Strategy Update - Media Presentation

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Leading market positions delivering leading performance Media Briefing by Ton Büchner and Keith Nichols February 20, 2013

Agenda 1.

Introduction

2.

Market environment

3.

Group strategic update

4.

Business Areas

5.

Financial implications

6.

Summary and conclusion Questions

Strategy Update 2013

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2012 highlights • 2012 revenue up 5 percent driven by favorable currencies and pricing, offset by lower volumes • 2012 EBITDA* 4 percent higher at €1,901 million (2011: €1,834 million) • Performance improvement program 2012 target has been exceeded • Net loss from continuing operations €1,733 million (2011: €536 million income), due to the Q3 impairment charge of €2,106 million • Net cash from operating activities up 86 percent to €737 million • Adjusted EPS €3.26 (2011: €3.10) • Total dividend for 2012 proposed at €1.45 (2011: €1.45) • Decorative Paints North America reported in discontinued operations; Chemicals Pakistan divestment completed in 2012 • The economic environment remains challenging, especially in Europe

* Before incidentals

Strategy Update 2013

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Our proposition: Leading market positions delivering leading performance AkzoNobel has gone through a significant amount of strategic change over the past five years Today, the company has • Excellent portfolio of businesses • Good long term growth potential on the basis of end-user segment growth • Strong positions in high growth markets (44% of revenue) • Leadership positions in many markets • Clear leader in sustainability • Track record of delivering sustainable innovations and products • Strong brands, both in consumer and industrial markets Clear focus to deliver on our significant potential • Improved returns and cash flow • Leveraging scale • Simplification and standardization • Continued innovation

Strategy Update 2013

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AkzoNobel strategy

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New and realistic 2015 financial targets focused on quality of earnings and value creation Return on sales (Operating income/revenue) %

Return on investment (Operating income/average 12 months invested capital) %

Net debt/EBITDA x

12

16

3

8

9,0 5,9 *

12

14,0 8,9 *

2

8

4

0 2012

2015

2,0

1.4

1

4

0

<

0 2012

2015

2012

2015

Assumes sales growth (CAGR) for the period of 4%

*2012 excluding impairment (€2.1 billion) and after IAS19

Strategy Update 2013

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AkzoNobel today • • • •

Revenue €15.4 billion 50,610 employees 44% of revenue from high growth markets Major producer of Paints, Coatings and Specialty Chemicals • Leadership positions in many markets

Revenue by Business Area

Operating income* by Business Area

EBITDA** by Business Area Performance Coatings

36%

37%

38%

44%

27%

5.4% Growth 2012 vs. 2011

48%

8%

5.9% Return on sales (operating income/revenue)

*2012 excluding impairment (€2.1 billion) **New definition including incidentals and after IAS19

Decorative Paints

47%

15%

Specialty Chemicals

10.4% EBITDA/revenue

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2013 market conditions not expected to improve significantly 2012 showed challenging market conditions in most end-user segments and geographical end markets Key developments in 2012: • Divestment of Decorative Paints North America announced • Impairment of €2.1 billion on continued operations • Exceeded Performance Improvement Program intermediate targets

2013 market conditions are not expected to improve significantly • Focus will be on: – Organic growth – Operating income – Return on capital – Operating cash flow • Management remuneration has been adapted accordingly • Continue building on our end-user segments and strong high growth market positions • Key management changes

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2. Market environment 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion

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~43% of revenues

~16% of revenues

New Build Projects

Automotive OEM, Parts and Assembly

Maintenance, Renovation and Repair Building Products and Components

~16% of revenues Consumer Durables Consumer Packaged Goods

Automotive Repair Marine and Air Transport

~25% of revenues Natural Resource and Energy Industries Process Industries

Strategy Update 2013 10

High growth markets are 44% of revenue and their importance will increase % of 2012 revenue, excluding Decorative Paints North America 38% Mature Europe

Three year GDP growth* 9%

6%

3%

8% Emerging Europe

15% North America

0% UK

Eurozone

USA

2013

2% Middle East and Africa

Latin America 2014

China

Developing Asia

2015

26% Asia Pacific

11% Latin America

Our goal: Greater than 50% of revenues from high growth markets

*Source: EIU: GDP year on year growth in local currency at constant prices

Strategy Update 2013 11

AkzoNobel benefits from its broad end-user segmentation and geographical presence •

AkzoNobel’s four end-user segments show a mixed picture for future development – Buildings and Infrastructure faces challenges, especially in Europe – Marine transportation shows reduced activity levels – Consumer Goods, Industrial, automotive and air transport are reasonably robust

•

High growth markets show stronger demand developments in virtually all segments

•

North America shows earlier signs of recovery compared to Europe

•

Consumer confidence varies strongly per region and has a clear influence on significant end user buying decisions (housing, cars, furniture, etc.)

•

The optimism levels reflected in the Purchasing Managers’ Index (PMI) will have a positive impact on our Industrial segments

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3. Group strategic update 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion

Strategy Update 2013 13

The vision and new targets Vision: Leading market positions delivering leading performance To be a leader in: • Operating efficiency and customer service • Innovation • Sustainability

New targets • • • •

Return on sales (ROS, operating income/revenue) Return on investment (ROI, operating income/average 12 months invested capital) Carbon emissions across the value chain Eco-premium products

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AkzoNobel strategy

Strategy Update 2013 15

We will drive five strategic focus areas 1. Care for the customer

1. Care for the customer

2. Reduction of product and process complexity 3. Focus on cash and return on investment

3. Cash and return on investment

4. Embedded safety and sustainability

4. Embedded safety and sustainability

5. Diverse and inclusive talent development

5. Diverse and inclusive talent development Strategy Update 2013 16

The company core processes will support our strategic focus areas Core processes

Behavior-based and process safety

Process owner

Integrated Supply Chain (HSE)

Operational control cycle

CEO/CFO

Continuous improvement

Integrated Supply Chain (Operations)

Innovation

Procurement

Talent management

RDI Integrated Supply Chain (Procurement) HR

Strategy Update 2013 17

Actions

> Deliver dependably > Grow organically > Innovate > Simplify > Standardize > Continuously improve

Strategy Update 2013 18

Strategy on a page

Strategic focus areas

Processes

Actions

End-user segmentation

• Care for the customer • Reduction of product and process complexity • Cash and return on investment • Embedded safety and sustainability • Diverse and inclusive talent development

• Behavior-based and process safety • Operational control cycle • Continuous improvement • Innovation • Procurement • Talent management

• • • • • •

• Buildings and Infrastructure • Transportation • Consumer Goods • Industrial

Deliver dependably Grow organically Innovate Simplify Standardize Continuously improve

Strategy Update 2013 19

Our sustainability strategy: Creating more value with fewer resources More customer value in our end-user segmentation

Resource scarcity across the value chain will create opportunities Scope 3 upstream

Scope 1 and 2

Raw materials

Own operations, including energy use

Scope 3 downstream

Customer operations

End-user

End of life

Scope 4 Energy/ resource benefits in use

Strategy Update 2013 20

Sustainability is business; Business is sustainability •

‘Downstream eco-premium solutions’: 20% of our revenues by 2020 We will increase the revenue from solutions that generate direct resource and energy benefits for our customers, consumers and users

•

Reduction of carbon emissions 25-30% reduction per ton by 2020 (2012 base) We will reduce our carbon emissions through the value chain

•

Resource efficiency As of 2014 AkzoNobel will report on an innovative new index measuring how we improve resource efficiency across the full value chain - compared to the value we generate

Strategy Update 2013 21

End-user segment trends, combined with sustainability, direct our innovation spend

End-user segments

Sustainability Sustainability = Business Business = Sustainability

Direction of innovation spend (2.5% of 2012 revenue)

Strategy Update 2013 22

AkzoNobel delivers innovation Buildings and Infrastructure Dulux Guardian

Transportation Aerobase Coating System

A premium, low-VOC and low-odor soft-sheen emulsion for interior walls

A consistently performing OEM-approved low VOC base coat/clear coat system for aerospace

Consumer goods Biostyle™ CGP

Industrial Monochloroacetic acid (MCA)

A range of sustainable hybrid polymers for consumer applications

An asset-light approach to sustainable chemical production using proprietary hydrogenation technology

Strategy update 2013 23

Performance Improvement Program to deliver €500 million in 2013, one year earlier than planned Performance Improvement Program

Operational Excellence

Functional Excellence

Business Unit Adaptations

Key summary to date

2013 Plan

• Gains of €250 million, excluding Decorative Paints North America • Costs of €292 million, excluding Decorative Paints North America • Pulled actions and associated costs forward • Added measures (including European Decorative Paints) with additional cost in 2012

• Accelerate delivery of recurring €500 million EBITDA gain in 2013, which was originally intended in 2014 • Associated cost is estimated at €205 million • Guidance of €500 million remains even though North America Decorative Paints will be divested • Added measures included

Strategy Update 2013 24

Moving from project based to continuous improvement will be core in 2013 Operational Excellence

• • •

Product and margin management Consolidation of RD&I Logistic and warehouse optimization

Functional Excellence

• • •

IT infrastructure simplification HR shared service model Finance shared service centers

•

Organizational redesign of Marine and Protective Coatings, Wood Finishes and Adhesives, and Pulp and Performance Chemicals Additional restructuring of Decorative Paints Europe

Business Unit Adaptations

Embedding

• •

During 2013, we will embed continuous improvement in our businesses

Strategy Update 2013 25

AkzoNobel strategy

Strategy Update 2013 26

4. Business Areas 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion

Strategy Update 2013 27

The global paints and coatings market is around €75 billion By market sector 2011, 100% = €75 billion

Aerospace Yacht Packaging Coil Marine Wood

By end-user segment 2011, 100% = €75 billion

Industrial

Decorative Paints (43%)

Consumer Goods

Buildings and Infrastructure

Vehicle Refinish Powder

Transportation

Protective

Performance Coatings (57%)

General Industrial

Source: Orr & Boss; management analysis

Automotive OEM

Strategy Update 2013 28

AkzoNobel has many leading market positions No.1 Position

Decorative

Multiple regions outside North America North America*

Other key players PPG, regional players

Sherwin-Williams

PPG, regional players

Protective

Sherwin-Williams, Jotun

Powder

Axalta, Jotun, regional players

Auto refinish

Axalta

PPG, AkzoNobel

Wood

Sherwin-Williams, Valspar

Marine

Jotun, Chugoku

Coil

PPG, Beckers

* AkzoNobel not present with North America divestment to PPG

Strategy Update 2013 29

Decorative Paints overview Revenue by end-user sub-segment

Revenue by geographic region

New build projects

Mature Europe

8%4%

Maintenance, renovation and repair

16%

Asia Pacif ic

14%

Latin America

49% 84%

25%

Emerging Europe Other regions

Decorative Paints key figures (new definition)

€ million

2012*

BA-level core processes and capabilities

Revenue

4,297

• • • • •

EBITDA Operating income

284 94

Return on sales

2.2%

Return on investment

3.0%

# Employees

Branding Distributor, wholesaler, retail management Understanding and serving professional painters Consumer inspiration Quality management, including product portfolio management

17,020

*After the divestment of Decorative Paints North America, excluding impairment (€2.1 billion)

Strategy Update 2013 30

Performance Coatings overview Revenue by end-user segment

Revenue by geographic region Mature Europe

8% 4%

Transportation

14%

36% 23%

Consumer Goods

11%

27%

Asia Pacific

Buildings and Infrastructure Industrial

North America

30%

20%

27%

Emerging Europe Latin America Other regions

Performance Coatings key figures (new definition) € million

2012

BA-level core processes and capabilities

Revenue

5,702

• • • • •

EBITDA

673

Operating income

542

Return on sales

9.5%

Return on investment

21.7%

# Employees

21,310

Industrial key account management Technical support and service Design, color and color matching Continuous innovation in functionality and ease-of-use Sustainable, safe solutions

Strategy Update 2013 31

Specialty Chemicals overview Revenue by end-user segment

18% 6% 58%

18%

Buildings and Infrastructure Transportation Consumer Goods Industrial

Revenue by geographic spread

3% 4% 10%

Mature Europe

North America 40%

Asia Pacific Latin America

22%

Emerging Europe Other regions

21%

Specialty Chemicals key figures (new definition) € million

2012

BA-level core processes and capabilities

Revenue

5,543

• • • • • •

EBITDA

830

Operating income

500

Return on sales

9.0%

Return on investment

13.6%

# Employees

10,750

Management of integrated value chains Continuous technological advancement Engineering and project management Process safety Product and margin management Managing capital intensive businesses and expansions

Strategy Update 2013 32

5. Financial implications 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion

Strategy Update 2013 33

Historical EBITDA profitability shows stable results in challenging economic times EBITDA as reported*

EBITDA margin

€ billion 2.0

% 14

12 1.5

10 8

1.0 1.8

2.0 1.7

1.8

1.9

6 4

0.5

2 0.0

0 2008

2009

2010

EBITDA margin *All years excluding National Starch

2011

2012

EBITDA Strategy Update 2013 34

Targets for 2015 are focused on increased cash generation and value creation New targets

Old targets

Change driver

Increase return on sales (ROS, operating income/ revenue) to 9%

Grow to €20 billion revenues

• Increased focus on delivery of operating profit after incidentals

Achieve return on investment (ROI) to 14%

Increase EBITDA each year, maintaining 13-15% margin

• Ultimate driver of value creation • Deliver returns above the cost of capital

Net debt/EBITDA <2.0 times

Reduce OWC/revenues by 0.5 p.a. towards a 12% level

• Fuller measure of cash generation; not just one component

Deadline: end 2015

Deadline: medium term

• Shorter term • Defined point in time • Increased focus on delivery and accountability

Strategy Update 2013 35

Incidentals are now included in EBITDA* as part of our ongoing business € million

Incidentals as reported

2010

2011

• Incidentals are now included in EBITDA unless genuinely one-off and not related to normal business (2,520) 2012

(139)

(126)

(32)

3

0

0

(2,170) • Restructuring charges are now considered an ongoing business activity and are not reported as incidentals 6

(107)

(129)

• Performance improvement program restructuring charges are also now included in (344) EBITDA

13

12

40

2,009

1,834

1,901

14.8%

12.6%

12.4%

Restated EBITDA

1,915

1,717

1,597

Restated EBITDA %

14.1%

11.8%

10.4%

Total restated incidentals Restated IAS19 incidentals with no impact on EBITDA

Total incidental EBITDA adjustment: IAS19 EBITDA adjustment EBITDA as reported

EBITDA %

*Restated for IAS19 adjustments which impact the other line

Strategy Update 2013 36

New focus to improve performance and drive value creation € million

Revenue EBITDA Depreciation, amortization Restated incidentals Operating income EBITDA margin Return on sales Invested capital** Return on investment

2010

2011

2012*

2015 Target

13,605 14,604 15,390 1,915

1,717

1,597

(590)

(563)

(625)

(32)

3

(64)

1,293

1,157

908

14.1%

11.8%

10.4%

9.5%

7.9%

5.9%

• Benefits of new targets – Clear focus on value creation – Linked to remuneration of senior management

9.0%

11,467 11,537 10,238 11.3%

10.0%

8.9%

14.0%

*2012 excluding impairment (€2.1 billion) ** Average 12 month invested capital excluding full year impairment

Strategy Update 2013 37

6. Summary and conclusion 1. Introduction 2. Market environment 3. Group strategic update 4. Business Areas 5. Financial implications 6. Summary and conclusion

Strategy Update 2013 38

New and realistic 2015 financial targets focused on quality of earnings and value creation Return on sales (Operating income/revenue) %

Return on investment (Operating income/average 12 months invested capital) %

Net debt/EBITDA x

12

16

3

8

9,0 5,9 *

12

14,0 8,9 *

2

8

4

0 2012

2015

2,0

1.4

1

4

0

<

0 2012

2015

2012

2015

Assumes sales growth (CAGR) for the period of 4%

*2012 excluding impairment (€2.1 billion)

Strategy Update 2013 39

Summary • Clear end-user segment focus providing forward looking indicators and direction for our market initiatives and innovation spend • Challenging market conditions expected in the near future • Operational strategy on the basis of: – Well defined strategic focus areas – Core processes – Clear set of actions aimed at continuous efficiency improvements • Clear sustainability strategy and sustainability targets • Guidance and targets defined • A number of new management team members • Focus on operating income, return on investment and cash generation: remuneration aligned

Strategy Update 2013 40

Leading market positions delivering leading performance Today, the company has • Excellent portfolio of businesses • Good long term growth potential on the basis of end-user segment growth • Strong positions in high growth markets (44% of revenue) • Leadership positions in many markets • Clear leader in sustainability • Track record of delivering sustainable innovations and products • Strong brands, both in consumer and industrial markets Clear focus to deliver on our significant potential • Improved returns and cash flow • Leveraging scale • Simplification and standardization • Continued innovation

Strategy Update 2013 41

Thank you for your attention

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 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.

Strategy Update 2013 43