Price increases keep Akzo Nobel on track in 2Q

Meanwhile, the company's plans to divest chemical businesses with around $840 million in annual sales is on track to be completed by the first quarter of 2006, said chief financial officer Rob Frohn at the group's second quarter results meeting.

Net income for the quarter was €182 million, up 22 per cent, while earnings before interest and taxes rose by a quarter to €341 million. However, EBIT was boosted by one-off items, and otherwise would have fallen 9 per cent on the impact of higher raw material costs and a new pension deal with the Dutch trade unions.

The company's Organon pharmaceuticals division - currently in the throes of a major restructuring as it tries to overcome the impact of losing patent protection on the antidepressant Remeron (mirtazepine) - had sales of €603 million, an increase of 4 per cent. Earnings came in at €87 million, up 10 per cent, and the unit also benefited from a €149 million pre-tax payment from the termination of the co-promotion agreement with Johnson & Johnson's Janssen-Cilag for the latter's antipsychotic drug Risperdal (risperidone).

Akzo's pharmaceutical ingredients business reported sales of €53 million, a rise of 2 per cent over the second quarter of 2004.

Pharmaceutical R&D spending for Organon reached 16.6 per cent of total sales in the quarter, Frohn said, as the company increased investments in its pipeline drug projects, including six products in Phase III development.

Meanwhile, the company's chemicals division was hit by high energy prices and incidentals such as a two-month strike in Finland's pulp and paper industry. Chemicals' second-quarter revenues of €963 million were 2 per cent higher than last year, and operating profits for the chemical division were up 12 per cent in the quarter, to €77 million.

Frohn reiterated Akzo's prediction that it will achieve full-year net income 'within the range of 2004', which was around €800 million.