Cash-strapped Europeans are cutting back on decorating, leading Dutch group AkzoNobel to take a €2.5 billion ($3.2 billion) writedown on its 2008 purchase of Dulux paint maker ICI and plunging it to a quarterly net loss.

The world's biggest paint manufacturer, which bought Imperial Chemical Industries (ICI) for about 8.1 billion pounds ($13 billion), said on Thursday it was looking for more cost cuts on top of the €500 million of savings announced last year to cope with weak consumer and construction markets.

"We can't escape the fact that the end market, which is construction and housing, in the U.S., in Europe, in the mature markets, is slow," chief financial officer Keith Nichols told reporters on a conference call.

"The principal concern remains the decorative paint markets in Europe. The impairment taken in this quarter is a reflection of these concerns and our realistic assessment of the markets going forward," he said, adding a quick recovery in the economy was unlikely.

Nichols is standing in for Ton Buechner, who took over as chief executive in April and has been on medical leave since September. Buechner, recovering from exhaustion, should return to work around the end of the year, the firm said on Wednesday.

Shares in AkzoNobel, which also makes coatings for cars, aircraft and ships, as well as specialty chemicals such as those used in the pulp and paper industry, fell nearly 5% on Thursday, as analysts zoned in on the huge writedown.

"A €2.5 billion impairment is very extreme," Rabobank analysts said in a research note.

"This means that 2.0 billion of revenues and €200 million of EBITDA (earnings before interest, tax, depreciation and amortisation) has been deleted from its forecasts annually. It gives Ton Buechner a clean sheet when he returns. In our view, Ton Buechner has a different, more prudent, view on the business and is a driving force behind this large impairment."

The impairment plunged AkzoNobel to a third-quarter net loss of €2.4 billion, compared with analysts' average forecast for a profit of €154 million in a Reuters poll.

The group made EBITDA of €540 million on revenue of €4.28 billion, broadly in line with expectations.

Nichols told analysts on a conference call that AkzoNobel's dividend policy remained unchanged, countering some suggestions the payout might have to be cut.

ING analyst Fabian Smeets said he had expected AkzoNobel to write down the goodwill on its purchase of ICI earlier - at the end of 2011 or first quarter of this year.