. Improved volumes in most businesses underpins revenue growth of 6 percent
. EBITDA €399 million, up 38 percent; EBITDA margin at 12.3 percent
. Net income improved to €81 million
. National Starch classified as discontinued operation
Outlook - cautiously optimistic
Q1 2010 Q1 2009 % € million
3,246 3,065 6 Revenue
399 289 38 EBITDA*
12.3 9.4 EBITDA* margin (in %)
258 150 72 EBIT*
7.9 4.9 EBIT* margin (in %)
81 (7) Net income total operations
* Continuing operations before incidentals

Akzo Nobel N.V. (AkzoNobel) today announced its results for the first quarter of 2010, with improved volumes in most businesses underpinning revenue growth of 6 percent. Continued margin management and cost reduction programs also contributed to EBITDA growth of 38 percent. The one-year rolling EBITDA margin reached 13.6 percent.

Commenting on the results, CEO Hans Wijers said: "We've had a good start to 2010, particularly in higher growth markets, where our performance was strong. While revenue growth across all AkzoNobel's businesses has been solid, our Q1 performance compares with a particularly weak first quarter in 2009."

Added Wijers: "We expect pressure from further raw material cost increases during the year and remain cautious about the strength of the recovery. AkzoNobel will continue to focus on customers, cost reduction and cash generation, but we will also prioritize investments and initiatives to ensure that the company is able to capture growth."

National Starch
AkzoNobel has received renewed expressions of interest in National Starch, which has accordingly been reclassified as a discontinued operation. Details of the reclassification can be found on page 18 of the Q1 2010 Report.

Revenue per Business Area:
Q1 2010 Q1 2009 % € million
1,056 988 7 Decorative Paints
1,048 986 6 Performance Coatings
1,154 1,092 6 Specialty Chemicals
(12) (1) Other activities/eliminations
3,246 3,065 6 Total

EBITDA* per Business Area:
Q1 2010 Q1 2009 % € million
82 48 71 Decorative Paints
143 105 36 Performance Coatings
207 151 37 Specialty Chemicals
(33) (15) Other activities/eliminations
399 289 38 Total
* Before incidentals

Revenue development in % versus Q1 2009
Volume
.Prices
.Acquisitions/ divestments
. Exchange rates
Total
Decorative Paints 5 (1) - 3 7
Performance Coatings 8 (3) (1) 2 6
Specialty Chemicals 15 (6) (5) 2 6
Total 10 (4) (2) 2 6

Volume development per quarter Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10
Decorative Paints (16) (10) (9) - 5
Performance Coatings (20) (19) (11) (2) 8
Specialty Chemicals (16) (18) (6) 4 15
Total (17) (16) (8) 1 10

Price development per quarter Q1'09 Q2'09 Q3'09 Q4'09 Q1 '10
Decorative Paints 7 4 4 (1) (1)
Performance Coatings 6 5 5 (3) (3)
Specialty Chemicals 3 5 (5) (9) (6)
Total 5 5 (1) (5) (4)

Decorative Paints - Significant growth in higher growth markets

Revenue up 7 percent; volumes up 5 percent

EBITDA at €82 million (2009: €48 million)

EBITDA margin 7.8 percent (2009: 4.9 percent)

Significant growth in higher growth markets; mature markets stable

The Decorative Paints business got off to a good start in 2010, with revenue up 7 percent due to a 5 percent increase in volume. In higher growth markets, revenue growth was strong (Asia increased 30 percent), while revenue remained stable in the mature markets compared with the previous year. Synergies and restructuring benefits contributed to better results in the mature economies. The closure and integration of multiple sites across Europe is running according to plan.

The EBITDA margin was 7.8 percent, an improvement of close to 3 percent compared with 2009, despite severe winter conditions in the Northern Hemisphere and a weak commercial property market. In line with its strategy, Decorative Paints increased investments in advertising and promotion by 0.5 percent of sales to accelerate growth in key high growth markets.

Performance Coatings - Strong volume recovery continues

Revenue increased by 6 percent; volumes up 8 percent

EBITDA up 36 percent at €143 million (2009: €105 million)

EBITDA margin at 13.6 percent (2009: 10.6 percent)

Lower Marine maintenance activity

Restructuring programs continue to deliver savings

It was a strong first quarter for Performance Coatings, with revenue increasing 6 percent. After a difficult Q1 last year - with reduced volumes for most businesses - there has been a recovery in 2010, although most businesses are still below pre-recession levels. During Q1, volume recovery was evident in all businesses, with the exception of the late cycle Marine and Protective Coatings business.

Overall margins improved during the quarter, but declined from the levels of Q4 2009. The higher growth markets displayed the most visible signs of recovery. All businesses benefited from margin management and cost reduction programs, resulting in an EBITDA of €143 million, 36 percent higher than in Q1 2009. The EBITDA margin was 13.6 percent, 3 percent ahead of Q1 last year.


Specialty Chemicals - Improved demand in mature and high growth markets

Revenue increased by 6 percent, with volumes up 15 percent

Broad demand improvement in both mature and high growth markets

EBITDA increased 37 percent to €207 million (2009: €151 million)

EBITDA margin 17.9 percent (2009: 13.8 percent)

Strong results, most notably Functional Chemicals and Surface Chemistry

National Starch activities reported as discontinued operation

The increase in demand evident in late 2009 gained momentum during the first quarter of 2010. Nearly all businesses experienced a recovery in demand in the mature markets, while strong growth als returned to higher growth markets. Accordingly, the combination of restocking, market share gains and improved fundamental demand led to a volume increase of 15 percent in the quarter. Average pricing was relatively stable versus Q4 2009, but was 6 percent below Q1 2009 levels.

Product mix and sustained margin management efforts led to margin improvement for the quarter, although raw material costs increased due to higher oil and feedstock prices. EBITDA was €207 million, 37 percent above Q1 last year. As percentage of revenue, the EBITDA margin was 17.9 percent, more than 4 percent ahead of 2009.

Cashflow
Operationg activities in Q1 resulted in a cash outflow of €525 million (2009: €317 million) as higher operating results were offset by payment of €159 million of accrued interest on refinanced bonds, higher pension top-up payments of €67 million and a seasonal working capital outflow. Expressed as a percentage of revenue, operating working capital was 15.6 percent (Q1 2009: 19.1 percent).

Outlook and medium-term targets
AkzoNobel remains on track to achieve its medium-term target of an EBITDA margin of 14 percent by the end of 2011. The focus on customers, cost reduction and cash generation continues, while investments to capture growth remain a priority, particularly in higher growth markets. Although volumes remain below pre-recessionary levels in most businesses, increases in volume, first evident in Q2 2009, have continued more broadly and are a reason for cautious optimism.

The Report for the first quarter of 2010 can be read on www.akzonobel.com/quarterlyresults.

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