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Akzo Nobel in Tough Euro Market

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Akzo Nobel NV (AKZOY - Free Report) is enhancing its global position in coatings through acquisitions and organic growth. Recently, Akzo underwent a major transformation with the sale of its Organon Pharma business to Germany-based pharmaceutical company Schering-Plough Corp. . It has also acquired UK-based chemical producer Imperial Chemical Industries PLC.

However, rising commodity costs are negatively affecting margins. Raw material and energy costs are expected to rise further. The company is also facing a difficult environment in Europe. Akzo reduced its guidance for the full year 2008. This prompts us to rate the stock a Hold with a six-month target price of $66.

On September 3, Akzo Nobel announced its plans to increase its sales of green products and offset mounting pressure from the slowing housing markets in the U.S. and Europe. The company currently generates 18% of its revenues from sustainable products. It aims to generate 30% from the green products by 2015.

Akzo Nobel is a leading global producer of coatings. The Coatings business is growing rapidly with a strong focus on selective acquisitions, cost control, product portfolio, and emerging markets. Marine and Protective Coatings remain the company's top performers despite significant raw material challenges, especially metals.

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