Feb 2 (Reuters) — Akzo Nobel’s Indian unit posted a decline in third-quarter profit on Monday, hit by charges related to the country’s new labour codes, with the year-ago quarter boosted by earnings from its now-divested powder coatings business.
Akzo Nobel India, a unit of Dutch paint maker Akzo Nobel NV, posted a consolidated net profit of 743 million rupees ($8.12 million) in the quarter ended December 31, a near 32% drop from the previous year. Revenue fell around 14% to 9.08 billion rupees.
The bottom line was also impacted by one-time charges of 283 million rupees, including costs related to the country’s new labour codes.
It had earlier divested its powder coatings business and international research center. Earnings from that segment were included in the year-ago quarter, contributing to a sharper year-on-year decline in reported revenue in the latest quarter.
The company, which is home to the «Dulux» brand, said comparable revenue, excluding the impact of the divested business and one-time charges, fell 1%, while profit rose 6%.
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KEY CONTEXTIn September, India’s antitrust body cleared JSW Paints’ $1.6 billion deal to acquire up to 75% stake in the unit at a time when paint makers in the country are grappling with rising raw material costs and competition.
After the deal closes, Akzo Nobel India will be renamed JSW Dulux, and as part of the conglomerate, it will become the fourth-largest player in a market dominated by Asian Paints, Berger Paints and Kansai Nerolac, a Geojit Financial Services analyst said.
Analysts at Ambit Capital expected volume growth for paint companies during the quarter, but anticipated that a negative price mix and heightened competition would pressure revenue.
Bigger rival and market leader Asian Paints also reported a surprise profit drop due to a one-time charge tied to the country’s new labour laws.