Good morning, and welcome to Akzo Nobel's investor update for the third quarter of 2026. I am Jan Willem Enhus, Head of Investor Relations. Today, our CEO, Greg Poux-Guillaume , and CFO, Maarten de Vries, will take you through our results. We will refer to the presentation, which you can follow by webcast or download from our website at akzonobel.com. A replay of the webcast will also be made available following the event. There will be a Q&A session after the presentation, and for additional information, please contact our investor relations team. Before we start, a reminder of our forward-looking statements disclaimer on Slide two. Please note this also applies to the conference call and answers to your questions. I will now hand over to Greg, who will start on Slide three of the presentation.
Thanks, Jan Willem. Good morning to everyone on the call. In Q3, we delivered a quarter of organic growth and continuing margin expansion. Many of our markets were challenging, yet we still grew organic sales by 2% on strong pricing performance of +5%. We priced decisively to protect margins while remaining focused on costs. As a result, we increased profitability with adjusted EBITDA margin at 15.3%, up 20 basis points. That is our sixth quarter in a row of margin expansion. Adjusted EBITDA was EUR 388 million, in line with our guidance, and up EUR 15 million at comparable scope and constant currencies. In parallel, we reached a new milestone in value realization with the sale of our Deco businesses in Southeast Asia for 21x 2025 EBITDA, more than twice our current trading multiple. This transaction completes the review of our Deco positions in Asia.
We are now set up for the long haul with the Deco portfolio of Europe, Latin America, and China built on leading positions. Our balance sheet is in good shape. Leverage stood at 2.1x at quarter end, in line with our target of around 2x , and that is before any of the Asia proceeds coming in. Finally, our Industrial Excellence Program is coming to an end. We have closed four sites this year. We have got two more to come before the end of the year, and the program will be completed by year-end with significant carryover savings into 2027. Turning to Slide four. Q3 volumes were down 2% year-on-year, 2% lower in Coatings, and 3% lower in Paints. In Coatings, Powder was flat with strong growth in North America standing out. Marine and Protective had a smaller quarter.
Marine grew despite headwinds in the Middle East, while Protective was lower. Automotive and Specialty Coating volumes were slightly up, with Aerospace delivering double-digit growth on a strong order book with plenty more runway ahead. Refinish was up in Asia, but not rebounding yet in the U.S., while Automotive remained slow. Industrial Coatings was down in the quarter. Coil was stable, Packaging continued to underperform, and Wood was impacted by low construction activity. Turning to Deco. Europe, Middle East, and Africa was flat with a strong sequential improvement in the U.K. and in the Middle East. Latin America was down single digit, as Brazil was healthy but impacted in Q3 by the timing of price increases. In China, our business continued to outperform in a depressed market. Southeast Asia had a good quarter, led by a strong performance in Vietnam.
Year to date, volumes are down 1%, another year that held promise for growth in Q1 that was stunted by macro events. We will continue to make our own luck as we wait for a much-delayed market rebound. Handing over to Maarten on Slide five.
Yes. Thank you, Greg, and good morning, everybody. We achieved another quarter of organic growth with organic sales up 2% at group level. Pricing of 5% was partly offset by 2% lower volumes and a 1% negative mix impact. Changes in scope reduced revenue by 5%. FX translation turned into a tailwind this quarter after multiple years of headwinds, adding 3%. As a result, total revenue was flat in Q3. Coatings delivered organic sales growth of 3%, with 5% pricing more than offsetting 2% lower volumes and mix flat. In Deco, organic sales were up 1%, with robust pricing of 5%, partly offset by 3% lower volumes and a 1% negative mix impact. Group-adjusted EBITDA came in at EUR 388 million, up EUR 15 million, or 4% at comparable scope and in constant currencies. The adjusted EBITDA margin improved by 20 basis points year-on-year to 15.3%.
Both segments executed price measures on plan to offset raw material inflation. The inflationary impact was more pronounced in Coatings given its higher solvent content, while Paints continued to benefit from structural cost savings from our Industrial Excellence Program. In Q3, Paints adjusted EBITDA margin rose 200 basis points to 19.4%, a level never attained outside of the ever-inflated COVID DIY boom in Europe. Turning to the next slide. Q3 was another operationally solid quarter. Trade working capital improved by 130 basis points year-on-year, decreasing to 15.7% of revenue. This continued efficiency, combined with higher EBITDA, supported a stronger return on invested capital, which increased to 13.7%. Higher EBITDA and continued working capital discipline underpinned resilient underlying cash generation in the quarter. However, transaction costs incurred year to date stand at EUR 69 million, weighing on overall free cash flow.
As a result, free cash flow came in at EUR 119 million in Q3 and EUR 83 million year to date. Supported by our underlying cash generation, we sequentially reduced leverage to 2.1x in Q3, already placing us within our target range of around 2x by year end. Now handing back to Greg for the next slide.
Thanks, Maarten. Looking ahead, we continue to expect to deliver 2026 adjusted EBITDA of around EUR 1.47 billion. Raw material and logistic inflation remains volatile. That said, with one quarter to go, we have good visibility on our input cost until year end. Pricing will continue to fully offset the inflation we currently see, and we will go further if required, including into next year. For Q4, volumes are forecasted to be flat. We expect pricing to be a slight net positive against raw material inflation, while OPEX savings will be delivered as per plan. Turning to slide 8. In October, we said we'd rebalance our Deco portfolio. I'm sorry, in October 2024, almost two years ago. Actually two years ago.
We said that we'd rebalance our Deco portfolio towards countries where we have a leadership position, that we'd monetize assets that are worth more to others than us, and that we'd concentrate our capital on positions of differentiating scale, particularly in coatings. As part of this process, the strategic review of our Deco portfolio has now been successfully completed. The final step of this Deco portfolio review came earlier this month when we signed a binding agreement to sell our decorative businesses in Southeast Asia to Nippon Paint for an enterprise value of EUR 1.2 billion, $1.35 billion. That's 21x EBITDA with around EUR 900 billion, I'm sorry, EUR 900 million of net cash proceeds after minorities and taxes. Indonesia closes separately in December, bringing in around EUR 200 million. The remaining EUR 700 million follows in mid-2027, and all proceeds will be used for deleveraging.
Together with India and Pakistan, the review realized more than EUR 2.6 billion of enterprise value at a blended multiple of 23x EBITDA. This outcome showcases that our active portfolio management creates significant value and highlights that Deco assets are more valuable than the market gives us credit for. The end result is a sharper, more focused Akzo Nobel going into the merger with Axalta, with a more compact Deco portfolio composed of leadership positions. As we head towards closing, we also announced our new name, Axanzo. That's our new name, Axanzo. Axanzo will go further and faster that we ever could alone with the power to innovate, the strength to deliver, and a commitment to excellence. As you know, the combination unites our legacies and ushers in a new era for our industry.
Axanzo will bring together a diversified and balanced portfolio of around 100 highly regarded and trusted brands across paints and coatings, spanning more than 160 countries. We will focus on delivering uncompromising performance to sharpen our competitive edge while establishing a profitable and sustainable path towards a world leader in coatings. By combining our expertise, the best of each of us will become the standard for all of us. Welcome to Axanzo. Turning to slide 10. Timing. Our merger is firmly on track, with shareholders overwhelmingly approving the combination during the EGM in August. There's another EGM planned for the end of November, the November 30th, and this is just a formality. It's to appoint the three additional Axanzo directors that have already been announced. Regulatory clearances are advancing, with 2/3 of regulatory approvals already secured.
A few merger control clearances are in the final stages, including in the U.S. and in the E.U. Although final sign-off is still pending, we can confirm that we are planning to divest Akzo Nobel's European Vehicle Refinish business and Axalta's North American Wood business. We have not been asked to prepare any remedies on any other business in any jurisdiction. We understand that these two divestitures will allow us to obtain regulatory clearance in phase I. As such, we remain on track to close in early 2027. Once again, Axalta Wood in the U.S. and Akzo Nobel Refinish in Europe. Meanwhile, the integration work is progressing at pace. The Axanzo executive committee has been announced internally, the operating model is being refined, and the teams remain focused on day one readiness and accelerating synergies. The value case is unchanged by the proposed remedies.
$600 million of cost synergies, around 90% within three years of closing, and 100 basis points- 200 basis points of revenue synergy uplift. Axanzo now has a name, a leadership team, and a clear path to closing. Early next year, we will fully launch. I will now hand over to Jan Willem, who will close with information on upcoming events, and then we will do the Q&A. Jan Willem?
Thank you, Greg. Before we start the Q&A session, I would like to draw your attention to the upcoming event slide 11, on slide 11. On November 30th, an EGM will be held to propose the appointment of three additional non-executive directors for Axanzo.
This concludes the formal presentation, and we will be happy to address your questions. Please state your name and company when asking a question and limit the number of questions to two per person so others can participate. Operator, please start the Q&A session.
Thank you. To ask a question on today's call, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Katie Richards from Barclays. Katie, your line is now open. Please go ahead.
Hi. Good morning. Thank you for taking my questions. I have two, please. Firstly, just on volume, you've changed the volume guidance. Could you explain to us what deteriorated relative to your expectations three months ago, and whether you're seeing any evidence of volumes improving towards the end of Q3? My second question, please, would be on the Southeast Asian Decorative Paints disposal. Two parts to this. Firstly, could you explain what was behind the decision not to sell the Sri Lankan assets here? Secondly, would you expect any antitrust issues for these disposals? I noted that Nippon has 75% market share in Singapore, for example, and 50% in Australia.
Thanks, Katie. I'll take the Southeast Asia question, and Maarten will take the volume question. In Southeast Asia, essentially, we're selling all our Deco businesses. Sri Lanka was part of what we called South Asia, which was India, Pakistan, and Sri Lanka. For a bunch of different reasons, we had to sell these countries separately. India, because it was a listed entity. Pakistan, because it was complicated to sell with India, and Sri Lanka is a joint venture, and it's something that we're handling separately because we have a joint venture partner. It's a small business, so it's more of an additional step that we have to take, but one that will not be very noticeable by you guys because it's a small business and we only own part of it. In Southeast Asia, so Vietnam, Indonesia, Malaysia, and the other countries that we've listed, we're selling everything.
We're selling Indonesia separately because Indonesia is the one country where we have a joint venture partner. We own 55% of our business in Indonesia, but we have a partner that owns 45%. It's a separate transaction. Everything else is being sold in one piece. All of it is going to Nippon. The merger agreement essentially puts the antitrust responsibility firmly in Nippon's hands. We're confident that they'll handle that successfully. Once again, it's their responsibility. Did I answer your question on that one before Maarten jumps into volumes?
Yes. Thank you.
All right. Maarten?
Yeah. Katie, on your question on the volume guidance, if we look at Q3, then we have seen some phasing impacts because of pricing. Specifically July and August were weaker, and we have seen a stronger September. That is also the basis of our guidance for Q4, where we guide on flat volume. It is really the timing of the pricing implementation, which also drove the phasing of the volumes during the third quarter.
Thank you, Katie.
Thank you. Just one follow-up.
Please.
Oh, sorry, just one follow-up. You've raised the pricing now quite significantly. Do you think that's any reason for the volume decline we've seen?
We don't think so, Katie. We're looking at price elasticity really closely. Pricing doesn't seem to be what's impacting volumes currently. Once again, although Q3 looks a little bit weak, a lot of it is for timing reasons, as Maarten explained. It's more just the economy globally is a little bit challenging and automotive is slower. There's a few markets. China consumer demand is also depressed. It doesn't correlate to pricing, at least not in the elasticity analysis that we do. We keep a very close eye on it. So not the issue for now, but clearly, there's a moment where you run into disposable income, certainly on the consumer side. That's not where we are at this point.
Understood. Thank you.
Thanks a lot, Katie Richards. Next question.
Thank you. The next question we have is from Laurent Favre, from BNP Paribas. Your line is now open. Please go ahead.
Yes. Good morning, all. Two questions, please. The first one on the remedy disposals. How does it impact the $ 600 million cost synergies, please? I understand that the wood part of the business may have been base case on the remedy, not necessarily Refinish. The second question, taking into account the Nippon disposal, the remedy disposals, on my numbers, you should be below 2x leverage during 2027 on pro forma on, whatever it is called, AkzoNobel. How do you think about capital allocation? Could we see accelerated share returns, I guess, fairly quickly rather than in a back-end loaded manner?
Remedies, we always said that we were committing to the $600 million number of. I am sorry, the impact of remedies. We always said that we would commit to the $600 million synergy number, cost synergy number, kind of rain or shine. We said it is independent remedies because we had calculated that number based on the possible remedy scenarios. The likely outcome, because it still has to be executed, but of the antitrust process is, as we said, the disposal of two businesses, Refinish Akzo Europe and Wood Axalta U.S. If you sum up these two businesses, you are talking a bit less than EUR 500 million of revenue, and the profitability is roughly at the target level for Akzo, which was between 19% and 20%. That kind of gives you the order of magnitude. Once again, it leaves that $600 million number protected.
We're certainly aiming to make that number higher than $600 million, but right now, we're just sticking to our message as we put the finishing touches to the regulatory process. That's for the remedies. If you have a follow-up, we'll take it afterwards. And the leverage question, Maarten?
Yeah, on the leverage ratio, Laurent, clearly, the cash flow out of the Southeast Asia disposal will support the faster deleveraging, and therefore, also will support a faster situation of getting to normal capital allocation. I think it's too early to commit now to leverage ratios by 2027. But certainly, this is very supportive of our case.
I would add to what Maarten said, that our aim is to be in a position to have a normal capital allocation as quickly as possible, and that includes share buybacks. Share buybacks are particularly attractive as long as the market continues not to reflect the value of the merger in our share price and in the AkzoNobel share price, potentially. So, to put ourselves in a position to be able to pull the trigger, I think is healthy for the company. Laurent, did we answer your questions?
Yep, absolutely. Thank you.
Thanks a lot.
Thank you. The next question we have is from Christian Faitz from Kepler Cheuvreux. Your line is now open. Please go ahead.
Yes, thanks. Good morning. Two questions, please. First of all, can you elucidate a bit why your pricing strategy in Brazil Deco is rather different from your key competitor in this market? Or is that, in your view, the new owner still trying to get used to market dynamics in Brazil? My second question is also on Deco. When do you expect the Chinese market to recover? We have now seen several quarters of decline in the country. Any hope for a 2027 recovery? What are your people in the country saying? Thanks very much.
All right. I'll take the politically incorrect question on Brazil, and Maarten will take the macro question on China. On Brazil, why does our pricing strategy differ from that of Sherwin-Williams now that they've bought the Suvinil business, which is our main competitor? Frankly, the Sherwin guys have been a little bit surprising. I would never have expected Sherwin to be volume driven. That hasn't been their MO over the years, but for whatever reason in Brazil, they are dropping pricing and going after volumes. In most markets that are fairly established, that's not a winning strategy, but we'll see how that unfolds over time. We're sticking to our plan, and our plan is to continue to increase margins in Brazil through a combination of cost action and pricing, and to make sure that we have enough pricing to mitigate the inflation that you have in Brazil.
You can actually compress your margins without decreasing your prices. All you have to do is not price for inflation, and then the market sees that as a reduction. I think, look, it is still in the early phase of the market stabilizing after the transfer of that significant business, Suvinil, to Sherwin-Williams, and the Brazilian market overall is healthy. Beyond that, whenever you do a price increase, usually there is a little bit of volume that comes in before because people are buying before the price increase, and there is a little bit of volume drop afterwards because the distribution has increased their inventories and therefore doesn't have a need immediately afterwards. This is kind of normal operations in these businesses. Hopefully, I have answered that question. Maarten, China?
Yeah, Christian, on China. Clearly, our Deco business in China is still very much impacted by the weak property market. In fact, the market, as we see it, is down roughly 11% this year. I would say the scenarios we are using also for 2027 is that we don't expect a recovery of that market anytime soon, at least not for 2027. What you see is that there is more movement and transactions in secondhand housing, but for sure not in new build. So it remains a challenging market to operate in.
Thanks very much, both.
Thanks, Christian. Next question.
Thank you. The next question comes from Chetan Udeshi from JPMorgan. Your line is open. Please go ahead.
Yeah. Hi. Thanks for taking my questions. The first question I had was just to clarify on the scope of the remedies. I heard you talk about 500 million of combined sales for Akzo's European Refinish business and Axalta's Wood Coating business. Can I clarify, is this $500 million or EUR? The second question was, have you started shopping these businesses around? Is it going to be a sort of coordinated sale with one particular buyer because there are not that many buyers? The reason I'm asking this is when I look at the pro forma multiple of the group, depending on what numbers you might use, 7x-8x. I'm just curious, all the asset sales or all the transactions we've done or we've seen in the coating businesses happen in double-digit multiple range.
Is it reasonable to assume you see the similar dynamic with the planned remedies, or should we see this as more like a scope sale and hence the multiples would be probably lower? The second question was, I know you're not giving Q4 specific guidance, but should we back out for 1.47 minus first three quarters of the year, or are there variables that are something we should keep in mind in terms of how Q4 may play out? In other words, what is your visibility today for Q4? Because in Q3 you did give us clear guidance.
And last question, I saw you raise the cash outflow, or the cash out for identified items for full year 2026, and I'm curious, is this going to be a constant trend now for the next two years as you deliver on these merger synergies, that there is a chance that the total cash out just keeps ballooning? Because as you go deeper into the project, you probably have better visibility on the total cash cost. Thank you.
All right. Thanks a lot. I will take the remedy question, and Maarten will talk guidance and cash or identified items. On the remedies, I said the sum of the two businesses is less than EUR 500 million of revenue. If I convert it to dollars, it probably be around that $500 million number too, but call it less than EUR 500 million of revenue. Have we launched a process yet? The Axalta guys are running a process for the wood business in the U.S. I think they put out a press release this morning or last night, and that started earlier because the regulatory discussions with the FTC came to a result on this a little bit earlier. So that one is ongoing and is a structured process. On Refinish Europe, Akzo Nobel, we have started reaching out to potential buyers.
We are in the early phases because that discussion has only recently come to fruition with the merger authorities in Europe. You have to keep in mind that the difference between the U.S. and Europe is that in the U.S. you have to close a remedy as a condition precedent to closing the merger, whereas in Europe, you have to have a signed agreement with an acceptable buyer. You do not have to have a closing. Therefore, the fact that the process on Refinish Europe is only starting now does not necessarily put it on the critical path because it is handled differently at U.S. and European level. Hopefully that answered that part of the question. If not, say so. I will take that as a yes. Maarten, go ahead.
[inaudible] .
Maarten.
Chetan, let me go into first Q4 guidance. So to be very specific, the assumptions below the Q4 guidance are really volumes flat. If you look at price versus raw material, we expect to be slightly positive. On top of that, we expect to deliver on our OPEX savings as we have done throughout the year. So these are the key building blocks for our Q4 assumptions. On free cash flow, indeed, the merger-related cash out in the first half was pretty immaterial, but it started to be material in Q3. That is why we have flagged, also increased the total cash out from identified items, because the merger related cash out for the full year will be roughly EUR 100 million, maybe just above EUR 100 million.
That is, of course, trending upwards in the second half versus the first half as we are preparing for the merger and also for the integration. For next year, merger related cash out is a little bit early to tell. For sure, there will be still cash out. As an example, the advisory fees for the bankers on both sides of the house, on the Akzo side. Again, that is a little bit early to tell at this moment. Is that clear?
Got it. Thank you.
Thanks. Next question.
Thank you. The next question comes from Sebastian Bray from Berenberg. Sebastian, your line is open. Please go ahead.
Hello, good morning, and thank you for taking my questions. I have two, please. The first is on the Refinish potential divestment in Europe. Can I confirm that this has a separate plant, or is it meant to have some type of licensing agreement that enables a tech transfer together with the brands to a buyer? My second question is on the Asia business. Net of the divestments that have been announced, what is the run rate of the sales on an annual basis left in that segment? Thank you.
I will take the first question. Maarten will take the second. On Refinish Europe, there are different options. Your question was related to the plant. We can offer different things depending on what the potential buyers are looking for. It is too early to comment in more detail, but we can address different preferences, which will, I think, open up the market for it. Maarten?
On the Asia sale, in scope of the divestment is a revenue level of just above EUR 300 million. So what remains is, of course, our coatings business in Southeast Asia and, of course, our Deco and coatings business in China. What you should take into account for the divestment is just above the EUR 300 million.
Thank you. So just to confirm, the amount that is exiting the building is EUR 300 million in year sales to Nippon and the select other divestments. Is that right?
Yeah. It is just above the EUR 300 million. Yeah.
Thank you.
Thank you. The next question comes from Jaideep Pandya from On Field Investment Research. Your line is now open. Please go ahead.
Thank you. I am going to try and ask the question Chetan Udeshi was asking slightly in a different way. You have done a fantastic job selling your assets in the last one year, and also the industry, compared to the listed multiples at which these coating companies are trading. Just from a theoretical perspective, when we think about these assets, especially the remedy assets and potentially some more Deco divestments, how should we think about this? Is there a massive value uplift that could be looked at? That is my first question. Second question is just around the volume picture in Performance Coatings. Because Marine and Protective Coatings, I guess, grew volumes year-on-year, but protective was down. Could you just give us some color around which areas do you see volume growth currently, and in which areas you see a recovery potential into 2027? That is my second question.
The third question really is around price versus raw materials. Now, if you can see into 2027, do we think that you could see a margin expansion in the second half, if raw materials stagnate? Thanks a lot.
All right. Thank you, Jaideep Pandya. Maarten de Vries will take the 2027 margin expansion question. I will take the first one, which you elegantly combined two questions into one. But I will answer them both. You are asking the Chetan Udeshi question again, which is what multiples are we expecting for the disposals, the remedy-driven disposals. Frankly, it is too early to have a view on that. I think you are also alluding to other Deco disposals. We are not planning to sell anything else in Deco. So that is a moot point in many ways. Then in terms of discussions about just multiples for our businesses, given the fact that we sold India for 25x, Deco Southeast Asia for 21x, Pakistan for 14x. We believe that our businesses are being undervalued by the market. That is for sure.
Otherwise, I would hide behind your, I think, the favorite disclaimer your institutions have a tendency to slap on the first page, which is that past performance is not an indication of future returns.
I would leave it at that. You have to fight for it every time, and it really depends on the business and the buyer universe. Your question on protection, what is going up, what is going down? What is going up in protection is data centers. That is a really good trend for our protective business. We have Marine and Protective Coatings. You guys understand the trends in Marine and Protective Coatings. You have data center construction, which is a real tailwind, and it is a tailwind because data centers, it is a lot of heat. These are big structures, and they need certainly things like passive fire protection, which is one of the key products in our protective business. What is down? Construction in general in a lot of areas. What else is up? Oil and gas is also pretty good.
But once again, it is a mixed bag of things that are doing well and the construction market, the general construction market, which is not the greatest right now. Maarten, the second question?
Yes. On the raw material trends, what we have seen is a slight upwards trend in our raw material basket. To be honest, that will continue in the first half. Our view is that in the second half of next year, that should start to come down. Of course, I am talking here about the raw material trends and how we see that translating in our P&L. On the other hand, from a pricing perspective, we are now in a stage also to prepare our price increases for the beginning of next year. That will also start to be a discussion. Bottom line, slight inflationary trends still in the first half and then starting to come down in the second half and further price increases to be expected for the beginning of next year. Thank you.
Thank you. The next question comes from Tony Jones from Rothschild & Co. Your line is open, Tony. Please go ahead.
Thanks everybody for taking my question. I've just got one left. On slide four, just coming back to volume development. I was looking at this, comparing it to the one at Q2, and it looks like on a year-on-year basis, five markets look like they're worse in this quarter compared to the prior one. I think the only one that's better is Deco EMEA. If those trends continue, why do you think volumes will be flat in Q4? Maybe could you comment how do you see early 2027 starting, and maybe give us an early look about that? Thank you.
Hey, Tony. Deco EMEA is better in Q3. Powder is also better in Q3. It's particularly Powder North America, which is a good sign. Deco Latin America is like a false positive. I don't know if it's a false positive or a false negative. I need to brush up on my terminology, but essentially, it's this timing of price increases between us and Suvinil, which has a tendency to shift a lot of volumes in Brazil. It means a weak Brazil for us in Q3 and, in all likelihood, a strong Brazil for us in Q4. It's not as clear cut as what you're saying. China is more challenging. In Deco, China is more challenging. Not China in general, but the Deco business certainly. Southeast Asia continues to be really healthy. I think I've covered all the Deco businesses and what else?
In Automotive and Specialty Coatings, Aerospace has been doing really well, but actually Refinish Europe is also better in Q3. It's kind of buried in everything else, but Refinish Europe is also better in Q3. It's more of a mixed bag that what the slide might lead you to conclude. Once again, there's a lot of border effects in these unusual times when people are taking price increases for a bunch of different reasons, including the raw material cost absorption. There's a lot of border effects between quarters. I wouldn't read too much into that sequential stuff from a volume perspective. I think you have to look over more quarters than that to extract trends of any significance. Did I answer your question, Tony?
Yes, that's helpful. Thank you. Appreciate it.
Thanks.
Thank you. The next question we have is from James Hooper from Bernstein Société Générale Group . Go ahead, James. Your line is now open.
Hi. Good morning, everyone, and thanks for taking my questions. I've got two left, please. First one is around raw material procurement strategy. With oil prices keeping up again and the Strait still closed, are you tempted to lock in volume commitments at lower prices or stick to the normal strategy? The second question is just around on the slide you had on the merger work streams referring to day one readiness and accelerating synergies. Can you give us a little more detail of what is going on, and particularly the accelerating synergies aspect? If you can give us any comments on the phasing that you're aiming for as the merger completes. Thank you.
Thanks, James. On raw materials, I'd have a pretty basic answer, which is that our job is not to be commodity traders. We're not trying to anticipate the cycles, or we're trying to anticipate a turnaround of raw material prices or an easing of the constraints in Hormuz. Companies that have tried to do that historically, it's usually ended in tears because if we were any good at commodity trading, I wouldn't be on this call. I'd be rich and on a beach somewhere. It's really more about negotiating individually with the suppliers and figuring out who needs what. If you can cut a good deal because somebody is looking to secure volumes, then sometimes that makes sense. But it's not a general trend that we're pursuing.
We're just trying to make sure that our inventory levels stay where they need to be and that we manage our working capital tightly. There's no commodity scarcity in the market in the sense that it's not like 2021, 2022, where you couldn't get your hands on raw mats, so you had to hoard. You don't have to do that. So our aim is not to try to anticipate the tipping point. By the way, people that try to do that were probably disappointed in Q3 because the market went the other way from what everybody was expecting. I'll leave it at that. What was the second question, Maarten?
Second question is on the integration and the synergy phasing. As I understand it well, the focus for us is really on capturing the procurement synergies as well as G&A synergies as fast as possible and to front-load these in year one and year two. Specifically, this is 2/3 of the synergies, making sure that we are on an extremely healthy run rate by the end of year one. All the preparation, apart from the preparation for day one, is on preparing and underpinning the synergies so that we can push the button on day one and start to execute on those.
Thank you.
Answering your question?
Yeah. Speed is our friend. Next question.
Thank you. Our next question comes from Tony Jones from Rothschild & Co. Your line is open, Tony. Please go ahead.
Yes. Thanks for taking my follow-up. I just had two more that just occurred to me. On raw mats, could you tell us in percentage terms what the inflation was in Q3 and what you're seeing for the fourth quarter? Then just wanted to finish up on Refinish. Helpful comments on EMEA looking better. What about North America? How's that looking? Thank you.
Refinish North America is still at trough. It hasn't picked up. It will, but it hasn't picked up, and therefore, that is not supporting our performance in Q3. Maarten, raw mats?
On the raw material inflation in Q3, it was high single digits up, and we see a similar trend in Q4.
That's great. Thanks, guys.
Thank you.
Thank you. We currently have no further questions waiting in the queue, and therefore, concludes our Q&A session. I'd now like to hand back to Greg for any closing remarks.
All right. Thank you very much. Thanks for your time and attention today. Look, lots of questions on antitrust and regulatory, and I fully understand why. Hopefully, this doesn't obscure the fact that we had a solid quarter in Q3. That in a market that has a lack of direction from a market perspective, we're continuing to deliver on our cost savings, we're continuing to price successfully, and we're continuing to drive the improvement of the business and to expand margins. Once again, sixth quarter in a row. That plus working capital discipline. The operational elements of Akzo Nobel are healthy and we'll continue to capitalize on that advantage to drive the business forward. As for the merger, I'm sorry.
As for the merger, what we tried to give you today were elements that show you that we are progressing well, we are progressing within the bands that we had set for ourselves, and that we are coming to conclusions with the regulatory bodies around the world. Therefore, we have a line of sight to closing. We know what we need to do. We have two remedies that we have to address, and that work has started. Therefore, it is now a sprint to the finish line, and we feel that we are in good shape given the level of preparation that we have with our friends at Axalta.
Both Maarten and I have done mergers before, and I think we are very satisfied with the level of cooperation, the level of granularity, and just the quality of the work that has been done to date to make sure that we hit the ground running on day one. On those words, I thank you for your time and we will talk soon. Thank you.
Thank you.
Thank you. This now concludes today's call, and I would like to thank everyone for joining. You may now all disconnect your lines.