Dutch-Swedish chemicals and paint maker AkzoNobel posted a small rise in net profit for the first quarter of the year despite weak demand in Europe, but said it did not expect an "early improvement" in its main markets.
Net profit stood at 89 million euros ($116 million), up by 6.0 percent from the first quarter of 2012, and was mainly driven by the fact that the group paid 21 million euros less in income tax compared with the same period a year earlier.
Headquartered in Amsterdam, the group said in a statement that sales fell by 7.0 percent to 3.47 billion euros, while operating income slumped by 8.0 percent.
Prospects remained gloomy, AkzoNobel added, though cash from the sale of its decorative paints division to US-based PPG in a 1.05 billion-dollar deal earlier this month would be reported in the second quarter.
"The economic environment remains challenging and we do not expect an early improvement in the trends that we see in our businesses," the company's chief financial officer Keith Nichols said.
Investors punished AkzoNobel's results, with shares in the company losing 3.9 percent to 45.16 euros in mid-morning trade on the Amsterdam stock exchange.
The group posted losses in all three of its divisions -- decorative paints, performance coatings and speciality chemicals.
AkzoNobel said that production in its chemicals arm was interrupted by a fire at one of its plants in the United States and blamed a colder than normal start to the year for slowing recovery in demand for agriculture-related products.
The group, which employs 55,000 people around the world, produces specialist paints and other chemical products used to make detergents, paper and asphalt.