumes for our Decorative Paints business increased for the 7th quarter in a row, driven by Asia as well as Latin America. Demand trends for performance coatings different from segment and region, most notably very strong growth momentum for powder coatings versus ongoing weakness in the marine and oil and gas industries.

We continue to see higher demand for Specialty Chemicals in all regions. In general, positive dynamics continued in Asia with good momentum in China, as well as South and Southeast Asia.

In Europe trends varied across the region. Volumes increased for Decorative Paints in Continental Europe, but the U.K.

was affected by lower consumer confidence. Latin America is showing signs of stabilization including a slight recovery.

We are leveraging our strong financial and operational foundation to adapt intelligent market and seize opportunities for growth. Now turning to Slide 11, we continue delivering growth while dealing with short-term market headwinds in some segments.

During the first half year 2017, volumes were 2% higher driven by Decorative Paints and Specialty Chemicals. Revenue was up 4% and for all business areas.

EBITDA was up 1% mainly due to volume growth and continued improvement partly offset by higher raw material costs and continued weak demand for marine and protective coatings. Adjusted EPS was up 4% at €2.4 per share.

In quarter two 2017, revenue was up 2% driven by the acquired industrial coatings business and growth momentum continued with higher volumes for Decorative Paints and Specialty Chemicals. EBIT was down due to higher raw material costs, lower demand for marine and protective coatings and a planned maintenance turnaround in industrial chemicals.

Adjusted EPS was up 2% at €1.35 per share. Following a record performance for Akzo Nobel in the first quarter of 2017, we continue to see growth across all our business areas with the exception of some challenging market conditions in marine and oil and gas industry and inflationary pressures.

We continue to take appropriate measures including putting in place a structure to drive operational excellence, and additional cost control, to deal with higher raw material prices in an inflationary environment. We will see the benefit of these initiatives later in the year.

We also announced the acquisition of U.K.-based Flexcrete Technologies Ltd. and an agreement to acquire French manufactured Disatech.

These deals will further strengthen Akzo Nobel's global leadership position in supplying innovative industrial coatings and aerospace and automotive coatings. Slide 12 shows the quarterly trends for volume and price mix.

During quarter two 2017, volumes increased for Decorative Paints and Specialty Chemicals building on the growth momentum in previous quarters. Although they were flat overall due to the ongoing weakness in marine and oil and gas industries.

The acquired industrial coatings business also contributed to the growth. Decorative Paints has now grown volumes for seven quarters in a row and strong demand for specialty chemicals continues despite the impact of a maintenance turnaround in industrial chemicals in Europe.

In performance coatings, volumes were up for industrial and powder coatings, although this was more than offset by lower volumes for marine and protective coatings particularly compared to very strong comparatives in 2016. Price mix was positive for specialty chemicals and performance coatings and flat overall for the second quarter of 2017.

This continues the improvement in the previous quarter. Positive price mix for Specialty Chemicals reflect the successful pass through of raw material price inflation, while for Decorative Paints and Performance Coatings it can take several quarters before the necessary mitigation impact is fully realized.

In Decorative Paints, the price mix effect is entirely related to changes in geographic and product mix as we grow faster in some markets than others. I will now hand over to Maelys who will guide you to our financial results in more detail.

Thank you, Thierry, and good morning to everyone on the call. Starting with the summary on Slide 13, volumes for the first half year 2017 were 2% higher driven by Decorative Paints and Specialty Chemicals and revenue was up 4% including for all business areas.

The acquired industrial coating business contributed 2% growth. EBIT was up 1% at €837 million mainly due to volume growth and continues improvement offset by higher raw material cost and continued weak demand for marine and protective coatings.

In Q2 2017, EBIT was lower due to higher raw material cost, lower demand for marine and protected coatings and a maintenance turnaround in industrial chemicals which impacted EBIT by around minus €13 million. These factors collectively impacted profitability which drops at 11.2% versus 11.6% last year and was 14.8% compared to 15.1% in 2016.

We are taking as Thierry mentioned our appropriate measures to deal with higher raw material prices in an inflationary environment. Operating income was impacted by exceptional identified items.

Now turning to some more details on Slide 14, where you'll find the bridge. EBIT increased 1% to €837 million mainly due to volume growth and continuous improvement, offset by higher raw material costs.

Foreign currencies were favorable overall. There was minimal impact from the acquired industrial coating business as we integrate the operations and transfer production volume to existing nearby Akzo Nobel manufacturing facilities.

The full profitability of the acquisition will be realized by the end of 2018. Higher volumes for Decorative Paints and Specialty Chemicals contributed positively partly offset by lower volumes for performance coatings due to ongoing weakness in the marine and oil and gas industry and the maintenance turnaround in industrial chemicals.

Adverse price mix overall was mostly as results of change in geography and product mix for Decorative Paints and we go faster in some markets than others. Price mix was positive for specialty chemicals and flat performance in coating.

The other category in this chart includes productivity improvement from our ALPS and GBS programs. Savings are running at similar range of previous year and we expect to generate as Thierry mentioned on the high range of the $200 million for the €200 million for the full year to at least I'll say wage and other cost inflation.

Also included here raw material price were higher compared with the same period in 2016. We're taking appropriate measures to deal with this higher raw material prices in an inflationary environment.

This measure whereby Q2 2017 already effective was specialty chemicals, while for decorative paints and performance coating, it will take several quarters before the net mitigating impact is fully realized. Operating income was impacted by exceptional identified items.

In 2015, operating income was positively impacted by unidentified items of €23 million with respect of the sale of assets. In the first half 2017, operating income was impacted by exceptional identified items totaling €20 million, mainly related to the implementation of the new strategy to create two focused high performing businesses as well as legal and anti-trust related items.

I'll now run through the highlights regarding the half-year results for each of the businesses starting on Slide 15. Decorative paints delivered higher volumes and profitability.

Volumes were up 6% overall with positive developments driven by Asia and Latin America, while in Europe trends that varied between quarters and across the region. Volumes increased for Continental Europe while the U.K.

was affected by lower consumer confidence. Revenue increased 3% due to higher volumes, partly offset by adverse price mix effects, which was mainly mix as we go faster in some markets than others.

Unfavorable impact from the Brazilian Real was offset by the weakening of the Pound Sterling. EBIT was up 8% due to the volume growth and cost control, partly offset by unfavorable price mix effect and higher than anticipated raw material costs.

The latter had a greater impact on Q2 2017. ROS increased to 10.1% versus 9.6% in 2016 and ROI was up 13.5% compared to 12.3% in the previous year.

During Q2 2017, decorative pants continue to deliver higher raw volumes; however, EBIT and ROS were adversely impacted by unfavorable price mix effect and higher than anticipated raw material costs, partly offset by cost measures. Appropriate measures are being taken to address this higher raw material prices.

Also, it can take several quarters before the necessary mitigating impact is fully realized. Turning now to performance coatings to Slide 16.

Revenue for performance coatings increased 4% during the first half 2017 driven by the acquired Industrial Coating business. Demand trends deferred by segment and region.

Positive volume development for industrial and powder coatings were more than offset by continued weak demand for marine and protective coatings. If I exclude marine and protective coatings, volumes were actually higher for protective coatings and price mix was flat.

EBIT and operating income were adversely impacted especially in Q2 2017, by the ongoing weakness in the marine and oil and gas industry as well as increased cost of raw material. Advents in the marine and oil and gas industry resulted in lower volumes for marine and protective coatings.

We're taking appropriate measures to address this higher raw material prices although as we mentioned for decorative paints, it can take several quarters before the necessary impact is fully compensated. ROS was 13.1% compared to 14.3% last year and ROI was 27.2% versus 31% in 2016.

Profitability for both half year and Q2 was adversely impacted by the lower volume for marine and protective and the integration of the acquired Industrial Coating business. There was minimal EBIT contribution for the acquisition as we integrate the operation and transfer production volume to existing nearby Akzo Nobel manufacturing facility.

The full profitability of the acquisition will be realized by the end of '18. Now turning to specialty chemicals as shown on Slide 17.

During the first half year 2017, revenue was higher due to increased volume, building upon growth during recent quarters in most business units and all regions. In Q2 2017, volume growth was limited by planned maintenance turnaround in industrial chemicals.

Positive price mix reflects a successful passthrough of raw material price inflation. EBIT increased 3% for the first half year 2017, mainly due to the higher volumes.

In Q2. EBIT and operating income were flat because favorable volumes and price mix development were offset by the impact of the planned maintenance turnaround in Industrial Chemicals, which impacted EBIT by around minus €13 million.

If we exclude this impact, EBIT would have increased 7% for Q2 2017. ROS was 13.9% versus 14.2% in 2016 and ROI was at 18% compared to 17.1% last year.

Slide summarizing the financial results for Q2 2017 are available in the appendix to this presentation. Moving on to cash flows on Slide 18, during the first half 2017, free cash flow was an outflow of €256 million versus an outflow of €161 million last year.

The difference relates mainly to higher tax paid, change to provision including the exceptional identified items, which were positive last year and negative this year and lower addition to sundry provision. These factors were positive offset by higher EBITDA, lower pension top-up payments and lower interest paid.

Capital expenditure and operating working capital, both remained at similar level to last year. At the end of June, net debt was €1.9 billion versus €1.6 last year and €1.3 billion at yearend 2016.

The increase during the first half year is mainly due to the pension top-up payment, most of which were paid in Q1 2017, dividend paid under share repurchase programs or €160 million concluded in April. IAS19 pension deficit is shown on the next Slide 19.

The net balance sheet position of the pension plan as at end June 2017 was a deficit of €0.8 billion versus €1 billion at yearend 2016. The reduction during the first half year was a net effect of top-up payment predominantly in to certain U.K.

pension plans, higher asset returns and lower inflation, partly offset by lower discount rates in key countries and derisking of pension liability through non-cash buying transaction of £262 million in Q1 2017 related to the ICI pension fund. I'll now hand back to Thierry for some concluding remarks on Slide 21 onwards.

Thank you, Maelys. We at Akzo Nobel are committed to investing in sustainability, innovation and the societies we operate in.

Some recent developments in these areas include the contract with energy company Vattenfall, which will enable us to ramp up the supply of renewable electricity to our facilities in Sweden and Finland, but our goal is to get to 100% renewables by 2020. Architects, designers and specifiers can now research and create a full coatings specification from a mobile device following the launch of a new digital app for powder coatings and Malaysian artists showcased their creativity to create murals at Starbucks stores in Malaysia using our Dulux paint.

This type of investment is key for long-term sustainable value creation. Now turning to our outlook shown on Slide 22.

Going forward, we continue to anticipate positive developments for EMEA excluding the U.K., North America and Asia improving during the year while Latin America is expected to stabilize. Market trends will remain challenging for the marine and oil gas industries for the rest of the year.

We have improved our ability to respond to developments in our market and continue taking appropriate measures, including structural changes to drive operational excellence and additional cost control to deal with the higher raw prices in an inflationary environment. We continue to expect EBIT for 2017 to be around €100 million higher than 2016, as a result of the growth momentum to continuous improvement and underlying trends, assuming no further material changes in market and economic dynamics, including foreign currencies.

We are making progress on our strategy to accelerate sustainable growth and value creation, including through capacity expansions, new product launches and acquisitions. Our new structure for the executive committee that we announced today will help drive and is designed to drive operational excellence and increased customer focus.

The separation process is also on track for completion by April 2018 resulting into strong and focused businesses. I'll now hand over Lloyd for information about upcoming events and the Q&A session.

Thank you, Thierry. Before we start the Q&A session, I would like to draw your attention to some upcoming events shown on Slide 24.

We hold an EGM on September 8 and report results for Q3 on October 18. This concludes our formal presentation and we'll be happy to hear your questions.

Please state your name and firm when speaking and limit the number of questions to a maximum of two so others can participate. Operator please start the Q&A session.

Hi. Good morning, everybody and thank you very much for your presentation.

My two questions if I may, in terms of -- just with a focus on the cost savings from the continuous improvement in 2017 how much has been delivered in the first half from that €150 million to €200 million that you say and then -- and so -- and therefore -- and what is the expected real effect in the second half? And the second question is on the executive committee set up, obviously you've noted that you're going to realign the performance with the new 2020 targets?

Is there anything else in terms of decision-making process that's being realigned next? Could you elaborate a little bit more on that executive committee set up?

Thank you.

Okay. So maybe on the first question for the continuous improvement, Maelys, do you want to take that question?

Yes. So, as we mentioned, there are cost savings that we have seen in the first half like what's similar to the one of last year, so around under €1 million and for the full year we had the program of €150 million to €200 million taking into account the higher raw material price we're taking additional measure to be more under €200 million level.

So then on the second question I think you were asking more details on the executive committee changes. First of all, just to point it out, I'm very happy with the changes we have and with the team in place.

These are all people who know the company and in fact very happy that when to refer on who actually brought the success of specialty chemical has come back to lead the business through the separation, which is a very good sign not only that's it's coming back, but also for that business. If you ask about the structural changes of the executive committee, it's pretty clear what our intent is.

It is we are all on board with a strategy. This is now all by accelerating delivery of bottom line.

So, Ruud Joosten will become the Chief Operating Officer and will lead all the paints and coatings business aspects of it. That's where we want to get in front of the customers, drive growth and basically share and learn much more around those business and leveraging across those businesses.

So that's all what Ruud is going to drive KPI, drive the targets in an accelerated fashion. At the same time, we have functionalized integrated supply chain, which was now really by business and although the profit and loss remains with the businesses obviously, I do believe that we can accelerate very much the implementation of integrated business planning, their best practices around operation manufacturing supply chain and take that to the next level.

So, all the changes you see is creating stability and people who know the company and their markets, hence we're firm on coming back and at the same time, be it all around execution and driving the bottom line as we promised on April 19.

Thank you very much.

Yeah, thanks a lot guys. Good morning, Thierry, Maelys, Lloyd.

Thanks for taking my two questions. The first question was just around pricing.

Price mix was negative 3 in deco in Q2. Maelys, I think you said most of that was negative mix.

I'm just wondering why we haven’t seen more evidence of physical price increases yet, when I think some of your other competitors were receiving positive pricing in Q2 already? Is it just the timing issue in your distribution channels or is there some other strategic decision you're making there?

And then my second question is in relation to the €100 million EBIT guidance. When I run the numbers and certainly if I benchmark it against consensus, looks to me like sticking with that guidance implies an acceleration in year-on-year EBIT growth to about 15% in the second half to get there.

What are the contributing factors to that in terms of full costing such a healthy improvement in second half profitability please. Thanks very much.

Yeah, so let me try to answer the question. Then Maelys, it's based on may daylong experience as CEO you may have to help me out on the details, but we do see the prices already moving.

Specialty chemicals has been seeing that already since a while, both volume and prices as such. Decorative paints sees it very much as of June and then moving into the rest of the year, we do see positive offset of raw materials and again as Maelys explained, it is basically the price mix effect that you see in decorative paint is really based on the growth strategy where we're growing much faster and these are really high percentages in markets with more medium and with a lower premium offerings in those markets.

Specialty chemicals, sorry, performance coatings, sees price increases happening, although I think that is a bit more viscous and that may still be ramping up over the third and the fourth quarter, but there of course the big impact is of by protective and marine, but basically impacts the numbers there. So that's around the price mix.

Maelys, I don't know if you want to add something to that point. No.

All right. So, second point is I think you asked around the guidance and what are we going to do on the improvement?

Your calculation is almost correct? The underlying EBIT increase is 13% to get to those numbers to be exact.

So, let me explain you what the elements are to get there. I already pointed out on the price mix where you would say the second quarter was probably the one where you have the impact of the materials in the numbers, but not yet the price parts.

It's kind of the pinch point to that extent and I'll explain that. Specialty chemicals is on a roll.

There was a onetime effect in the second quarter with the schedule turnaround in our Rotterdam industrial chemicals complex, which is a cluster with a number of companies and that becomes a mega shutdown. If you exclude that onetime item and you look at the months where that was not the case, that business will deliver totally according to plan on volume and everything.

So that's where you'll see a step change in the second half, but that's just underlying trend that continues. If I look at the volume memento of deco in June and July and then recall the price mix, that really adds up to versus the first half of the year.

I've already commented or we already commented on the continued improvement targets, which is somewhat backend loaded as the rewards come in in the second half. So that adds up to it and then yes, there is a significant cost containment that we had rolled out and we actually reemphasized around the out-of-pocket if the markets are more viscous on the margins, well then you just have to do something about your costing and we basically also are looking at constraining hiring this year for everything that's not critical for the bottom line delivery of 2017.

And again, the items that I just indicated, we do want to accelerate best practices where we have very good examples in the company around IBP and integrated business planning. The whole standardization journey and hence the structure to accelerate it with the COO and the integrated supply chain structure on the other hand.

So, we wouldn't recommit to this if we had a solid plan and trends that point in that direction.

That's really clear. Thanks a lot guys.

Good morning, everybody. Tony Jones, Redburn in London.

Thank you for taking my two questions. So firstly, with much change, management change, can you be explicit that nothing from the strategic plan as detailed by the price CEO has a will changed?

And maybe specifically addressing the potential for major acquisition by Akzo and then back to the raw material cost. I appreciate the detail Thierry in terms of the timing mismatch being probably more accuse in Q2, but in terms of absolute cost inflation, we can model a basket of raw materials and how the price has changed, but we can't see timing effects perhaps due to your own contract.

So, could you maybe give us some feeling of whether the peak of cost inflation was in Q2 or whether we'll see that still a headache in the second half, thank you?

Yeah, so answering your first question the way that Tom operated the company was pretty transparent and inclusive. The people who are on the current Executive Committee were in the Executive Committee.

David Allen was kind of in the extended Executive Committee. So, it's not exactly a new team.

It is probably new orientation of what the tasks are to drive execution. So, there is no change in strategy whatsoever.

In fact, everything is near up delivering the results within the strategy that was outlined. So that is on the first question.

On the cost inflation for the raw materials, I think the second quarter was indeed more of a pinch point. I think that's -- as I in chemicals, we have offset is already, but the pricing in deco, Ruud Joosten who is running that business up till today, gets in that direction.

And then the other point that we mentioned in the performance coatings I think that's going to be a bit of a -- I think we're somewhat at the point where we will be seeing that delta being offset later in the year and again marine and protective coatings have their own dynamics. I also skipped basically a part on acquisitions.

We have it on two specific acquisitions that are small in size, but are very much targeted to open up markets for us and for bigger acquisitions of course we always stay tuned for that, but with the separation and with everything that's going on, I think we have lots of our plate already to drive execution at this point.

Thank you. That's very clear.

Yes. Good morning.

Thank you very much. Two questions.

The first one, I might have to be honest. I have trouble with the full-year guidance and one of the reasons as seasonally obviously Q3 is stronger than Q2, some of the businesses you've alluded to being quite weaker, quite high margin and very important in Q3; U.K.

deco, the raw material situation I think will be more difficult clearly in Q3 even Q4, even if it's better than Q2. So, I'm just wondering about Q3 itself, how confident are you can start moving towards the second half guidance that you're now inferring up 13% and then specifically on U.K.

deco, I think in the segment you suggest that was down and you're pretty cautious obviously on the second half. You mentioned the mix with China strong, U.K.

down obviously having an impact I think on the overall number. Just wondering about that because PPG were more bullish, they tend to be anyway generally, but they were talking about significant share gains I think in the U.K.

and it still being strong. So, I am just wondering how it trended for you through the quarter and whether you saw any share loss and now you're advertising quite heavily again in the U.K.

at the moment, but just how the U.K. deco business is performing as well, thank you?

All right. First of all, on where we are, I think I've outlined in the previous answer, the different elements of why we feel comfortable around the guidance that we've given, again barring unexpected situations in the market, but there we feel comfortable about the elements that are in there.

So not sure if it's value to repeat that. The third quarter, I mean there the dynamics are obviously that would be a stronger quarter than the second quarter, obviously otherwise that would make no sense with the yearly guidance.

But coming back on your question on the U.K. the market obviously the consumer confidence specifically in the non-food retail in the U.K.

is down. There is a number of external metrics that clearly indicate that.

So, the whole market is impacted. We have not lost any share in that market and yes, maybe the Akzo Nobel style is a bit more introverted than some others, but that doesn't take away from the results in the market.

So, I just mentioned you've seen the recent IMS forecast, you'll clearly see that they indeed see lower trending in the U.K. and that again what we're seeing.

So, we are still maintaining our market shares. So, it's more the trend of market we're providing.

Okay.

Hi it's Jeremy Redenius of Bernstein. Good morning, everybody and thanks for taking the questions.

The first question I have is about raw materials. Your predecessor had mentioned in Analyst Meeting that he thought pricing versus raw materials, said differently, prices would offset raw materials for the full year.

So that is price increases late in the year, you would be able to catch up. It sounds like you're talking much more cautiously about that, much more cautious about the timing to increase prices.

So, would you reaffirm his statement that prices would offset raw materials for the full-year such that in that bridge you showed for the half year that by the full year there would be complete offset? And then secondly as the new CEO, I think you have a huge challenge in front of you, it feel like you're inheriting a lot of different moving parts and so I would like to hear in your own words really what you see as your top few priorities specifically really your top few priorities as you step in the role, thank you very much.

Well, thank you for the questions. First point on the raw materials versus pricing, I think the raw material impact is higher I think than we anticipated in the beginning of the year.

In addition to that, the reason some of the segments as I indicated a bit more viscosity to get the prices up, it's happening, but it's happening a bit slower on. As a result, that explains why we really look at the cost containment, continues improvement yield and the hiring slowdown that I've indicated.

So, we thrive to offset that as you would expect in a business by the other means, so that is indeed correct. The second thing or the top priorities, well, the priority is pretty clear, it deliver on our financial plan as an executive committee and it's the same people around the table.

We're committed to this. The company has a legacy of sticking to their commitments and as a new CEO and with the new EXCO, we definitely want to keep doing that.

And also, the fact that we maintain our €100 EBIT increase in 2017 versus 2016. So, I think the top priority and as many priorities and many things to work on that is definitely to keep delivering on the plan that we outlined earlier in the year.

And if I can follow-up on that, I'd like -- could you help me understand and where shareholders fall in the list of priorities because I know in your press release today, it sounds like you're making a good honest effort to repair relations with them. So, I wanted to hear where that falls in your priorities as welI?

Well, I think Anthony has outlined the whole plan to do that. Obviously, it is a key stakeholder in the company, but in my opinion one of the best ways to please shareholders is giving great results and that's what we're pushing for.

So, there is a number of priorities, but I think by showing performance is probably the best tribute to shareholders.

Okay. All right.

Thank you very much.

Hey. Good morning, everybody.

Thanks for taking my two questions. The first one is again on guidance €100 million improvement.

What's your view and I'm sorry to ask that again. I think you're trying to get away from it, but the people around, if I remember clearly, it was €70 million last year EBIT up from 2015.

How do you see things in '17 and how this €300 million guidance in 2017 first question? And second more commercial narrowing business, it seems to me that the order book of '17.

'18 looks be better than '16, '17. Could you comment a bit on maintenance, your view on not just H2, but 2018 versus '17 and you said in terms of both maintenance and you be out in the moving business, thanks.

All right. Thank you.

Not sure if I fully grasped your question about the €70 million last year and the €100 million this year, and by the way I am not trying to get away from the €100 million. On the contrary, I think I elaborate on the statutory because it is a key priority for us.

So not sure how much more I can be additive to that point. If you go to marine and protective coatings specifically your question was around marine, yes, I think we see the order book stabilizing, but of course of it is at a different level than it was before.

And in fact, I would have to check exactly on what the competitive are quarter-by-quarter in '18 and '17 for the order books. I do know that in marine, the repair and maintenance was seen as a potential uplift and that legislation seems to be just being implemented slower.

Hence, I mean the contingency that we put into to deliver as a company to deliver on our bottom line in other cost of the company.

Thank you.

Yes. Good morning.

Two questions. The first is on restructuring charges, Maelys, I remember that you said that the guidance for 2017 will be roughly €70 million.

Can you tell us what the amount of charges is year to date that is in the reported EBITDA number? And then the second question is also on the marine and protective coatings, can you tell us where you think we stand in the cycle as the compassion base seems to be getting easier from this point and we are seeing a sequential improvement.

Yeah, on the restructuring as you know, we guided always around 0.5% to 1% of sales. On the first half we had limited, but of course as we have mentioned, we are developing the two new focused businesses and there will be of course restructuring associated with that and that will be part of the new design.

So, there will be some to be seen in '17 and in '18 for it. On the marine and protective, indeed as we outlined, Q2 was a peak in 2016 and that's why the comparison is particularly negative.

For this quarter, we have started to see the decline last year. So, remember Q3 had a very sharp decline in Q4, so indeed we should have less of a drop comparatively while moving to H2.

Even through as we mentioned in our guidance, we continue to see the weakening, which is probably longer that we forecasted, but the comparison in fact will indeed be more favorable in the second half.

Right. And then maybe coming back to the restructuring changes because I didn't fully understand what you were saying.

So, what I remember is that you were guiding for €70 million, so that was definitely at the low end of the range. Are you saying that because of designing of the two new businesses, we will see more researching charge this year?

As I said, the €70 million is what we guided as the normal continue improvement. So, I've to see what measure we need to take if any in the new design.

This is ongoing at the moment.

Right. Okay.

Thank you.

Good morning. Thank you very much for the presentation.

Just had two very quick clarification questions. I just wanted to check, you said that Mr.

Werner Fuhrmann is running the specialty chemicals business, would be running it through the separation. Does that mean that he won't be staying beyond it become an independent company and someone else will take over running the business?

And also in the cash flow you have an increase in provisions of €85 million in the second quarter. I was just wondering if you could really outline what those were related to please?

Yes. So, let me take the question about Furman and then Maelys will answer a few cash questions.

Werner Fuhrmann is rejoining the Executive Committee. I probably was understating how enthusiastic I am about it because he is the man who lead that business and when I took over from him, it felt a bit like in softer terms, just having to take the ball in.

So, having him back in the team is actually pretty important to me. Werner joins the team definitely through the separation and then it depends on the scenarios and whoever is the ownership if it's in the dual track whatever the outcome is, I think that's then a decision I believe that has to be taken by other people.

But Werner is definitely there to take the business that he has spent a lot of time and really is the father of basically bring that to the separation and then it's for his to decide what the options are. On the cash, bring it back to Hans and Maelys.

Yeah, this is Hans De Vriese. On the changes in provisions in the second quarter, the main driver's affect that we see lower additions to provisions in this quarter.

Last year it was driven by insurance provisions that were added in that specific quarter and that's the main driver for the difference among some smaller other things. We also saw some higher withdrawals in the second quarter this year.

Thank you.

Yes. Good morning all and I've got two questions please.

The first one you saw Mr. Brookman's in the EGM announcement, on the announcement that you will convene and EGM you were mentioning a discussion point on the PPG situation.

I was wondering if you could tell us in your own words what you mean by further explanation of how Akzo handle on the situation with PPG and do you think that something has been missing in that handling. I'm wondering what you can tell us now ahead of the EGM being convened?

And the second question is actually for Thierry, is there you can say on the development of the separation of chemicals in terms of interest you have received that could lead to a change of strategy i.e. less interest for the whole division, more interest for parts of division perhaps reconsidering the breakup of the chemical itself in the separation.

Thank you.

Yes. I'll take the question then on the EGM, indeed we're going to discuss this subject.

You know the verdict of the court where we go a clear support from the judge and his verdict, but one of the elements was that he suggested that we continue to work to improve relationships with our shareholders. So, in response to that, as I said in my short introduction, we did a survey to see exactly what the various issues were and one of the issues, which came up was indeed that not all, but there was a substantial part of our shareholders who would like to have some further explanation because one way or the other, in one way with all the noise, which was going on at the time they felt that maybe they should be filled in a little bit more and that is exactly what we're going to do on the EGM.

You don't mind if I don't -- now at this moment try to deal with that issue. I think we'll do that on September 8 and I promise you we'll give you a further full explanation of events, which took place and I'll give you an insight of the way the thinking went and the reason why we came to the decisions, which we took.

Another question you had around the separation processes to create the painting and coatings business and the performance of the chemical business, as I outlined, we're on track timing wise. So that's the first part of it.

Lots of due diligence work advises bank etcetera that is going on. The dual track is still what's on the table.

I think we've already outlined early on that it would be the decision between one piece or in some pieces, but not many pieces and that has been unchanged. In fact, one of the reasons for the time for approval who want to be certain with all the incoming data on what is now the options and what is the pros and cons of those options before we go to shareholder approval, on the interest definitely when the news came out, originally there was quite some interest in people interested in part etcetera, etcetera and that's not surprising because it is a top quartile business and many of the KPIs and in the market that it operates in.

So, the one I'll necessarily comment on the interested parties etcetera but it's pretty clear that there is in the background a significant burst of interest and that we'll update in the EGM Meeting when we get to that point.

I think we've got one more question on the line just before we conclude the call.

Yeah hi, this is actually Chetan Udeshi on behalf of Martin. I wanted to follow-up on this comments around mix and how that is impacting the price development in Q2 because except your Q1 volume growth in decorative paints goes 9% it's clearly slowed down to 3%.

Presumably most of that slowdown has come in emerging market and yet your price mix development has remained negative 3% similar to Q1. So, can you explain why we haven’t seen a better development on price mix clearly when emerging market growth seems to have slowed down compared to Q1 levels, thanks.

That's the question.

Yeah, as mentioned before, Q1 is a small quarter. So, we always mention it on the 9% and if you look also in 2016, where there is 6%, it's always small quarter.

Therefore, a small variation make it as a big number. So, we address that issue the trend for the year, but what is important that indeed you continue to see this positive momentum for the quarter after quarter growth in decorative paint.

Indeed, for the moment their price mix is still negative. In Q2 we've mentioned that indeed we have taken some action but the mix spot, which is indeed the mix between the region is yet negative.

So, we expect the pricing to start ticking, be more visible going forward. So that's where indeed we are concentrated and working on to change this trend.

So, before I hand it over to Lloyd, I would like to thank you all for your participation. I am also looking forward to engage more in the future.

So, this is kind of the first step. So, I am looking forward to it and thank you for participating in this call and Lloyd back to you.

Yes, thank you very much Thierry and thank you everybody for your questions and for joining the call this morning. If you have any further questions, please contact Investor Relations.

We're to you to assist in any Q&A you have further. Thank you and bye, bye.