Welcome, and thank you for standing by. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question and answer session. To ask a question, please press star and the number one. This call is being recorded. If you have any objections, you may disconnect at this point. Now, I will turn the meeting over to your host, Lloyd Midwinter. You may begin. Hello, welcome to Akzo Nobel's investor update for the first quarter of 2021. I'm Lloyd Midwinter, Head of Communications and Investor Relations. Today, our CEO, Thierry Vanlancker, and CFO, Maarten de Vries, will guide you through our results. We'll refer to a presentation which you can follow on screen and download from our website, akzonobel.com. A replay of this webcast will also be available. There will be an opportunity to ask questions after the presentation. For additional information, please contact investor relations. Before we start, I would like to remind you about the disclaimer at the back of this presentation. Please note this also applies to the conference call and answers to your questions. I now hand over to Thierry, who will start on slide four of the presentation. Hello, everybody. Thank you, Lloyd. Hello, everybody, and a very warm welcome to everyone on the call. We're still in COVID-19 around the world, so I hope you and your loved ones are all safe and well. Our Q1 results demonstrate very much the change in trajectory due to our new Grow & Deliver strategy. We achieved strong underlying growth and a further step up in profitability. Revenue for the first quarter was up 16% in constant currencies compared to 2020, and 10% higher versus 2019, including strong growth in Asia. In Q1, we delivered organic growth of 15% and acquisitions added 1%. Before we go on with the text, you may recall that we used to report ROS, or return on sales, excluding unallocated costs. This was in relation to the metrics set for our Winning together: 15 by 20 strategy. As of now, and just as a reminder, we now focus on ROS defined simply as adjusted operating income as percentage of revenue. Hence our ROS in the definition used as of now increased to 13.6% versus 10.4% for the same period last year. Adjusted EBITDA was 29% higher at EUR 391 million, and adjusted earnings per share from continuing operations increased 66% to EUR 1.18 per share. Free cash flow improved by EUR 118 million, and return on investment increased to 17.7%, as compared to 14.7% in 2020. We also have now concluded our EUR 300 million share buyback, and we will start the additional EUR 1 billion share buyback as announced early this year. We will start it on April 27. In addition, we have completed the acquisition of Titán Paints, which strengthens significantly our business to be a clear leader in Spain for Decorative Coatings. Let's turn to slide number five. In summary, the results for the first quarter, we believe, demonstrate a powerful start to our Grow & Deliver strategy. Volumes grew for the third consecutive quarter. They are 16% higher than Q1 last year and up 8% versus the same period in 2019. Our recent acquisition of Titan Paints in Spain expands the portfolio of sustainable solutions that we are able to offer to our customers there. In addition, we continue to see strong growth for our powder coatings business and now have a dedicated portfolio in place to supply the electrical vehicles segment. We've kept a laser strong focus on margin management, accelerating our pricing initiatives to address the significant industry-wide raw material cost inflation, and delivered already in Q1, a 2% higher selling prices. During the quarter, we've also completed a major ERP integration in China and also reached 100% renewable electricity use in France, and this is in addition to the 11 countries where this is already the case. Let's now turn to slide number six, which summarizes how we view current trends in the markets where we operate. Demand for Decorative Paints continues to be strong in all regions where we operate. Strong positive momentum continues for China and South America. Compared to the previous quarter, Southeast Asia continues to recover, driven by India, Malaysia, and Pakistan. In EMEA, the do-it-yourself segment remains particularly strong, and we believe that is structurally so. Demand for industrial coatings remains strong, in particular the coil and packaging segments. Growth trends for powder coatings are very positive globally and especially strong in Asia. Our growth in powder coatings continues to be driven both by end market demand and clear market share growth. Automotive and specialty coating strengths remain strong for consumer electronics and continue to improve for automotive OEM and vehicle refinishes. Demand for aerospace is still impacted by COVID-19, although improving sequentially, especially in the so-called MRO segment. Demand for marine and protective coatings has remained subdued as marine and oil and gas-related projects continues to be impacted. We've already done very well in relation to our stated intent to grow at least in line with our relevant markets, with our increased focus on growth underpinned by robust end user markets. Turning to slide number seven with a focus on one of our key business units. We intend in the coming analyst calls to feature one or two of our business units during each of our quarterly result presentations. This time we will start with powder coatings and Decorative Paints in South America. With our powder coatings business, we enjoy a leading position in the fastest-growing and high-performing segment of the coatings industry. We are more than 2x the size of other players. Powder coatings is truly one of the crown jewels in our portfolio. Growth in this segment and for our business is driven by several factors. Due to the specifics of the powder technology, powder coatings provide clear sustainability advantages compared to liquid coatings, because it's completely solvent-free and highly efficient in reusage. In addition, due to continuously lowering the baking temperature, we are constantly opening up new market opportunities. You may recall that last year, the technology acquisition of Stahl enabled us to penetrate the low cure domain, opening up new markets such as wood and thermoplastics. Our position in this segment has been traditionally and continues to be exceptionally strong. We've increased our investments in both our own manufacturing sites and our product range. Recent examples include our R&D facility in Como, Italy, dedicated to delivering low cure powder coatings, as well as our dedicated portfolio for the electrical vehicle segment, where we also try to protect the IP. During the first quarter, revenue for powder coatings was up 19% in constant currencies, 12% higher compared to the first quarter of 2019. We also increased, at the same time, our return on sales by 700 basis points over the same period since the first quarter of 2019. Now moving to slide number eight for the second of our business units featured this quarter, namely Paints South America. As you are aware, we have a very strong presence in the paints markets of South America with about a EUR 400 million revenue. Our growth in the region is driven by both end market demand as well as market share gains. In total, the market size for Decorative Paints is estimated to be around EUR 3.5 billion in that geography. We have leading positions in Argentina, Bolivia, Brazil and Uruguay with our strong local versions of our Dulux family of brands, including Inca and Coral. We have been outgrowing the market over the last four years through solid margin management, offsetting significant transactional currency headwinds and building strong customer relationships, especially so during the COVID-19 pandemic. We are currently on the verge of introducing an upgraded premium offering for the market with a focus on decoration and protection. Revenue for Q1 was up 62% in constant currencies versus the same period in 2019, and we've delivered double-digit revenue growth in each of the last three quarters. Margins have also increased significantly with 550 basis points increase in ROS between the first quarter of 2019 and 2021. With that, I'll hand it gladly over to Maarten, who will run you through the financial results in more details as of slide 10. Go ahead, Maarten. Yes. Thank you, Thierry. Hello, everybody on the call. During the first quarter, revenue was up 16% in constant currencies and 10% higher versus the first quarter of 2019. Volumes were 16% higher, especially in Asia, and acquisitions also added one percent. Price increased two percent and was especially strong in Decorative Paints, although price mix was adversely impacted by geographic and segment mix. Adjusted EBITDA increased 29% to EUR 391 million due to strong margin management and cost discipline. Adjusted operating income was up 43% at EUR 307 million. This resulted in a return on sales of 320 basis points higher at 13.6%. The next slide shows the development of adjusted operating income during the first quarter. We delivered 43% more profit in the first quarter compared to the same period last year, mainly resulting from revenue growth and cost discipline. Higher volumes contributed EUR 175 million. Price increases contributed EUR 41 million, while geographic and segment mix had an adverse effect of EUR 59 million. Currencies were negative with EUR 17 million. Raw material and other variable costs increased with EUR 38 million in addition to the impact of higher volumes compared with the first quarter of 2020. The increase was mainly driven by raw material inflation and mix. Operating expenses increased with EUR 9 million, mainly due to higher volumes and increased advertising and promotion, offset by cost discipline in other areas. Continuous improvement initiatives successfully offset inflation. Turning now to the next slide for the results of Decorative Paints during the first quarter. Revenue grew with 31% in constant currencies and 20% versus the same period in 2019, driven by strong demand in all regions, resulting in 28% higher volumes. Price increased with 4%, although this was partly offset by 3% geo mix. Within EMEA, volumes grew faster in Southern Europe and growth in Asia was also strong. Demand in EMEA continued to be strong, especially in the DIY segment. Revenue was up 24% in constant currencies and 22% higher versus 2019. Revenue for South America was up 56% in constant currencies, and as Thierry mentioned before, 62% versus 2019, mainly driven by significant volume increases on the back of strong demand. The significant adverse currency impact was driven by the Brazilian real and the Argentinian peso. Compared to previous quarter, volumes were significantly higher in China and continued to recover in Southeast Asia, driven by India, Malaysia and Pakistan. Revenues were up 41% in constant currencies and 4% compared to the same period in 2019. Strong volume growth, combined with ongoing margin management and cost discipline, resulted in adjusted EBITDA up 83% at EUR 183 million and adjusted operating income 131% higher at EUR 148 million. The return on sales increased with 740 basis points to 15.9%. Finally, we are in the process of repaying around 4 million furlough support received in the U.K. last year during the COVID times. Moving now to the first quarter results of Performance Coatings. Revenue was up 8% in constant currencies and 5% higher versus 2019, driven by strong growth in powder and industrial coatings. Volumes increased 10% as demand continued to improve. Price was positive 1%, although mix was impacted by segment as well as geographic mix effects, resulting in 2% unfavorable price mix. Revenue for powder coatings was up 19% in constant currencies and increased 12% compared to 2019, with significantly higher volumes compared to the first quarter of 2020, especially in Asia. Demand for marine and protective coatings continues to be impacted by postponed projects, partly offset by strong growth in yacht coatings. This resulted in revenues 2% lower in constant currencies compared to the same period last year, although up 4% versus the first quarter of 2019. Volume growth for automotive and specialty coatings was offset by adverse currency and mix impacts. Demand for consumer electronics was strong, and the aerospace segment is showing early signs of recovery with sequential improving demand. Strong growth for industrial coatings with revenue in constant currencies up 14% and 11% higher versus 2019, was driven by significant volume growth, especially in the packaging and coil segments. Overall, the adjusted operating income increased 3% to EUR 196 million, mainly due to volume growth, and return on sales was 14.7% for Performance Coatings. Turning to cash. We continue to maintain a strong focus on cash and working capital management. This resulted in improved operating working capital as a percentage of revenue to 13.4% in the first quarter from 16.5% last year and 14.4% in the first quarter of 2019. Free cash flow, excluding pension pre-funding and top-up payments, improved by EUR 121 million compared to last year, mainly due to higher profit and lower working capital outflow. Capital expenditures for the quarter were EUR 57 million. We are investing in growth, the optimization of our asset footprint and ongoing integration of our ERP systems. For the full year 2021, we expect capital expenditures to be slightly higher versus the previously indicated EUR 250 million. Our cash tax rate is expected to be slightly lower for 2021 at around 20%. We ended the first quarter with a net debt EBITDA leverage ratio of 1 x. We continue to target a leverage ratio of net debt EBITDA of 1:2x and remain committed to retain a strong investment credit rating. Moving now to the next slide. Adjusted EBITDA increased with 29% to EUR 391 million, driven by strong demand and margin management. Adjusted earnings per share from continuing operations was 66% higher at EUR 1.18. We've now completed the EUR 300 million share buyback and our EUR 1 billion share buyback, as announced earlier this year, will start on April 27th. Now I'm handing back over to Thierry for his concluding remarks. Yeah. Thank you, Maarten. Let's look at slide 17. To summarize, we delivered with Akzo Nobel a strong growth and profitability in the first quarter, with revenues up 16% in constant currencies. Return on sales increased to 13.6% versus 10.4% last year. As mentioned with our new Grow & Deliver strategy, we target to grow at least in line with our relevant markets, building on our strong foundation. Although trends differ per region and segment, with raw material disruptions and inflation expected, especially in Q2 and Q3, margin management and cost saving programs are in place to really keep us on track to deliver the 50 basis points increase in ROS. Now handing over to Lloyd for information about upcoming events and the Q&A session, slide 18. Thank you, Thierry. Tomorrow, April the 22nd, we'll host our annual general meeting of shareholders. The AGM takes place in a fully virtual format like last year, with the opportunity to ask questions during the meeting. We'll announce our results for the second quarter of 2021 on July the 21st. This concludes the presentation. We would now be happy to receive your questions. Please state your name and company when asking the question and limit the number of questions to two per person so others can participate. Operator, please start the Q&A session. Thank you so much, Lloyd. Our first question is from Line of Mutlu Gündoğan of ABN AMRO. Sir, you may begin. Yes. Good morning, everyone. Two questions. First one on Decorative Paints. 28% volume growth is obviously very strong. Do you think there was some restocking of channels that might have benefited you? Also, can you tell us how that volume growth has continued into Q2? Secondly, on raw materials. You indicated you expect inflation to have a bigger impact in Q2 and Q3. Do you still believe you can offset this via price increases this year? If so, how should we think in terms of phasing, i.e, by when will you have offset this? Thanks. Yeah. Thank you very much for your questions. On Decorative Paints, don't think this has anything to do with restocking, to be honest. The numbers are indeed pretty high, but they're high around the world. High growth numbers. We've alluded to the fact that the momentum in Europe continued to be strong, and that continues to be the case. By the way, if we talk to the bigger retail channel partners that we have in home improvement areas, they indicate that they see a structural change that also in Western Europe, for example, you see younger adults doing do-it-yourself and home improvement, and that clearly everybody's anticipating that home office work with going to the office will be a mix, and therefore the home office, but the importance of the home is more important. I think if you correlate it with what you hear from the big players on the retail side, they will actually say the same thing, and it correlates with our own surveys. I don't think that that necessarily has to do with restocking. Now, of course, the percentages, to be honest, we compare more with the first quarter of 2019 than versus the first quarter of 2020, specifically for Asia, because frankly, there China was off the map, but literally was closed for business on the first quarter, so that distorts the numbers. Even if you look in a place like Asia, for example, for our Decorative Paints business versus 2019, it's already up 4% in those numbers. If you go in the rest of the world, actually, the numbers are even bigger for Decorative Paints. There we continue to be very bullish, by the way. It's not only underlying demand, it's not only what our channels are, but we clearly are gaining share in key markets where we operate. What does that do for the second quarter? Well, of course, in fact, we start getting a glimpse for the second quarter, typically for our geographies in March, because that's kind of the buying for spring. That was actually very promising. Again, we don't see that momentum changing at all. Second to your question around raw material inflation, I think we do believe that for the whole year, the raw material inflation will be more in the high single digits. In fact, that is excluding, to some extent, logistics costs and all sort of, how do you call it? Opportunistic buys or spot orders that you have to do because it is pretty wild on the availability of the raw materials. The reason why we say that it's going to impact us more in Q2 and Q3 is sheer the supply chain. That's how it flows through our supply chain. We saw the impact already in our input costs in Asia because there the supply chains tend to be shorter. That's going to be zooming in in all our businesses in quarter two, quarter three. Our price increases, you've seen we've done 4% in paints already, and that's just wave one. We've also already have the impact already in our P&L from our increases in coatings, that will just keep compounding because most of these things were announced in the first quarter that it takes a while, a month or two months to get it effective. That will keep going up. For us, it's very clear that by the third quarter, we want to offset all of the raw material impact, we are pretty confident that will be very much feasible. Does that answer your questions? Definitely. Thank you. Thank you. Our next question is from Alex Stewart of Barclays. Sir, you may begin. Hi there. Morning, thanks for taking my questions. Just to according to the rules. If I look at the negative mix effect in your bridge, the EUR 60 million, could you confirm whether that was impacting both the Decorative Paints and the Performance Coatings division? Anything you can give us on the specific segments and regions which have caused that would be very helpful too. Then just secondly, on your bridge again, could you just tell us or remind us how you split costs into the volume and the variable cost component? If I sell an extra 100 cans of paint, do you put the direct selling cost into the volume bucket and the sort of variable operating cost into the other one? I'm trying to understand how much of the raw material's variable cost bucket is because of higher expenditure related to the volumes. Thanks so much. Okay. All right. Thank you, Alex, for your question. Let me try to take the first one, and I'm happy to delegate the second one to Maarten, I have to say. On the mix part, just a couple of things there. If you bought from us a liter of paint in any region, in any segment, et cetera, your prices went up in the first quarter. They were about 4% up in deco, and they were about 1% up in the Performance Coatings element, and that will compound. Now, what are the effects then in the bridge? Well, Asia was up about 30%. In fact, Asia has typically a different mix already, so the variable margin per liter might be slightly different. Secondly, also in this, and that also has an impact, Asia tends to be the quicker one in the supply chain, so you have the impact in your accounting much faster from your raw materials. In fact, a big part of the bridge is the impact that we saw in Asia because of the growth and also the somewhat quicker pull-through of that. Again, there all of the activities on pricing are on the way, so that is actually a temporary effect that comes out of that. Again, don't forget that we're comparing here for Asia a severely COVID-impacted first quarter of 2020 with specifically for China, an almost not impacted first quarter of 2021. The second element is then indeed around segments. Probably the most, I would say the most clearest two examples of where you have geographies impacting it besides the Asia point is in Europe, Decorative Paints, EMEA, where you have, in fact, Southern Europe and Middle East, Africa doing very well. Now there we often go via importers or national distributors. That means that the margin per product might be slightly different, but our cost is also different. In fact, it is extremely attractive business for us, but that's what actually shows up in the bridge. The other clear example is in automotive and specialty coatings, where most of the segments, frankly, are back where they were before COVID. There's two notable examples. Aerospace, which is a very high margin segment, is still down. It's about 20% down sequentially. It was improving, but it's still about 20% down versus the first quarter in 2020. At the same time, consumer electronics, very attractive, but a lower margin per liter business for us than aerospace, is significantly up. If you look at automotive specialty coatings, it looks like it's back at the levels where it was pre-COVID-19, and that is correct. There is a significant mix in segments there. Again, I want to stress that if you were buying material from us, you've actually in a specific region, specific channel, you've been paying 4% more for our Decorative Paints, and that's just step one for it. You've been paying 1% more when it comes to Performance Coatings across the board. Assuming that that answers the question, Alex, I'll pass the second question on to Maarten on how we put that in which bucket. Alex, on the volume-related part of the bridge, it's really raw material, packaging, and other variable input costs. This is really the volume-related part, whereas, as mentioned earlier in the bridge, the real raw material price impact sits in the EUR 38 million. As mentioned by Thierry earlier, that is very much driven by the strong growth in Asia and the pulling in of the supply chain in Asia, where the supply chain is, of course, much shorter, driven by this 30% growth in Asia. The last piece, the EUR 9 million is through the OPEX. That relates to Because you might ask that later, that EUR 9 million relates to, on one hand, our operational higher volume-related costs in manufacturing, in distribution and warehousing, also additional advertising and promotion. Then, on the other hand, compensated by cost-saving actions. Whereas overall inflation is offset by our normal recurring improvement actions. I hope that helps to clarify this. It does. Thank you. Just to confirm, the EUR 60 million on mix, that was both coatings and paint both contributed to that? Yeah. That's indeed. That was your first question. Very good. paints and coatings, and Thierry just gave some examples of what we've seen underlying. Yep. Very useful. Thank you. Our next question is from Mubasher Chaudhry of Citi. Sir, you may begin. Hi. Thank you for taking my questions. Just two, please. Just firstly on the raw materials. You said that the headwind in the first quarter was mainly due to the shorter supply chains in Asia coming through and therefore, the raw material impact coming in a bit quicker. If I look at Asia Deco, that's a relatively smaller part of the business compared to, say, EMEA. Therefore, should I be thinking about the proportionate increase in raw mats as we go into second and third quarter, in line with the size of the EMEA business, and therefore a much, much bigger headwind? Then just secondly, on the cost savings side, could you just break out, in the bridge you talked about OpEx and cost savings. Well, it was a negative number. Going forward with the higher volumes and with the one-off costs coming back in, just how should I be thinking about that in terms of the bridge going forward? Are we retaining a large portion of those, or will that be a headwind in the second and third quarter as well? Thank you. I'll hand the second question to Maarten, but just be careful here, though, because a big part of the impact was in Asia on the pull through of raw materials was in our Performance Coatings business. Just want to put it in perspective, and I just want to point out our Performance Coatings business in total is bigger than our Decorative Paints business. I don't think you don't have to expect to see change here. Probably more specifically for the question you asked around Deco EMEA. Deco EMEA will of course, also see increases in their raw material input. Believe me, they were the ones very fast out of the gate with adjusting their pricing and are continuing to work on that. Of course, also the price increases will bring more to the bottom line proportionally to the size of the other businesses. Yes, the impact of raw materials as that wave comes actually to our whole industry will indeed be higher in the second quarter, third quarter. The reverse impact and the positive impact of our pricing will definitely be equally bigger. We feel, just want to stress it to everybody on the call. It's always a bit of a churn to go to price increases, but our teams have been working li ke clockwork on it. Prices are there. We're tracking it. They are tracking it. In fact, getting extremely good traction on the implementation because, again, this is an industry-wide situation, so you would expect everybody to face the same hurdles there. Just don't want to get it as a Deco thing. This is in fact on the whole company. In fact, the Asia impact was proportionally even more in our coatings business in Asia. With that, Maarten, maybe the second question. Yeah. On the OpEx question. What we've said, and we said it also post Q4, is that really the run rate we exited Q4, and going into the first quarter, were really the run rate we were focusing on, and that's all about maintaining our cost discipline. We've also at the time flagged that we would likely see some higher volume related costs in our OpEx related to our manufacturing and warehousing and distribution, while still focusing on driving cost savings. Now, part of the cost savings we continue to see, and I flagged it also last time, is the COVID related travel and entertainment. That's roughly EUR 5 million per quarter. As long as COVID continues to be with us, we will see that coming through, plus additional structural savings. The net effect from the volume related cost to the additional advertising and promotion and then vis-à-vis the cost savings is the minus EUR 9 million versus last year. I hope that paints the picture. Thank you very much. Matthew Yates from Bank of America. Thanks so much. Good morning, everyone. Couple of questions. The first one is, can you help me think about your utilization rates across the production footprint. You mentioned in the introductory remarks that the CapEx may be slightly higher than you originally guided. Is that the volume growth or the expectation of future volume growth creating a necessity to add capacity? I'm just wondering, generally, how interchangeable are your plans depending on where that demand is being pulled from, whether that's on the Deco or the Industrial side? The second question is specifically around the Marine business. I think in your slides, you highlighted that was a market still somewhat subdued. I just wondered whether there are any green shoots in here, be it higher freight rates leading to maintenance, or whether you're beginning to see any increase in the order backlogs at some of the Korean shipping yards. Even if that was the case, does it still take a couple of years to feed its way through into Akzo's paint backlog? Thanks. Yeah. Thank you, Matthew, for your question. First of all, on the utilization rate, as you know, paint manufacturing is pretty much batch processes. In fact, you can extend your capacity quite significantly by going, for example, to a seven days a week extra shift, 24/7, et cetera. In many cases, that has been what we've done. A lot of our manufacturing cost is somewhat volume-related, as you put in more temporary workers to handle more, to do the manual part of the process. In that sense, I think we can absorb quite some volume. The utilization rate in our industry is a slightly different definition, I would say, than what you would typically get in the, I would say, more the hardware chemical part of the chemical industry. In that sense, that is not a big concern. Of course, these growth rates have our team and our engineering team looking at what else they have to do for the future. Frankly, that is more planning ahead and manageable within our normal processes. In fact, the increase that Maarten indicated in the prepared notes to be slightly higher than 250, it may be 250, somewhere between 250, 275. That is more the combination of some other projects we wanted to do, putting some higher productivity, newer tooling in some of the plants. That comes together with, for example, our ERP rollout, which is also, to a certain extent, capitalized. That's about the order of magnitude. It's not driven by a knee-jerk reaction on having to do something here. On the capacity, that is not such a big issue. Secondly, is it interchangeable? To be honest, the raw material supply has been so, how should I say? Unpredictable in certain extent that we've tested what we can do there. It's only on short-term, it's only limited interchangeable because there are specifications, you have re-qualifications of customer, et cetera. We didn't have to revert on that, but it was more behind the scenes, quite some shipping from materials between sites, et cetera, to keep everything running. That's on the utilization rate. On the marine and protective business, we are, in fact, relatively optimistic for what is coming. On the new ship, if I stay on the marine side, the dry docking was somewhat postponed in 2020 because a lot of the shipping companies didn't want to have their crews onshore out of fear for COVID-19. We do see those calendars filling up, so that's actually pretty positive. New ship builds, clearly, it's that after years of drought in new shipbuilding, there are much more new ships being built. That is, in fact, a very positive situation. Also be honest that the paint job comes at the end when the ship is built. I think the new shipbuilding is probably for us an upside in 2022. There, the order books are definitely bigger. The business that is really doing well and, in fact, also after the acquisition we did at the end of last year of the yacht coatings business, where we enjoy a very strong position in that niche market, is doing exceptionally well. Probably part of it is of all the behavioral changes people go through in COVID-19, recreational boating has been extremely strong around the globe. That's also part of that business. On protective, you may recall that in the first quarter of 2020, we saw a significant uptick in our protective business. More directed toward the energy industries, oil and gas, et cetera. With COVID, that took definitely a step back. We do see quite some things on the books for new projects, there is, in that industry, quite some force majeure things they're going through. We believe that may be coming more in the second half of the year. Our team in marine protective is actually pretty positive. It seems it's going to be more in the second half of this year and then into 2022 when it comes for ship building. Does that answer your question? That's great. Thank you, Thierry. Yep. Thank you. Next, we have Charlie Webb of Morgan Stanley. Sir, go ahead. Morning, gentlemen. Thank you for taking the questions. Maybe just first, obviously, you all talked a lot about raw materials and their impact on the P&L, but just understanding your comments around availability. Has raw material availability or lack of availability been an issue and impacted volumes? How do you see that impacting your business versus some of your local competition or peers in certain markets? Is it a case where you are able to produce and others perhaps aren't, which could lead to some mix shifts or share shifts? Just understanding what that means for you, what you see there in the market more broadly. Then just one on sequential development and demand. You touched on briefly, April looks to continue the same vein, but perhaps you can just run us through divisionally what you're seeing in terms of the sequential trends, Q1 into Q2. I think that'd be very helpful. Yeah. All right. Thank you, Charlie. First of all, the impacts on the volumes from raw materials, that was not part of this first quarter. We don't think that necessarily is going to impact the second quarter. To be honest, Charlie, there is a force majeure threat towards the paints and coatings all over. Paints, by the way, coatings, if you have a liter of it is a cocktail of multiple ingredients. In fact, since somewhere at the beginning of the fourth quarter, we've seen it started with TiO2. That seems to be plateauing, we see some light that things actually not getting worse, I would say. Latex at one moment of time, which is the key ingredient for Decorative Paints, latex was at 50% of worldwide capacity, that, of course, constrains it. We haven't necessarily been impacted that much. We do see in markets, but I think our teams are very busy selling our own products without doing necessarily all the analysis on local competitors, that we do feel we can get our hands on the product versus some of the other players maybe not be able to get their hands on the material. Secondly, of course, we source from multiple people around the world. I was hinting at us shipping material between plants or from region to region ourselves, to get it just in time to a specific place. There's quite some pyrotechnics on putting TiO2 from China on a train, for example, to get it one week earlier than by boat. There's a lot of creativity, but I think it has been helping quite well. It's not constraining yet, but there's a lot of close calls. There's a lot of involvement from all of us to talk to suppliers around what's happening and then also coordinating with customers. We do want to avoid that customers would start to over-order just to be on the safe side because the system for everybody in the market could not handle that anymore. If you go on where it's tight, it's been tight on the latex, as I've indicated. Polyurethanes, which is a key ingredient in some of the coatings businesses in the industry, has been pretty tight. Often there are the more exotic, I would say additives, dispersants, or whatever you can call, which often there have been some minor force majeures being called, and then we have to ship inventories amongst ourselves. It hasn't necessarily impacted volume. I don't expect we'll be impacted from our volume of what we need to do. There's a lot of tired faces around the hallways trying to get stuff from A to Z. There is obviously already in the first quarter, you see some extra costs hidden on shipping stuff to ourselves from one side to the other as there is an availability issue from a supplier. The other element is around sequentially. I think on paints, I can be very short. I think on all of the paints businesses, all four of them in the four regions, they're sequentially, it is strong, and if anything, it is strengthening. The one region that was a bit slower versus the others, I would say, was maybe Southeast Asia, but it has more to do with still rolling lockdowns in certain places in India, Pakistan, Indonesia, et cetera. Although that also seems to getting back to normal. They're sequentially up, and in fact, that can only improve further as such. In our coatings businesses, I would say the exit of the quarter was strong, but that is somewhat seasonal. That could be expected. Powder coatings, I expect that to continue at an extremely high level. It's driven by Asia, but it's also the automotive. On top of that, the architectural markets that are extremely strong around the world, I would say. There, I think that continues. If I go to automotive and specialty coatings, the automotive-related markets are mostly back where they were last year. In fact, I think there I'm somewhat optimistic for what I see on market share gains that we're doing in the market. Aerospace, I think will sequentially come back, I think that will be a trek through the whole year, I would say, until it gets in 2022 for the new builds to something that is more or less resembling what it is. I do think the MRO, so the maintenance and repair, will probably be a positive surprise in the next quarters as people get their planes back in gear to use them. Also some painting, repainting that happens as airlines shift planes between each other. If I go to our marine protective, I think I covered that in the previous answer. If I then go to industrial coatings, I think there the coil demand, the packaging demand, and actually the wood demand, were sequentially trending stronger, and we do expect that to continue. All in all, Charlie, I think we're pretty optimistic for, I would say, virtually all our segments right now. Does that answer your question? Yes. No, that's perfect. Thank you very much. If there's silence, must be content. Yes. Thank you. Too slow hitting the mute button. Next, we have Gunther Zechmann of Bernstein. Sir? Let me go ahead. Thank you. Morning, Thierry. Good morning, Maarten. A couple questions, please. One on mix, one on demand. Can I ask you about your comment you made with 4Q around what is underlying demand, what is end market demand? You referenced 2% increase versus 2019 levels. Is that a guidance that still holds given the start to the year and your comments that this is sustainable and that there's been structural changes that have been driving that demand? The second one is if I can pick you up on the mix impact and the contributions to the Deco and in Performance Coatings. I'm just trying to get my head around what the driving factors behind that minus 3% mix are. You mentioned geo and segment mix in Performance Coatings. Powder was up 19%. In the slide, you show that it's improved operating margins by 700 basis points over the last two years. Is that still dilutive to margins in powder despite that improvement? It would just suggest you didn't make much money on that two years ago. You might do now. On the Deco mix side, you also said with the 4Q results that Europe is still a lower margin business than Asia and LATAM. I take your point that EMEA has got different margin profiles, of course, by country. It's just striking that EMEA has grown very strongly, still much less than LATAM and Asia. I'd like to understand the mix impact on both businesses a bit better, please. Yeah, Gunther, we would have to have a PhD in trying to explain all those numbers. Let me start with the first one, and I'm looking here. I'm going to dial a friend called Maarten de Vries on some of these questions. The underlying demand, I think you refer to what we said on what we expected for 2021 versus 2019. I'm just checking, Gunther. Is that what you're referring to? Yes, that's right. You mentioned 2% increase. Correct versus 2020. Correct. 2%. I think we, of course, if you now look at what we see the demand and you see also what needs to happen in the pricing, I think we're probably more looking at about a 5% versus 2019. It's significantly up. I think there's so many things, moving parts in supply, in markets, et cetera. I think for modeling purposes, taking a number that is much closer to 5% is probably a safe bet for what we expect 2021 to be revenue-wise versus 2019. Does that answer your first question, Gunther? It does, yes. Yep. On the geo mix, I'll start, then I'll pass it on to Maarten here. If you look at the geo mix, the segment mix, the two elements here is indeed Asia, which in fact was very strong. I'm talking about coatings. Let me start maybe by coatings. The Asia markets were up quite significantly in the segments. I'm not sure if I have the exact number here, I think if you look at our total Asia business for coatings, we look at, again, versus first quarter of 2020, we look at about 30% up more or less. Again, these are good profit businesses. It's just the variable margin, which is slightly different here. That is almost true, I would say with the exception of Marine and Protective, that uptick in% is almost true for all three coatings businesses. Therefore, the price mix here is quite different. I don't know, Maarten, if you want to add something. If you then look at coatings and that 30% in coatings up in Asia, then you look, for instance, at consumer electronics, which is an Asian business, which is up significantly, in fact twice the level of the 30%. That business, in the automotive and specialty coatings business has relatively a lower margin, so that then drives the mix differences. That is one of the key drivers, there are also a lot of other underlying segments which are obviously different in the total picture. Just want to underline here when we talk about, for example, consumer electronics, it is a lower variable margin for the product. In fact, they are very good business because also then the servicing model and the cost associated are different. Don't want to have any confusion here around the margin versus what the bottom line is from those businesses. That's actually on the coatings. Now, Gunther, let me check whether that actually answers your question on the coatings part of the house. Yeah, that's helpful. Thank you. Yep. Then you also asked on paints. Somewhat similar, I would say, but again, in LATAM, and Maarten, you probably have the more exact numbers here. You have, of course, the impressive% numbers up. That is also because they have to get their prices up significantly just on the foreign exchange, and they often get dollar input raw materials. I think, Maarten, you can probably give some of the data then how they really did versus the years. Yeah, if you look at LATAM, of course, strong growth from a value perspective, but you need to look at the volume is significantly lower. If you look underlying in the Latin American region, the growth has been very much specifically in Argentina. There you see also change. Brazil has been strong, but again, Argentina is even stronger. You see there are also underlying changes. One other point, Gunther, I would like to make on paints for mix and geo mix, et cetera, is that if I look at our paints EMEA business, this first quarter was much stronger and comparing it with the first quarter of 2020, it is much stronger in Southern Europe and then Middle East Africa. Very good profitability businesses, at a lower price per liter out there because of the distribution model that's behind it. Secondly, there's still a higher proportion of consumer versus professional market because of the do it yourself that's starting to normalize a bit, but it's still a difference in the mix. If I go to China, for example, we see to some extent, two elements in there. One is the fact that our high-end Dulux is doing extremely well. If we compare that, then you have to take all the wobbles out. If we compare that versus the growth of our premium Dulux versus the first quarter of 2019 is about 15%. That is actually pretty strong. At the same time, we have now since about six months, we started our geographic expansion and also introducing a medium range, four tier 3, tier 4 cities that is doing very well. That is then the counterbalancing effect if you just look at percentage on margin, et cetera. There's a lot of moving parts. That's why I was stressing that if you are sitting as a user of our materials, all in all, you've been seeing a 4% increase in price for your paints and you've seen an increase on 1% already on coatings. In fact, that number will go up quite significantly in the second quarter because this is just announced and that's what we've booked already in the first quarter. Does that answer your question, Gunther? Thank you. That's been very helpful. Yep. Thank you. Thank you. Our next question is from Laurent Favre of Exane. You may now go ahead. Thank you. Yes. Good morning, all. I've got only one question. It's not on mix. It's actually on Performance margins. When we look to Q2, Thierry, you've said a few times on this call that there was more impact or quicker or faster impact from raw materials on margin in Performance because of the supply chains in Asia. You've talked about some of the recovery or accelerating momentum in the higher margin parts of the business and low pricing. My question is, would you assume you can defend the Q1 margin in Performance into Q2? I think Laurent, yes, because again, you have a lot of things happening in the market, but I see no reason why that would not be defendable. I think we are encouraging the teams to actually take it up a notch. Yeah. Separately as a follow-up on M&A, are the current disruptions leading managers and owners to refocus internally as opposed to being entertaining discussions with potential acquirers? Would you assume that the M&A pipeline can get better for you for the rest of this year? You're talking about our people or you talk about the targets? Well, I guess your ability to deliver on bolt-on acquisitions for the rest of this year. I think the pipeline continues to be there. I think as before, nothing has changed in that approach there. As we said before, I think we are very focused on the targets that we really would want to have. We're not going to go for a wholesale, let's buy everything that's not bolted to the floor because that doesn't bring any value on the medium term. I think in that sense, nothing has changed at all. Thank you. Next we have Jaideep Pandya of On Field Research. Go ahead, please. Thank you. Yeah, first question is really just around the volume leverage. You guys are well above 50% now on volume leverage. Is this now a new paradigm for the coatings industry, Thierry, in your view that because for the first time you're seeing volume growth as an industry, and there's potentially more scope to come with markets like aero and marine on a path of recovery. Should we expect that if consistently your industry grows sort of 3%, 4% for the next couple of years, that volume leverage actually could be not sort of the old 40%, but more like 50% and above? The second question is really just around your price raw material dynamics. Considering you guys have FIFO accounting, and if raw material costs spill over into 2022, am I understanding this correct that you're actually saying that 2021/2022, you're going to be offsetting all the raw material inflation with price increases, and sort of mix negative goes away as things normalize? Thanks a lot. Thank you, Jaideep. On the volume leverage, I think I see no reason why that would change from what you've seen in the recent numbers, but that is probably more to do with the fact that the paradigm that if you sell more volume, you therefore can increase proportionally all the other costs is not valid anymore. I think we mentioned that a couple of times. We are very much on keeping the cost flat. Fixed cost, the word fixed has a meaning in that respect. In that sense, I think that's why you see the volume drop down because we do look at our cost basis as more of a fixed set. Of course, the volume leverage, you have a big drop-through from your variable margin dropping through in the numbers. I think, yes. Haven't done the calculation on what that would be mimicking. I don't know, Maarten, I think I would say it actually should mathematically be higher than what has been historically the case. Secondly, on the raw material cost, we do believe that the raw material cost will be more a 2021 situation. Not sure if that necessarily would trickle through into 2022. That's our current knowledge because it is very much driven by, yes, there's strong demand, so that would almost give opportunities in supply to get their prices up. At the same time, there is really an odd streak of force majeures, explosions, fires, ransomware, COVID, Texas freeze, you call it. That at one point, it's very much like a peak crisis more than anything else. Answering your question very specifically, we are intent to, and in fact, we have the plans together and we're executing on it, to offset the raw material cost ASAP. What we see currently in our own simulation on how that would hit our books, by somewhere end of third quarter, we want to have that completely offset. Great. All right. 50 basis points is too low then for a margin increase. Anyway, that's not a question, a comment. Bye-bye. Thanks, Jaideep. Next, we have Peter Clark of Societe Generale. Thank you. Good morning. I think that was me. Is it? Yes, correct. Yes. Yeah. It's just on the margin situation, particularly on the deco and what you're saying on raw materials. My understanding is obviously with some of the contracts you put in place for the paint season, so Q2 and Q3, where you're up against this very stiff margin of close to 20% on EBIT, gave you some protection. We're seeing things that are temporary in nature, there's going to be a raw material hit to some degree. Just how defendable these margins are, given what you're also saying on mixing deco, how you see that through the next couple of quarters. On to the Performance Coatings. I was a bit surprised actually, the auto business, the auto and specialty coatings business in terms of the volume growth year-on-year, particularly the auto refin, reading between the lines and certainly against what was still a soft comp for you, that it wasn't stronger. I know there was some one-offs with your colleagues in Pittsburgh or your competitors in Pittsburgh. Effectively, just looking at the year-on-year, I was a bit surprised it wasn't a bit stronger. If you could, just a few comments on auto refinish would be good. Thank you. On the margin for deco, I think you're specifically referring to deco EMEA, if I understand the question correctly, I see no reason why that would not continue. In fact, as we go to the season, it would actually be slightly a plus, I would say. Again, that business, we said it before, that business has changed its paradigm now since a while around going to price list increases. As we saw the raw materials coming, they actually did exactly just this, going into 2021. The effect, they have their adjusted price list then there's probably other waves still to come. There's also stuff you can do around your commercial conditions that actually can offset some of the other items. I see no reason why the margins would not continue to evolve in a positive way. Secondly, on the vehicle refinish, in fact, if there were positive one-offs at some of our competitors, we probably had a negative one-off in the sense that in the comparison, we did our price increase early. We did, in fact, our price increases already at the end of 2020. That always gives a bit of customers who want to pre-buy, et cetera. Last year, that happened in the first quarter. We had basically the buying effect in the first quarter. We're comparing apples with oranges here for the first quarter. All in all, we keep track very detailed of our gains and our losses at body shops. We actually are edging, continuing to edge since a while now at increasing, and it's marginal in vehicle finishes, it all goes very slow, but we marginally are increasing our market share. I'm not worried there at all. Got it. Yeah, it was about Deco generally, because obviously in Q2 and Q3, you've got this hurdle of 20% EBIT margins. There's a lot of moving parts here, but you're pretty confident with what you see today with this demand momentum. You're not seeing that as a massive hurdle for you. No. Thank you. Our next question is from Geoff Haire of UBS. Sir, your line is now open. You may begin. Hi. Thanks. Most of my questions have been asked. I just wanted to see if you could confirm, could you give us what the volumes in both the Decorative Paints and the Performance Coatings are relative to Q1 2019, please? I think you said it was 8% for the group overall. Yeah, that's correct. Maarten, do you have the list in front of you? Yeah. Let me quickly check, but I think- Have it here. If you go to the volumes, if you look at the paints, I think we talked versus Q1 2019, the paints volumes are up probably more than 20%. That is versus the Q1 2019. That's a combination of what's happening in South America and what's happening in Asia. I think that's very positive. If you look at coatings, volume-wise, it's more around 2% that we're up. Yes, sir. Low single digits in coatings and around 20% in paints. Yep. Okay. Thank you. Our next question is from Rob Hales of Morningstar. You may go ahead, sir. Hi, good morning. Thanks for taking my question. A couple quick ones on Deco. I'm just wondering if anything's changed in distribution channels, just depending on how COVID is moving around the world. The second one, where is the trade business in EMEA Deco versus pre-COVID levels right now? Yeah, good question. I think distribution, you mean specifically around paints or- Yeah I think that's what you're referring to, correct? Yeah. Okay. It's a bit of a daily or weekly changing situation, where things get shut down for a period of time, et cetera. Right now, at this moment of time, I think with some exceptions in Pakistan or in certain places in India, and I think we had a recent one in Indonesia, I think for most of it in Europe is actually open or opening up again. That means that sometimes in a quarter, there's one or two weeks that Country X decides that they're going to shut it down, et cetera. The country that is probably, despite the strong results, that probably is the most impacted tactically on the market is probably Brazil right now, where frankly, the COVID-19 has been pretty severe. That's probably where there is more channels intermittently being closed, et cetera. Right now, I would say distribution-wise, it is more or less overseeable and open, I would say. If you ask around the trade business, trade business is actually doing a bit stronger than it was last year, but it's still somewhat trending lower than what the usual levels would be. Do It Yourself is obviously going very strong. If I look at the trade business, it is trending up, but it's still behind on where it was in 2019. In fact, that explains also why, again, if you look at the top-line margin, it's a bit different between consumer and the trade business profitability-wise at the end. If you go to the bottom line, it's equally profitable, but that's why you see also there a bit of an optical mix dilution at the top end of it. We see that trending back, to be honest. Great. Thank you. Does that answer your question? Yep. That's great. All right. Thank you. Next, we have Laurence Alexander from Jefferies. Go ahead, please. Hello. Just two quick clarifications. You mentioned earlier a structural shift in the architectural towards a younger demographic. Do you have any sense for the elasticity of demand, how that demographic reacts to pricing? Secondly, with respect to the aerospace activity starting to pick up, do you have a sense for how much of a tailwind over, say, the next 12, 18 months restocking in that channel could be? Yep. Thank you for your question. Laurence, I'm going to give you an answer on the young demographics. That's even the people who are seeing the young demographics walking in their stores are still trying to figure it out. The only thing that I can say is from the two big retail chains in Europe that we work with, who claim that they see the young demographics showing up much more for DIY, they couple that to requests for having more of our premium end products. In fact, if I quote one of the key players in one of those big channels, these people want to get it done with one paint layer that is actually scuff-resistant, has high hiding power, et cetera. They don't want to climb on a ladder three times a week just to save a penny, because we would have thought maybe that they were down-trading, but that doesn't seem to be the case. Again, we'll see what happens over time, but there doesn't seem to be necessarily a down-trading in that market at all. Secondly, on aerospace, as you know, our aerospace business in normal days is about 50/50 new builds and 50% is MRO. The new builds, we do believe that will be probably more a 22-ish situation. On the MRO, which was significantly down, and there we talked at one point, it was almost half down from where it was in 2020. Right now, the trend in the quarter, if the trend were to continue, the MRO may be closer to normal as we get to the middle of the year again. It's actually sequentially trending upwards, which would be a good thing. If I look at our aerospace business, for example, in the first quarter, it was down about 20%. That is still not fun, but that is significantly better than where it was, I would say six, nine months ago, and it's sequentially trending better. That is restocking. I think that's actually if you hear what the request is for materials, it seems like it's being used pretty quickly on the machines, and it's not really stock-building at airlines. Thank you. Yep. Okay, great. I think we've got time for just one last question. Yes. Our last question is from Chetan Udeshi from JPMorgan. Go ahead, please. Yeah. Hi. Last question, hopefully a quick one. Typically, second quarter sees a seasonal sort of uptick in margin. At least that's been the past seasonality. Do you see at this point any reason to think differently given the raw material dynamics, or you think that will be the case even in second quarter this year? Yeah. There's two dynamics here, Chetan. I think we see no reason why the demand and the mix, et cetera, would not support a positive upward trend. At the same time, the second quarter is probably the one where the raw materials are going to have more impact. It depends. They're really punctual, I would say, on when our prices hit versus when the raw material hits. Hopefully we portray some confidence in how the year is going to develop. I think the second quarter, we'll see where it comes out. I think it's probably going to be a bit of two forces there and see what it does. Third quarter, fourth quarter, we're actually pretty positive because the wave can only hit you once, and we'll see in which quarter that exactly happens. Okay. Understood. Thank you. Yep. Thank you. Thank you very much for your questions and your time today and your continued interest in Akzo Nobel. If you do have any further questions, please contact Investor Relations. That concludes today's conference. 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