Revenues – 5% autonomous growth
Revenues from continuing operations of EUR 2.6 billion were up 2% on last year. Autonomous growth was 5%. Volumes increased 1%, attributable to Chemicals. Average selling prices were 4% higher, with both segments contributing. Currency translation had a 2% negative effect in the quarter, mainly due to the weaker U.S. dollar and Asian currencies. Acquisitions (mainly Chemcraft) and divestments (the 2005 Chemicals divestment program) on balance had a 1% negative impact. The changes in revenues of Akzo Nobel compare as follows with the third quarter of 2006:

EBIT up 11%; EBITDA improved 7%
Operating income before incidentals rose 11% from EUR 219 million to EUR 244 million. The EBIT margin was 9.4%, against 8.6% in the third quarter of 2006. Both Coatings and Chemicals realized strong autonomous growth and cost savings.

EBITDA before incidentals in the third quarter grew 7% to EUR 333 million. Both Coatings and Chemicals contributed to this increase. The EBITDA margin rose to 12.8% (2006: 12.2%). Coatings achieved an EBITDA margin of 12.4% compared with 12.0% in 2006. Chemicals’ EBITDA margin increased from 15.6% to 16.7% in 2007.

Including incidentals, operating income decreased 25% to EUR 213 million, with an EBIT margin of 8.2 (2006: 11.1%). Incidentals in 2007 were a net loss of EUR 31 million, compared with a gain of EUR 65 million in the third quarter of 2006. The 2007 losses mainly related to restructuring and impairment charges at several Coatings and Chemicals sites. 2006 included gains for several divestments at Chemicals and special benefits in respect of the U.S. postretirement benefit schemes. See the table on page 9 for further details.

Net financing charges increased from EUR 25 million to EUR 39 million, mainly due to higher net interest-bearing borrowings as a result of the share buyback program. Interest coverage in the third quarter was 5.5 (2006: 11.4).

The share in profit of associates was EUR 7 million, compared with EUR 15 million in 2006. Earnings decreased after the divestment of Flexsys on May 1, 2007.

The income tax charge in the third quarter of 2007 was 21%, compared with 25% in 2006. The 2007 tax charge was favorably influenced by one-off releases of tax provisions of EUR 8 million.

Operational net income substantially up
Operational net income from continuing operations increased 16% to EUR 156 million. Organon BioSciences’ net income was up 38%, partially due to the effect of the nonrecognition of depreciation. Including lower incidentals, total net income for the company declined 10% to EUR 281 million. Earnings per share were down 5% to EUR 1.04 (2006: EUR 1.09). The decrease of earnings per share was less than the net income decrease, as the share buyback program reduced the number of shares outstanding. Net income breaks down as follows:

Workforce
Akzo Nobel’s workforce at Coatings and Chemicals totaled 43,510 employees, up compared with the 42,690 employees at year-end 2006. The number of employees at Organon BioSciences was 18,710, down from 19,190 at December 31, 2006.

Interim dividend increased to EUR 0.40
Akzo Nobel recently announced an increase in the minimum pay-out ratio to 45% of net income before incidentals, up from a range of 35–40%. We decided to increase the interim dividend for 2007 to EUR 0.40 per common share

(2006: EUR 0.30). Starting October 24, 2007, Akzo Nobel shares will trade ex-dividend. The interim dividend will be made payable on October 31, 2007.

Trading conditions in 2007
Akzo Nobel’s portfolio is well-positioned for profitable growth. Assuming that no significant changes in the major economies of the world occur, Akzo Nobel believes that it is well placed to deliver on the objectives to outgrow its markets and further improve the financial returns in Coatings and Chemicals compared with 2006.

Overview
Coatings had a strong third quarter with revenue growth of 3% on last year to EUR 1.7 billion. Autonomous growth was 3%, mainly driven by Marine & Protective Coatings. Acquisitions added 2%, predominantly in Industrial Finishes. The currency impact was negative at 2%, mainly affecting the industrial activities and Marine & Protective Coatings.

EBITDA before incidentals amounted to EUR 209 million, up 7%. The EBITDA margin improved to 12.4%. Before incidentals, EBIT grew 8% to EUR 174 million, with an EBIT margin of 10.3%. The moving average ROI was 20.3%.

Decorative Coatings
The bottom-line performance of Decorative Coatings clearly improved, despite the stable top-line. The business successfully implemented restructuring programs in mature markets, which supported the earnings improvement. Almost all countries are supporting this upswing. Management changes in Morocco were implemented to boost the performance. In Turkey, results were negatively influenced by weaker market conditions. Programs on complexity reduction and brand clustering are being implemented worldwide, resulting in brand synergies, improved sharing of best practices, stronger market impact, and efficiency improvements.

Industrial activities
Industrial Finishes successfully completed the acquisition of Chemcraft in the United States. The prolonged correction in the North American residential construction industry leads to soft demand in the North American-based and the Asian export-driven businesses. Nevertheless, all key financial measures remained sound, albeit weaker in comparison to the exceptionally strong performance of 2006. The major economies in Western Europe appear healthy and offered modest growth opportunities in 2007. Autonomous growth in China, India, Vietnam, and Russia remains encouraging. Powder Coatings performed well in Europe and Asia, but was flat in the Americas.

Marine & Protective Coatings
Marine & Protective Coatings again achieved double-digit revenue growth, driven by both volume and price improvement. The Marine New Building volume is in line with the same quarter last year, but behind this year’s very strong second quarter due to a slow down in the new build program in Korea. The Marine Maintenance and Repair activity shows strong revenue growth, especially in the Americas and Asia. Top line growth in Protective Coatings is driven by China, India, and Eastern Europe as well as the successful integration of the Ceilcote business. Yacht continues its recovery from the slow start to the year with a strong quarter for the super yacht new construction in Europe. Aerospace Coatings continues its upward trend, with good volume for OEM and growth in Asia Pacific, seeing profits well ahead of last year and the strong second quarter result.

Car Refinishes
Revenues were in line with the previous year. Contributions from higher selling prices were offset by somewhat lower volumes and a small negative currency effect. The implementation of the new contract with the Royal Bank of Scotland – the largest car insurer in the United Kingdom – under which Car Refinishes will be the exclusive paint supplier for their U.K. repair network, has almost been finalized. In order to improve operational excellence the Pontiac North Brush operation was closed down and all production and logistics moved to the recently opened, state of the art production facility for Automotive Plastics Components in Pontiac South Brush, Michigan. Early in October 2007, our share in the automotive passenger car coatings activities of Kemipol in Turkey was divested to Kansai Paint. The joint venture Kemipol will continue to be active in the car repair, wood, and coil activities.

Akzo Nobel’s revolutionary automotive clearcoat Sikkens^® Autoclear^® UV recently picked up another award when it received first prize in the Garage category of the Grands Prix Internationaux de l’Innovation Automobile at France’s Equip Auto 2007 event.

Developed by the company’s Car Refinishes business as an industry first, the product harnesses the power of ultra-violet to dry in just six minutes and has the potential to radically improve bodyshop capability.

Pulp & Paper Chemicals
Pulp & Paper Chemicals’ autonomous revenue growth in the third quarter was 4%, mainly driven by improved pricing. This favorable development for the top line was, however, to a significant extent offset by the negative currency impact (weaker U.S. dollar) and the transfer of the U.S. hydrogen peroxide business to the OCI joint venture. Europe and the Americas have made good progress during 2007, but are faced with high energy (Europe) and currency headwinds (Americas). Results in Asia continue to improve, aided by the successful startup of new facilities, especially in China.

Base Chemicals
Base Chemicals reported strong quarterly results due to higher selling prices and increased demand compared to the third quarter of 2006. During the quarter caustic prices remained at good levels, while Energy benefited from high plant availability and favorable summer gas prices. The woodchip plant in Mariager (Denmark) started up successfully.

Functional Chemicals
Functional Chemicals turned in good performances in most of its businesses. Cellulosic Specialties achieved profitable growth especially in the Building segment. Salt Specialties increased its performance through restructuring and efficiency projects. Sulfur Products realized overall higher prices while volumes also increased in Europe. Ethylene Amines benefited from the combination of higher prices and high utilization of its Stenungsund plants. Both Chelates and Polysulfides are still confronted with margin pressure, despite recently announced price increases. The China investment projects showed good progress on the technical side. In addition, several license and engineering (EPCM) agreements were concluded.

Surfactants
Market demand for surfactants was robust in the third quarter and plant utilization remained high. The business unit recorded healthy demand in most markets, especially Agro, Asphalt, and Mining. Volumes were up 9% on the previous year (of which 4% stemmed from the Feixiang exports). Margin pressure continued to be an issue, as the increases in sales prices were still lagging raw material cost increases. Production at the McCook site was terminated in June, leading to a positive effect on Surfactants’ results.

Polymer Chemicals
Polymer Chemicals’ revenues for the quarter were on the same level as in 2006. Proceeds from higher selling prices were offset by negative effects from weaker currencies (mainly the U.S. dollar) and somewhat lower volumes. The lower volumes were caused by a slightly stronger seasonal slowdown in Europe and lower shipments in Organometallic Specialties, partly of a one-off nature. Margins were negatively impacted by product mix and lower selling prices in the Asia Pacific region due to competition with local suppliers.

China is preparing for a huge increase in traffic levels due to the 2008 Olympic Games and major improvements are being made to allow the athletes to travel quickly and easily to each venue. But the current amount of traffic means that work on the roads is not possible during the day.

A vital contribution has come from Akzo Nobel. The company’s Surfactants business has supplied a quick-setting micro-surfacing emulsifier which enables roads to be resurfaced in double quick time during the night.

Good quarter for Organon and Intervet
On March 12, 2007, the company announced its intention to divest Organon BioSciences (OBS) to Schering-Plough, following their binding cash offer of EUR 11 billion. As a consequence, in accordance with IFRS 5, the OBS activities qualify as so-called discontinued operations. As a result, going forward depreciation or amortization will no longer be recognized for the OBS activities, as a result of which pre-tax results increased by EUR 53 million, of which EUR 21 million was recognized in the third quarter of 2007. This also affects the statement of income lines for S&D and R&D expenses.

The consultation procedures with the relevant employee representative bodies have been completed and the related sale and purchase agreement has been signed. On October 11, 2007, Schering-Plough Corporation received approval from the European Commission for its planned acquisition of OBS. It is expected that the transaction with Schering-Plough will be completed no later than at the end of 2007.

Organon
Organon reported continued strong performance of its key products. At EUR 615 million, third-quarter revenues were 2% below 2006, due to negative currency translation effects, mainly

attributable to the U.S. dollar and the Japanese yen. Contraceptives realized the strongest revenue growth (up 13%), due primarily to NuvaRing^® and Cerazette^®, for which volume increases of EUR 15 million and EUR 5 million were realized, respectively.

Contributions from volume growth in contraception and fertility, and higher royalties were offset by decreased sales of Remeron^® and Anzemet^®, and the loss of Avinza^®.

Operating income before incidentals grew 27% to EUR 117 million (2006: EUR 92 million). The effect of lower revenues and higher R&D expenses was more than offset by the effects of a favorable product mix, lower marketing expenses, and the nonrecognition of depreciation and amortization. If depreciation and amortization had been recognized, EBIT would have amounted to EUR 101 million, up 10% on 2006.