Paris, December 16, 2010 roadshow SRI Investor update… · -trends Mega-trend example The world’s population grows and wealth increases, with significant mid-market development

SRI Investor update

Paris, December 16, 2010roadshow

SRI Investor update

Paris, December 16, 2010

• AkzoNobel at a glance

• Strategic ambitions

• Research, Development & Innovation

• Operational review

• Financial review

Agenda

• Outlook

Paris SRI Investor update

at a glance

Strategic ambitions

Research, Development & Innovation

Operational review

1

AkzoNobel key facts

2009• Revenue €13.0 billion• 54,738 employees• EBITDA: €1.7 billion*

• EBIT: €1.1 billion*

• Net income: €285 million• Leader in Dow Jones Sustainability Index

Revenue by business area


* Before incidentals. All data after reclassification of National Starch

Revenue by business area

32%

35%

33%

AkzoNobel key facts

Leader in Dow Jones Sustainability Index

EBITDA* by business area

2

* Before incidentals. All data after reclassification of National Starch

EBITDA* by business area

Performance Coatings

Decorative Paints

Specialty Chemicals

32%

27%

41%

The global paints and coatings market is around €70 billion

Decorative

% of market100% is around

Decorative44%


Performance56%

Source: Company ReportsPowder Coatings

8%

44%

The global paints and coatings market is 70 billion

Wood Finishes

General Industrial Coatings

Car Refinishes

% of market100% is around €70 billion

6%

10%

7%

3

Performance56%

Marine and Yacht

Protective coatings

Auto OEM, metal, plastics

Coil CoatingsPackaging Coatings

Special purpose

Powder Coatings

2%

9%

3%

3%

6%

2%

AkzoNobel is the world’s largestCoatings supplier2009 revenue in € billion

6

8

10


0

2

4

AkzoNobel is the world’s largestCoatings supplier

4

Strategic ambitions


Strategic ambitions

5

We want to be the and Specialty Chemicals


the world’s leading CoatingsChemicals company

6

Our medium term strategic ambitions

Value – accelerated growth• Grow to €20 billion revenues• Increase EBITDA* each year,

maintaining a 13-15% margin level

• Reduce OWC percent of


* Absolute earnings before interest, tax, depreciation and amortization, before incidentals** Operating Working Capital at year end as a percentage of quarter*4 revenue*** Dow Jones Sustainability Index

• Reduce OWC percent of revenues** year-on-year by 0.5 towards a 12% level

• Pay a stable to rising dividend

Our medium term strategic ambitions

accelerated growth20 billion revenues

Increase EBITDA* each year, 15% margin

Reduce OWC percent of

Values – sustainable growth• Top quartile safety

performance• Top 3 in DJSI***• Top quartile performance in

diversity, employee

7

Absolute earnings before interest, tax, depreciation and amortization, before incidentalsOperating Working Capital at year end as a percentage of quarter*4 revenue

Reduce OWC percent of year by 0.5

Pay a stable to rising dividend

diversity, employee engagement and talent development

• Top quartile eco-efficiency improvement rates

We are embarking on the next chapter of our journey to industry leadership

Portfoliotransformation

2003-2008


We are embarking on the next chapter of our journey to industry leadership

Accelerated andAccelerated andsustainable

growthIntegration andrestructuring

2008-2010 2010-2015

8

How global megatrends affect our industry

Population growth fbillion in 2050*

Quality of life around 3 billion people emerging over the next 20 years*

Climate change efficiency and for low carbon & renewable energy sources*

Scarcity of natural resources since today we already use the replenishment capacity of 1.4 planets*

* Sources: UN World Population prospects, OECD, IPCC, World resources institute, WBCSD


How global megatrends affect our industry

Population growth from 6.8 billion people today to >9 billion in 2050* is a strong driver for global demand

Quality of life will improve for a new middle class of around 3 billion people emerging over the next 20

Climate change will increase the need for energy efficiency and for low carbon & renewable energy sources*

Scarcity of natural resources will drive innovation since today we already use the replenishment capacity of 1.4 planets*

* Sources: UN World Population prospects, OECD, IPCC, World resources institute, WBCSD

9

We are very well positioned to benefit from megatrends

• Strong portfolio with leading positions

• Excellent geographical spread and ambitious growth plans

• Exciting RD&I pipeline with innovative solutions for key market

segments

• Clear sustainability focus

• Growth agenda to be supported by functional excellence

• Strong executive leadership team


We are very well positioned to benefit from

Strong portfolio with leading positions

Excellent geographical spread and ambitious growth plans

Exciting RD&I pipeline with innovative solutions for key market

Clear sustainability focus

Growth agenda to be supported by functional excellence

Strong executive leadership team

10


Leading market position results in superior level of profitability


* Before incidentals


Leading market position results in superior level of profitability

11

Excellent geographic spread ofboth revenue and profits

High-growth markets are important (% of 2009 revenue

‘

21%North America

High-growth markets profitability is above average

9%Latin America

North America


Excellent geographic spread ofboth revenue and profits

growth markets are important (37% of revenue)

39%‘Mature’ Europe

7%‘Higher-growth’ Europe

growth markets profitability is above average

20%Asia Pacific

4%ME&A

12

How we will grow in both mature andhigh-growth marketsOrganic growth• Expand focus from high to mid market segments• Fuelling growth in high-growth markets

Innovation pipeline• Spend of around 2.5% of revenue makes us the clear peer group

leader in absolute spendleader in absolute spend• Emphasis on focused, bolder, sustainable innovation

Acquisitions• Wide range of opportunities• All Business Areas qualify• Value creating no later than in year 3


How we will grow in both mature andgrowth markets

Expand focus from high to mid market segmentsgrowth markets

Spend of around 2.5% of revenue makes us the clear peer group leader in absolute spendleader in absolute spendEmphasis on focused, bolder, sustainable innovation

Wide range of opportunitiesAll Business Areas qualifyValue creating no later than in year 3

13

Aspirations for high

Double revenues in China• Grow from $1.5 to $3 billion of revenues • Make a step change in people development

Create significant footprint in India• Grow from €0.25 to €1 billion of revenues• Increasing footprint for all business areas• Increasing footprint for all business areas

Outgrow the competition in Brazil• Grow from €0.75 to €1.5 billion of revenues• Become clear market leader in all our activities

Expand in Middle East and Sub


Aspirations for high-growth markets

Double revenues in ChinaGrow from $1.5 to $3 billion of revenues Make a step change in people development

Create significant footprint in India1 billion of revenues

Increasing footprint for all business areasIncreasing footprint for all business areas

Outgrow the competition in Brazil1.5 billion of revenues

Become clear market leader in all our activities

Expand in Middle East and Sub-Saharan Africa

14

High-growth markets will become significantly more important% of revenue, indicative

‘

18%North America

High-growth markets will be around 50% of revenue in this decade

11%Latin America


growth markets will become significantly more important

32%‘Mature’ Europe

9%‘Higher-growth’ Europe

growth markets will be around 50% of revenue in this decade

25%Asia Pacific5%

ME&A

15

Exciting RD&I pipeline with innovative solutions for key market segmentsCurrent innovation strategy delivering:• 9% of revenue from “breakthrough”

innovations*• 20% of revenue from

Eco-premium solutions**

How innovation will support our How innovation will support our growth agenda:• Functional solutions in key market

segments• Increase spend in Big R&D• >15% of revenue from

“breakthrough” innovation*• >30% of revenue from

Eco-premium solutions**• Major innovations that result in a significant competitive advantage** Higher eco-efficiency than main competitive product


Exciting RD&I pipeline with innovative solutions for key market segmentsCurrent innovation strategy

9% of revenue from “breakthrough”

Revenue by key market segment

43%13%

12%

How innovation will support our

32%

Residential construction

Non-residential construction

Transport

Consumer goods

How innovation will support our

Functional solutions in key market

Increase spend in Big R&D

“breakthrough” innovation*

Major innovations that result in a significant competitive advantageefficiency than main competitive product

16

Current sustainability strategy delivering:• Safety at 3.6 injuries/ million

hours• 20% of revenue from Eco

premium solutions• Energy savings• Pioneering carbon footprint


• Pioneering carbon footprint measurement

• 85% raw materials from suppliers with vendor policy signed


Current sustainability strategy

Safety at 3.6 injuries/ million

20% of revenue from Eco-

Pioneering carbon footprint

Accelerated sustainability strategy will deliver:• Safety at 2.0 injuries/ million

hours• 30% of revenue from Eco-

premium solutions• Sustainable fresh water

management


Pioneering carbon footprint

85% raw materials from suppliers with vendor policy

management• 10% eco-efficiency

improvement• 10% carbon footprint reduction• 20% executives from high-

growth economies• Key supplier partnerships

delivering footprint reduction

17


• Strong HR function to optimize support to our business• Facilitate “One AkzoNobel” culture• Employer of choice• Capitalize on diversity; 20% executives from high

economies

HR

Supply • Sourcing, manufacturing & distribution integrated in one

supply chain function: leveraging our scale

Finance

• Become “One Finance” organization• Simplify & integrate systems• Harmonize & standardize processes• Pro-active & continuous people development• Achieve 25% cost savings

Supply chain

supply chain function: leveraging our scale• Develop sourcing strategies for key raw materials• Build on a network of regional strategic sites



Strong HR function to optimize support to our businessFacilitate “One AkzoNobel” cultureEmployer of choiceCapitalize on diversity; 20% executives from high-growth economies

Sourcing, manufacturing & distribution integrated in one supply chain function: leveraging our scale

Become “One Finance” organizationSimplify & integrate systemsHarmonize & standardize processes

active & continuous people developmentAchieve 25% cost savings

supply chain function: leveraging our scaleDevelop sourcing strategies for key raw materialsBuild on a network of regional strategic sites

18


Hans WijersCEO

Werner Fuhrmann

Sven DumoulinGeneral Counsel


Tex GunningBA Decorative Paints

Werner FuhrmannSupply Chain

Marjan OudemanHR & OD

Graeme ArmstrongRD&I


Hans Wijers

Keith NicholsCFO

Rob Frohn

19

Rob Frohn BA Specialty Chemicals

Leif Darner BA PerformanceCoatings

Tex GunningBA Decorative Paints

Strategic and financial reasons to accelerate growth in mature markets

Focus on EBITDA margin increasePursue additional restructuringDownsize lower margin stores

EBITDA impact

EBITDA margin vs. market shareDecorative Paints mature market example

40

60

80

100

2009

EBITDA impact (€ million)


Strategic and financial reasons to accelerate growth in mature markets

Focus on EBITDA margin increasePursue additional restructuringDownsize lower margin stores

Focus on market share increaseInvest in brand building

Invest in channel management

EBITDA margin vs. market shareDecorative Paints mature market example

EBITDA impact

2015 2009 2015

million) EBITDA impact (€ million)

20

In high growth markets such as India, focusing on the mid

DecorativePaints

PerformanceCoatings

100

80

60

% o

f mar

ket

India market relevant for AkzoNobel, 2009


20

0

60

40% o

f mar

ket

Market size

In high growth markets such as India, focusing on the mid-tier is crucial

Premium ~20% Typical focus for AkzoNobel(and other multinationals)

PerformanceCoatings

SpecialtyChemicals

India market relevant for AkzoNobel, 2009

21

Low price ~30%Low cost local value propositions, low end technology, and ‘service-lite’ business models

Mid-tier ~50%Intense battle between globalmulti-nationals ‘moving down’and local companies ‘moving up’

Market size

EBITDA margin vs. market share issuein the mid-tier segment

Focus on EBITDA margin increaseStay in the premium segment

Restrict cost growth

EBITDA impact

EBITDA margin vs. market shareAkzoNobel (all Business Areas) high growth market example


EBITDA impact (€ million)

20406080

100120140

2009

EBITDA margin vs. market share issuetier segment

Focus on EBITDA margin increaseStay in the premium segment

Focus on market share increasePursue higher volume mid-tier

business models

EBITDA margin vs. market shareAkzoNobel (all Business Areas) high growth market example

EBITDA impact

22

million) EBITDA impact (€ million)

2015 2009 2015




23

Innovation highlights from 2009/10

Dulux® Weathershield SunReflectLowers the temperature of external walls by up to 5reduces the need for air conditioning by reflecting up to 90 percent more infrared radiation that comparable exterior paints.

Compozil® FxA wet end management system for the largest and fastest paper machines. Top quality paper can be produced with higher productivity, better economy and reduced higher productivity, better economy and reduced environmental impact.

Colour Click®A web image tool, based on unique technology to help consumers accurately choose with their home environment.

Autoclear® LV ExclusiveA high-gloss clear-coat paint for car refinishing. Based on proprietary resin technology, it is not only highly resistant to scratches and easy to apply, it features remarkable selfhealing properties when exposed to gentle heat.


Innovation highlights from 2009/10

SunReflect™Lowers the temperature of external walls by up to 5° C and reduces the need for air conditioning by reflecting up to 90 percent more infrared radiation that comparable exterior

A wet end management system for the largest and fastest paper machines. Top quality paper can be produced with higher productivity, better economy and reduced higher productivity, better economy and reduced

A web image tool, based on unique technology to help consumers accurately choose colors to match and coordinate

coat paint for car refinishing. Based on proprietary resin technology, it is not only highly resistant to scratches and easy to apply, it features remarkable self-healing properties when exposed to gentle heat.

24

Delivering results

KPIs

Innovation% Revenue from BreakthroughInnovations*

R&D Expenditure


R&D Expenditure% Spend on ‘Big R + D’

Sustainability% Revenue from Eco-Premium Solutions**

• Major innovations that result in a significant competitive advantage** Higher eco-efficiency than main competitive product

Delivering results

2008 2009 2010EMedium

Termambition

5 7 9 >15

25

39 40 46 >60

Premium 18 20 22 >30

Major innovations that result in a significant competitive advantageefficiency than main competitive product

Insight into global mega

• A more sustainable planet


• Social accountability & transparency

• Global economic & populationgrowth

• Accelerating technologydevelopment

• A specializing, solution-driven

• Well-being & personalization

• Convenience

Insight into global mega-trends

Mega-trend example

The world’s population grows and wealth increases, with significant

mid-market development in emerging economies

26

Serving the needs of the global mid-market

Affordable solutions in powders and machine-less tinting

transparency

population

driven world

AkzoNobel Solution Promises

Achieving zero footprint

Bringing products for well-being and identity

Serving the needs of the global mid-market


Creating new horizons in functionality

Saving you time and effort


AkzoNobel Solution Promises


Bringing products for being and identity

Serving the needs of market

Rapid curing and totally water-borne

Surfaces to control vector-borne diseases

27

Creating new horizons


Coatings and energy management

totally water-borne

Market Insightinto Sustainable Construction

Insights

Materials


Materials

Energy Management

Design, Maintenance & End-of-Life

Health & Wellness

Water Management

into Sustainable Construction

Innovative Solutions

Seasonally responsive coatings

28

Seasonally responsive coatings

‘Release-on-command’ bonding materials

Therapeutic/mood-controlling color scheming

Self-repairing coatings

Thin film solar panels for roofing & glazing

Scale & capability

‘Big R&D’ in global laboratories:• Deventer (NL)• Felling (UK)• Sassenheim (NL)• Slough (UK) • Songjiang (CN)• Strongsville (USA)• Strongsville (USA)

150 labs performing incremental ‘little d’ for regional & local customers

11% of R&D capability in China

Planning global R&D center in India


Scale & capability

‘Big R&D’ in global laboratories:

150 labs performing incremental ‘little d’ for regional & local customers

11% of R&D capability in China

Planning global R&D center in India

29

Operational review


Operational review

30

Decorative Paints key facts

2009• Revenue €4.6 billion• 21,940 employees• EBITDA: €487 million*

• 36 percent of revenue from high• Largest global supplier of decorative paints• Many leading positions, strong brands

Some of our strong brands



Some of our strong brands

Decorative Paints key facts

36 percent of revenue from high-growth marketsLargest global supplier of decorative paintsMany leading positions, strong brands

Revenue by geography

31

Revenue by geography

Europe

Asia Pacific

North America

Latin America

Other regions

50%

15%

21%

10%4%

Making it happen in Decorative Paints

AkzoNobel Decorative Paints Leadership• We are the clear global market leader in

Decorative Paints• We will extend leadership in greater Europe• We will build leadership positions in China,

South East Asia, Brazil, Russia and Poland

AkzoNobel Decorative Paints Stewardship• Integration is a major success• We are fixing the US and Germany• We will invest to deliver growth and profit


Making it happen in Decorative Paints

Decorative Paints LeadershipWe are the clear global market leader in

We will extend leadership in greater EuropeWe will build leadership positions in China, South East Asia, Brazil, Russia and Poland

Decorative Paints StewardshipIntegration is a major successWe are fixing the US and GermanyWe will invest to deliver growth and profit

32

We are the clear global market leader in Decorative PaintsDecorative Paints 2009 revenue € billion

3

4

5

* 2008 figure

0

1

2


We are the clear global market leader in Decorative PaintsDecorative Paints 2009 revenue

33

Europe is the biggest market for Decorative Paints% of Decorative Paints market*100 % = €22 billion

4

60

80

100%1

* Only includes markets where AkzoNobel is active.Does not include non-paints sales or integrated distribution

Asia Europe0

20

40

60

LatinAmerica


Europe is the biggest market for Decorative Paints% of Decorative Paints market*

11 6

Consumer

34

is active.paints sales or integrated distribution

Europe North AmericaBy-it-yourself

Professional

Europe will continue to be the biggest market for decorative paintsDecorative Paints market*€ billion

20

25

30


2006 2007 2008 20090

5

10

15

* Only includes markets where AkzoNobel is active. Estimates made in 2009. Does not include nondistribution

Europe will continue to be the biggest market for decorative paints

NorthAmerica

35

2009 2010 2011 2012 2013 2014

Europe

LatinAmerica

Asia

is active. Estimates made in 2009. Does not include non-paints sales or integrated

We have a strong overall leadership position in Europe

19

Total Europe 2009 (%)100% = €10.1 billion

AkzoNobel

Others

8

44

362

Relative market share to our nearest competitor is 2.5 times


We have a strong overall leadership position in Europe

AkzoNobel

36

8

4

Relative market share to our nearest competitor is 2.5 times

PPG

DAW

TikkurilaMateris

We will strengthen our leadership position in EuropeGain market share in “mature” Europe• UK, Benelux, France, Spain, Greece, etc

Capture market growth in “higher growth” Europe• Poland, Russia, Turkey, etc


We are leveraging our global scale, brands & best practices

We will strengthen our leadership position

Gain market share in “mature” EuropeUK, Benelux, France, Spain, Greece, etc

Capture market growth in “higher growth” EuropePoland, Russia, Turkey, etc

37

We are leveraging our global scale, brands & best practices

Build leadership position in China

A strong AkzoNobel competitive position

Market leadership Market leadership


Build leadership position in China

A strong AkzoNobel competitive positionStrong second overall

Market leadership today in the 4 ‘Tier 1’ citiesMarket leadership today in the premium segment

Large market today

+

38

Exciting growth potential

Large market today2010 market ~ €2.5 billion

Strong growth potential2010 growth rate = 9%

2010-2015 growth rate = ~10%

+

Aggressive investment in China to capitalize on potential• Increase positioning into the • Continue to build our Dulux• Extend distribution through

annually (year-end 2009: 3,000)


5 years ago382 Tier 2 and 3 cities 588 Tier 2 and 3 cities

Aggressive investment in China to capitalize on potential

Increase positioning into the mid-tier markets and citiesDulux brand

Extend distribution through ‘controlled stores’: grow around 700 end 2009: 3,000)

39

Today588 Tier 2 and 3 cities

5 years from now647 Tier 2 and 3 cities

Build leadership position in Brazil

Above average market growth (>5% p.a.)

• Expand distribution from 7,500 outlets to 17,500• Invest in brand building for Coral (Dulux ‘brand cluster’)• ‘Own’ point-of-sale


Significant organic growth potential in Brazil

Build leadership position in Brazil

Strong AkzoNobel competitive position+

from 7,500 outlets to 17,500for Coral (Dulux ‘brand cluster’)

40

Significant organic growth potential in Brazil

We are leveraging our scale through global brand positioning

Validated global segmentation

Dulux/Sikkens Pro

Dulux Consumer

Brand clusters


Scale leverage in advertising and promotion

Metal paint/specialist paint

Pre-deco specialist

Wood care specialist

Mid-tier

We are leveraging our scale through global brand positioning

Validated global segmentation

41

Scale leverage in advertising and promotion

The ICI integration is a major success

Cost reductions

FTEs*

Brands

SKUs

N/A

25,800

100

>90,000

Area Beginning 2008


* Clearly, we are adding FTEs, particularly in the high growth markets, to support growth. The reductions are estimated reductions due to synergy and related restructuring

SKUs

Raw materials

Factories

Warehouses

Packaging Types

>90,000

>8,000

80

160

>900

The ICI integration is a major success

N/A

25,800

100

>90,000

> €190 million

-/- 3,800

75

75,000

> €220 million

ongoing

<50

<60,000

Beginning 2008 End 2010 End(Generally 2012)

42

Clearly, we are adding FTEs, particularly in the high growth markets, to support growth. The reductions are estimated reductions due to synergy and related restructuring

>90,000

>8,000

80

160

>900

75,000

6,000

58

130

600

<60,000

<3,000

<50

<110

<300

The US turnaround challenge 2008

Turnaround . . . % of gallons sold

AkzoNobelAkzoNobel


Market structure and dynamics drove need for a turnaround

The HomeDepot

Lowes

Wal-Mart

Independentdealers

The US turnaround challenge 2008

AkzoNobel AkzoNobel

43

Market structure and dynamics drove need for a turnaround

Independentdealers

Company-owned stores

Retail channel size

The US turnaround story

• Take $150 million costs out of the business• Relaunch Glidden through ‘Glidden Gets You Going’

• Quality• Packaging• Campaign film

• Strengthen relationship with Martha Stewart

• Relaunch Glidden Pro and increase


The US turnaround story

Take $150 million costs out of the businessGlidden through ‘Glidden Gets You Going’

Turnaround . . . Integrate

Grow

Strengthen relationship with The Home Depot including

Glidden Pro and increase Stores business profitability

44

Glidden at Wal-Mart puts us ahead in the retail channel• Wal-Mart opts for icon brand Glidden to

strengthen its paint category at all of its 3,500 stores

• Wal-Mart is a major player in total US DIY market, including paint

• Complete program including, over time, all interior and exterior paints for both brand and Glidden

• Significant additional sales potential of around $250 million

• Financially sound transaction• Start up costs of $ 25-30 million (2010/2011) to

stores/ color centers reset• Optimal utilization of supply chain: no major

additional investments required


Winning new business generates the highest returns

Mart puts us ahead in the

Mart opts for icon brand Glidden to strengthen its paint category at all of its 3,500

Mart is a major player in total US DIY

Complete program including, over time, all interior and exterior paints for both ColorPlace

Significant additional sales potential of around

Financially sound transaction30 million (2010/2011) to

stores/ color centers resetOptimal utilization of supply chain: no major additional investments required

45

Winning new business generates the highest returns

Winning globally


Winning globally

46

Performance Coatings key facts

2009• Revenue €4.1 billion• 19,940 employees• EBITDA: €594 million*

• 45 percent of revenue from high growth markets• Leading positions in performance coatings• Innovative technologies, strong brands

Revenue by business unit


Marine andProtective Coatings



Car Refinishes

Industrial Coatings

Wood Finishes andAdhesivesPowder Coatings

18%

17%

15%

Performance Coatings key facts

45 percent of revenue from high growth marketsLeading positions in performance coatingsInnovative technologies, strong brands

Revenue by business unit Revenue by geography

47


Europe

North America

Latin America

Other regions

Asia Pacific30%

20%

41%20%

8%6%

25%

Making it happen in Performance Coatings

construction


construction

consumer goods

Making it happen in Performance Coatings

transportation

48

consumer goods

transportation

Performance Coatings has a balanced exposure to different end markets

Generalindustrial

Packaging

Specialty Plastics


Coil

Powder

Protective

Wood

Plastics

Performance Coatings has a balanced exposure to different end markets

Transportation

ConstructionAutomotiveOEM

Marine


49

Consumer goods

OEM

VehicleRefinish

Protective

AkzoNobel’s competitive portfolio leaves room for growth

Market segments Global market size (€

Marine

Wood/ Coil/ Packaging

Protective


Protective

Vehicle refinish

Powder

Automotive OEM

General industrial

Source: External sources and company estimates

AkzoNobel’s competitive portfolio leaves room for growth

Global market size € billion)

Global market share %

Position

3 20 – 25 1

7 15 – 20 1

6 10 – 15 1

50

6 10 – 15 1

5 10 – 15 3

5 10 – 15 1

6 < 5 < 5

8 < 5 < 5

Growth in both mature and high growth markets

High growthmarkets

Organic Wood Finishes and Adhesives in China, Vietnam and Bangladesh


Innovation based Midwith new technology and new distribution

Selective acquisitions

Prime, Car Refinishes

Growth in both mature and high growth

High growthmarkets

Mature markets

Wood Finishes and Adhesives in China, Vietnam and Bangladesh

Specification selling, Protective Coatings

51

Mid-tier expansionwith new technology and new distribution

6i, Stickerfix, Autoclear LV, Car Refinishes

Prime, Car Refinishes Lindgens, Industrial Coatings Dow Powder, Powder Coatings

Value: excellent returns over the cycle

EBITDA* margin


* Before incidentals** ROI% is calculated as EBIT of the last four quarters divided by the average invested capital of these quarters

Value: excellent returns over the cycle

Moving average ROI in %**

52

** ROI% is calculated as EBIT of the last four quarters divided by the average invested capital of these quarters

Values: embedding our ambitions

34567

SafetyTotal reportable rate of injuries per million hours


Sustainability developments• Pro-active product stewardship• Developing technology based on renewable resources • Helping customers lowering their ecological footprint

012

2006 2007

Values: embedding our ambitions

Total reportable rate of injuries per million hours

53

Sustainability developmentsactive product stewardship

Developing technology based on renewable resources Helping customers lowering their ecological footprint

2008 2009 Q3 2010 Target

Specialty Chemicals key facts

2009• Revenue €4.4 billion• 11,140 employees• EBITDA: €738 million*• 32 percent of revenue from high• Major producer of specialty chemicals• Leadership positions in many markets




Functional Chemicals

Industrial Chemicals

Pulp and PaperChemicals

Surface Chemistry

Chemicals Pakistan

21%

16%

9%


Specialty Chemicals key facts

32 percent of revenue from high-growth marketsMajor producer of specialty chemicalsLeadership positions in many markets


54


North America

Europe

Asia Pacific

Latin America

Other regions

33%

21%

48%20%

9% 4%

19%

Our Specialty Chemicals portfolio

Surface ChemistryFunctional Chemicals



Our Specialty Chemicals portfolio

Surface Chemistry Pulp and Paper Chemicals


Chemicals

Chemicals Pakistan

55

The chemical industry value chain


Mining, oil, biomaterials

Base chemicals

Pulp and Paper Chemicals


The chemical industry value chain


Chemical inter-mediates

Performance/functionalchemicals

‘End’ products

Surface Chemistry


Functional Chemicals

Chemicals Pakistan

56

We built many market leadership positions in attractive niches

FunctionalChemicals

IndustrialChemicals

1

Chelates, sulfur products, polysulfidesorganic peroxides,

1

Monochloroacetic acid (MCA)

1

Chemicals Pakistan holds strong positions in various markets in Pakistan

Pulpand Paper

SurfaceChemistry

1

IndustrialAgricultural

1

Bleachingchemicals

(MCA)


We built many market leadership positions in attractive niches

3

3

CMC

polysulfides,

peroxides,

1

Monochloro-acetic acid

Chlorine merchant,Caustic merchant, Salt(all Europe)

12

1 Ethylene amines,metal alkyls, Elotex, Bermocoll

Salt Specialties (N. Europe)

12

Chemicals Pakistan holds strong positions in various markets in Pakistan

3

AgriculturalHome &Personal care

(all Europe)

3 Retentionand sizing chemicals

57

Serving many market segments, driven by higher per capita income2/3 of revenue driven by consumer demand• Varying from cleaning

products to paper products• Innovative sustainable

solutions• Strong position in high-growth

markets

1/3 of revenue driven by construction & transport• Varying from PVC to asphalt

additives• Innovative energy-saving

solutions• Strong position in high-growth

markets


Serving many market segments, driven by higher per capita income

16%12%

6%products to paper products

growth


66%

Residential construction

Non-residential construction

Transport

Consumer goods

Varying from PVC to asphalt

growth

58

Attractive operating margins over the cycle

€ billion

4

5

6

0

1

2

3

1998 1999 2000 2001 2002


Attractive operating margins over the

12%

14%

16%

18%

20%

0%

2%

4%

6%

8%

10%

2002 2003 2004 2005 2006 2007 2008 2009 2010 H1

revenue EBITDA margin

59

Different business


• Strategy: Protect and selectively grow


• Strategy: Grow, preferably in high• Strategy: Grow, preferably in highgrowth markets

Surface Chemistry and Functional Chemicals

• Strategy: Aggressively grow


Different business approaches

Strategy: Protect and selectively


Strategy: Grow, preferably in high-Strategy: Grow, preferably in high-

Surface Chemistry and Functional

Strategy: Aggressively grow

60

Financial review

Paris SRI Investor update 61

Year-on-year Operating Working Capital % of revenue to reduce towards 12%

2500

3000

OWC€ million

19.1%

16.2%16.4%

1000

1500

2000

4Q08 1Q09 2Q09

2,185 2,238


2,341

year Operating Working Capital % of revenue to reduce towards 12%

16%

17%

18%

19%

20%

16.2%15.6%

15.0%

10%

11%

12%

13%

14%

15%

16%

2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

OWC

OWC as % of LQ revenue*4

13.7%

14.6%15.0%

2,238 2,007 1,691 2,037 2,346

62

2,191

14.1%

Capital expenditure prioritization for growth• Capex 2010 expected to be around 3% of revenue (excluding

Ningbo €100 million and

• Medium term: Capex level to be around 4% of revenues

Capex as a % of revenue


Capital expenditure prioritization for

Capex 2010 expected to be around 3% of revenue (excluding 100 million and €40 million National Starch)

Medium term: Capex level to be around 4% of revenues

63

A stable to rising dividend

We intend to pay a stable to rising dividend: • a cash interim and a final dividend will be paid

Our dividend policy*

2010 interim dividend

€1.20 €1.20

*The new dividend policy and dividend pay-out will be discussed at the 2011 Annual General Meeting

• Interim dividend to be paid on 3 November, 2010• We intend to grow the 2010 total dividend by around

share*• Therefore we are guiding towards a total 2010 dividend of


A stable to rising dividend

We intend to pay a stable to rising dividend: a cash interim and a final dividend will be paid

Our dividend policy*

2010 interim dividend €0.32 per share – up 7% from 2009*

€1.35€1.80

out will be discussed at the 2011 Annual General Meeting

Interim dividend to be paid on 3 November, 2010We intend to grow the 2010 total dividend by around € 0,05 per

Therefore we are guiding towards a total 2010 dividend of € 1.40*

64

Unchanged ambition to maintain strong balance sheet

€ millionTotal EquityNet debt*

• Credit ratings confirmed in August at BBB+/Baa1, outlook improved • Credit ratings confirmed in August at BBB+/Baa1, outlook improved to stable

• National Starch proceeds will fund growth and potentially partly be used to further optimize capital structure, for example by repaying 2011 debt maturity and/or de

* Before net pension deficit of €1.5 billion September 30, 2010 (December 31, 2009


Unchanged ambition to maintain strong

Sept 30, 2010 Dec 31, 20099,291 8,2452,030 1,744

Credit ratings confirmed in August at BBB+/Baa1, outlook improved Credit ratings confirmed in August at BBB+/Baa1, outlook improved

National Starch proceeds will fund growth and potentially partly be used to further optimize capital structure, for example by repaying 2011 debt maturity and/or de-risking pensions where possible

1.5 billion September 30, 2010 (December 31, 2009 €1.9 billion)

65

Pension deficit improves to

Key pension metricsDiscount rateInflation assumptions

0€ billion

Pension deficit development during Q3 2010

-2.0

-1.5

-1.0

-0.5

0

Deficitend Q2 2010

Top-ups

(1,793)

35


Pension deficit improves to €1.5 billion

Q3 2010 Q2 20105.0% 5.2%2.7% 2.9%

Pension deficit development during Q3 2010

(3)

(1,506)

(411)471

Increasedplan assets

Inflation Discount Other Deficitend Q3 2010

Decrease Increase

rate

195

66

• 2004 pro forma (including ICI) pension under funding was around €4 billion

• Defined Benefits closed to new entrants, major plans closed in 2001 (ICI) and 2004 (Akzo Nobel)

• Committed to further de

• Total defined benefit pension plans cash contribution expected to reach €490 million in 2010 (2009:

Pro-active pension risk management


reach €490 million in 2010 (2009: around €350 million of “top

• Cash pension top-ups around in 2011

• Non-cash IAS19 financing expenses related to pensions and other post-retirement benefits expected to be 2010 (2009: €174 million)

2004 pro forma (including ICI) pension under funding was

Defined Benefits closed to new entrants, major plans closed in 2001 (ICI) and 2004 (Akzo Nobel)

Committed to further de-risk over time

Total defined benefit pension plans cash contribution expected to 490 million in 2010 (2009: €414 million), which includes

active pension risk management

67

490 million in 2010 (2009: €414 million), which includes 350 million of “top-up” payments (2009 €240 million)

ups around €350 million expected to continue

cash IAS19 financing expenses related to pensions and retirement benefits expected to be €105 million in

174 million)

Successful extension of debt duration will be further optimized over time Debt maturity*€ million (nominal amounts)

400

800

1.200

• Undrawn revolving credit facility of • €1.5 & $1 billion commercial paper programs in place• Net cash and cash equivalents

Significant liquidity headroom*

02010 2011

€ bonds

* At the end of Q3 2010


Successful extension of debt duration will be further optimized over time

Undrawn revolving credit facility of €1.5 billion available (2013)1.5 & $1 billion commercial paper programs in place

Net cash and cash equivalents €1.8 billion

Significant liquidity headroom*

2012 2013 2014 2015 2016

$ bonds GBP bonds

68

Low fixed costs as a percentage of revenue% of 2009 annual revenue*

Raw materials,energy, andother variableproduction costs

Fixed productioncosts


Selling, advertising,administration, R&Dcosts

EBIT margin

* Rounded percentages, all data excluding incidentals

DecorativePaints

Low fixed costs as a percentage of

100%

69

* Rounded percentages, all data excluding incidentals

0%Decorative Performance

CoatingsSpecialty

ChemicalsAkzoNobel

Raw materials, energy and other variable costs represent around half of revenue

10%

10%

6%6%

Additives

Solvents

Primarypackaging

Chemicals &intermediates


* Other variable costs include a/o variable selling costs costs (e.g. freight) and products for resale** Other raw materials include cardolite, hylar etc.

8%11%

3%

10%

CoatingsSpecialties

Resins

Pigments

Around 2/3 of total spend is managed centrally to maximize scale advantages

Raw materials, energy and other variable costs represent around half of revenue

13%

24%

Regional and/orlocal approach

Global markets,

Energy

OtherVariableCosts*

70

* Other variable costs include a/o variable selling costs costs (e.g. freight) and products for resale** Other raw materials include cardolite, hylar etc.

3%6%

global strategy

Hybridcentralized/BUapproach

Costs*

Other raw materials**

TitaniumDioxideCoatings

Specialties

Around 2/3 of total spend is managed centrally to maximize scale advantages

Outlook

Paris SRI Investor update 71

Outlook

Reasons for caution • Global economic outlook • Construction and housing markets remain soft in mature markets• Potential bubbles in high growth markets

“Cautiously optimistic”

Reasons for optimism• Leading positions, scale and diversified markets• Strong balance sheet to fund growth• Evidence of sustained industrial demand beyond re• Delivery beyond ICI synergies


Global economic outlook Construction and housing markets remain soft in mature marketsPotential bubbles in high growth markets

“Cautiously optimistic”

Leading positions, scale and diversified marketsStrong balance sheet to fund growthEvidence of sustained industrial demand beyond re-stockingDelivery beyond ICI synergies

72

Safe Harbor Statement

This presentation contains statements which address such key issues as AkzoNobel’s growth strategy, future financial results, market positions, product development, products in the pipeline, and product approvals. Such statements should be carefully considered, and it should be understood that many factors could cause forecasted and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information


competitive positions are based on management estimates supported by information provided by specialized external agencies. For a more comprehensive discussion of the risk factors affecting our business please see our latest Annual Report, a copy of which can be found on the company’s corporate website

Safe Harbor Statement

This presentation contains statements which address such key issues as AkzoNobel’s growth strategy, future financial results, market positions, product development, products in the pipeline, and product approvals. Such statements should be carefully considered, and it should be understood that many factors could cause forecasted and actual results to differ from these statements. These factors include, but are not limited to, price fluctuations, currency fluctuations, developments in raw material and personnel costs, pensions, physical and environmental risks, legal issues, and legislative, fiscal, and other regulatory measures. Stated competitive positions are based on management estimates supported by information

73

competitive positions are based on management estimates supported by information provided by specialized external agencies. For a more comprehensive discussion of the risk factors affecting our business please see our latest Annual Report, a copy of which can be found on the company’s corporate website www.akzonobel.com.

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Paris, December 16, 2010 roadshow SRI Investor update… · -trends Mega-trend example The world’s population grows and wealth increases, with significant mid-market development