Arkema Sa · EURONEXT:AKE
Arkema Sa — Investor Day (July 2017)
45 slides from Arkema Sa's investor day presentation, Jul 10, 2017
Slide 1: Arkema Capital Markets Day 2017
Slide 2: Strategy and long-term ambition
Strategy and long-term ambition Thierry Le Hénaff, Chairman and CEO
Slide 3: A strong and committed executive team
A strong and committed executive team Thierry Le Hénaff Marc Schuller Vincent Legros Christophe André Chairman and CEO Industrial Specialties Adhesives Advanced Materials and Coating Solutions Luc Benoit-Cattin Thierry Lemonnier Bernard Boyer Michel Delaborde Industry Finance Strategy Human Resource
Slide 4: Strategy and execution have led to exceptional value creation over time
Strategy and execution have led to exceptional value creation over time
Slide 5: A strong track record...
A strong track record... Share of specialties Sales outside Europe EBITDA Free cash flow In % of sales In % of sales In €m In % of EBITDA 72% 64% 1,189 36% 43% 44% 355 20% 2006 2016 2016 2006 2016 2016 2006 2016 2016 2006 2016 Arkema 5 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 6: ... reflected in the share price evolution
... reflected in the share price evolution 2015-2016 share price evolution Market capitalization Share price evolution + (10-year performance) In €bn 100 7.1 95 +69% 90 Arkema 85 (+250%) 80 x4.2 75 +17% 70 Peer* average 65 (+68%) +14% 60 CAC40 1.7 55 (-1%) 50 45 Jan.2015 Apr.2015 Jul.2015 Oct.2015 J
Slide 7: Main levers of transformation
Main levers of transformation Organic growth Portfolio management Innovation, partnerships €3.7 bn sales acquired and geographic expansion €2.2 bn sales divested Productivity plans Lower capital intensity Reduction of working capital Offset 1/2 to 2/3 of inflation 5.6% of sales in 2016 14.5% in 2016
Slide 8: Significant achievements since last Capital Markets Day...
Significant achievements since last Capital Markets Day... Malaysia New step in the attractive Further streamlining Expansion in Globalization of the adhesives and sealants market of the portfolio PVDF Kynar® Thiochemicals footprint Development of Bostik Divestments of activated carbons +25% product
Slide 9: ... including a significant step-up in financials
... including a significant step-up in financials Sales EBITDA REBIT margin Free cash flow In €m In €m In % In €m 7.5 +426 +27% 1,189 +220bp 9.7% 6.0 +52% x3 7.5% 784 +145 2014 2016 2016 2014 2016 2016 2014 2016 2016 2014 2016 2016 9 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 10: Well on track with short-term (2017) and mid-term (2020) targets
Well on track with short-term (2017) and mid-term (2020) targets Main drivers 2014-2017 Main drivers 2017-2020 Completely consistent with announced roadmap Intermediate milestone to 2023 long-term ambition 1/3 organic growth, 1/3 M&A, 1/3 external environment Significant contribution of innovation i
Slide 11: Arkema today
Arkema today
Slide 12: Arkema at a glance (2016)
Arkema at a glance (2016) A strong portfolio of businesses A global and balanced footprint €7.5 bn sales Specialties 72% 19,700 employees 24% 34% 36% 46% Present in 50 countries 30% 30% 133 industrial sites High Performance Materials Europe 25% Advanced Materials 21% Adhesives North America €222 m R
Slide 13: Our portfolio of businesses
Our portfolio of businesses High Performance Materials Industrial Specialties Coating Solutions Advanced Materials Fluorogases Acrylic Monomers Upstream of PVDF Upstream of PMMA Performance Coatings 46% Adhesives 30% Engineering plastic 24% of sales of sales of sales Performance Coatings Thiochemica
Slide 14: 2016 sales by end markets
2016 sales by end markets 24% 19% 19% 11% Emerging Home Lightweighting Regulations countries efficiency and Design Low-VOC Megatrends insulation Consumer Coatings Chemicals & Building & Goods Plastics Construction 5% 7% 7% 8% Access Lightweighting to clean water Mobility Others New energies Automoti
Slide 15: Key strengths
Key strengths Management Customers Know-how Entrepreneurial Leadership positions Broad and proprietary and nimble culture (#1 to #3 worldwide) on 90% of sales technology base Track record Customer intimacy at all Group levels Innovation pipeline Execution skills Global footprint Ability to manage co
Slide 16: Leading positions on all key product lines
Leading positions on all key product lines Rank Business Lines Main peers #3 Bostik (adhesives and sealants) Henkel, Sika, H.B. Fuller #1 Specialty Polyamides Evonik, Ems-Chemie, Ube #1 PVDF (fluoropolymers) Solvay, Kureha #1 Sartomer (UV curing resins) Allnex, Miwon #1 Thiochemicals Chevron Phillip
Slide 17: Acquisitions have delivered true value over time
Acquisitions have delivered true value over time Created performance coatings Entered the attractive value chain adhesives market Coatex / Certain Dow assets in the US Only 3 years of Bostik Cray Valley / Sartomer / Sunke (Den Braven non included) €2.9 bn €480 m 6.0 times spent 2017e EBITDA 2017e EB
Slide 18: Best-in-class manufacturing footprint
Best-in-class manufacturing footprint Total recordable injury rate 3.4 Safety and environmental performance 1.5 <1.2 Proprietary technologies 2012 2013 2014 2015 2016 2016 2025 target Emissions Ability to manage complex projects Net energy purchases -8% -15% Volatile organic compounds Chemical oxyge
Slide 19: Ability to manage complex projects: Thiochemicals, Molecular sieves
Ability to manage complex projects €200 m investment Greenfield site Thiochemicals Malaysia At full capacity after 18 months Partnership with CJ CheilJedang (South Korea) on bio process €60 m investment For xylene separation Molecular sieves Quick ramp-up expected France Digital and 3D used to optim
Slide 20: Ability to manage complex projects: Changshu
Ability to manage complex projects Largest industrial plant of Arkema worldwide Changshu China $500 m cumulative investments with profitability in line with Group average State-of-the-art industrial units and focus on product differentiation Changshu Shanghai 5 Business Lines represented 1 large R&D
Slide 21: Strong and transparent corporate governance
Strong and transparent corporate governance >94% 98% 45% attendance rate average approval rate female over 2014-2016 of last AGM resolutions directors 1 80% senior independent director independent appointed in 2016 members 21 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 22: Our long-term ambition (2023): Accelerate our journey toward specialties
Our long-term ambition (2023) Accelerate our journey toward specialties
Slide 23: Our vision
Our vision A global specialty chemical group strongly focused on adhesives and advanced materials, fostering customers innovation in megatrends and sustainability, and delivering best-in-class financial, operational and CSR performance. 23 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 24: Long-term financial objectives (2023)
Long-term financial objectives (2023) REBIT margin EBITDA to free cash conversion 11.5% to 12.5% 35% Under strict financial discipline ROCE Net debt Rating at least 10% <2x EBITDA Solid investment grade Defined in normalized market conditions and under current IFRS rules 24 CAPITAL MARKETS DAY 10-11
Slide 25: Our strategic priorities
Our strategic priorities Innovation Acquisitions Emerging countries Commercial excellence Operational excellence Corporate social responsibility Digitalization 25 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 26: Accelerate growth of Advanced Materials and Adhesives
Accelerate growth of Advanced Materials and Adhesives 2016 2023 Specialties Specialties 72% >80% High Performance Materials Industrial Specialties Coating Solutions Advanced Materials + Adhesives 26 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 27: Reinforce footprint in higher growth countries
Reinforce footprint in higher growth countries 30% 33% 33% 36% 2016 2023 34% 33% Europe North America Asia and RoW 27 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 28: Innovation is our DNA
Innovation is our DNA Lightweight Water Bio-based materials management products and design New energies Home efficiency Electronics and insulation solutions 6 R&D and innovation platforms focused on megatrends 28 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 29: Innovation creates significant opportunities
Innovation creates significant opportunities Rilsan® HT Hydrophilic membranes Celocor® N3xtDimension™ For lightweighting For water filtration For paints and coatings For 3D printing Ground-breaking innovation Full range of solutions Special Kynar® PVDF grade Reduce quantity of TiO2 for car manufactu
Slide 30: 3 major growth pillars
3 major growth pillars Adhesives Advanced Materials Thiochemicals 30 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 31: A wave of significant projects supporting our objectives
A wave of significant projects supporting our objectives Adhesives Advanced Materials Thiochemicals Further organic growth and cost Build and start the PEKK plant in Mobile Double site capacity at Kerteh optimization of Bostik “legacy” (Alabama, USA) (Malaysia) Development of Den Braven and CMP Co
Slide 32: Planned calendar of these projects
Planned calendar of these projects Start-up Ramp-up Development of Den Braven and CMP PEKK plant in Mobile Series of PVDF expansions Significant polyamide 11 expansion in Asia Molecular sieves in Honfleur +30% Sartomer capacity in Asia Doubling of Kerteh in Thiochemicals Announced today 2016 2017 20
Slide 33: Adhesives
Adhesives Market Fragmented market and ongoing consolidation by the leaders Barriers to entry, resilience and low capital intensity Substitution of mechanical fasteners by adhesives Increasing needs for home efficiency and insulation Arkema / Bostik Participate in the consolidation of the market Foc
Slide 34: Adhesives long-term ambition
Adhesives long-term ambition Exceed 1/3 of Group sales More than double sales versus 2016 in completing GDP+ organic growth by an ambitious bolt-on acquisition program 12.5% to 13% REBIT margin Maintain capex level below 3% of sales 34 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 35: Advanced Materials
Advanced Materials Ranking of polymers pricing and performance Arkema’s products Market Bio-based PEKK Consolidated market with limited number of players Significant opportunities from megatrends Lightweighting, clean water, new energies, 3D printing PVDF High-performance Rilsan® HT polymers Pebax®
Slide 36: Advanced Materials long-term ambition
Advanced Materials long-term ambition Exceed 25% of Group sales 14% to 15% REBIT margin Support long-term growth of bio-based polyamide 11 with ~€300 m exceptional capex in Asia R&D expenses at 4% of sales, up to 8% in certain applications 36 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 37: Thiochemicals
Thiochemicals Market H2S derivatives Niche market with significant opportunities in a balanced mix of fast growing and resilient applications Animal nutrition, petrochemicals / refining Gas odorant, polymers Emergence of Asia with increasing needs for innovative solutions Arkema Worldwide #1 with gl
Slide 38: Status of current thoughts in Thiochemicals
Status of current thoughts in Thiochemicals Balanced contribution from refining/petrochemicals and animal nutrition Expected average top line growth of 5%/year over the period Double REBIT from 2016 levels (purely organic) 38 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 39: Targeting excellence is our driver
Targeting excellence is our driver Commercial excellence Operational excellence Accelerate our long-term growth Objective: €30 m to €40 m gain /year Program to be launched at the To offset at least 1/2 of inflation on fixed costs 2017 worldwide Senior Management convention Key account management Peo
Slide 40: Rollout of our digital strategy
Rollout of our digital strategy Business Operations Organization Place customers at the heart Move to “Next Gen” Deeply reinforce internal of the digital strategy manufacturing footprint digital culture, tools and uses Strengthen knowledge, relationships Develop the use of immersive tools for constr
Slide 41: Fully committed to CSR
Fully committed to CSR 5 components of our CSR policy Ramp-up of our CSR ambition Continuous progress in long-term safety Safety and environmental targets Adding a new dimension to CSR through broader dialogue with stakeholders: Materiality Assessment Environment Mid-term ambition Innovation A 360°
Slide 42: Dividend policy
Dividend policy Dividend In € per share Arkema confirms its policy 2.05 aiming to pay a stable 1.8 1.85 1.85 1.9 to growing dividend each year 1.3 The dividend has grown 1 at 13% per year on average since 2010 37% payout in 2016 2010 2011 2012 2013 2014 2015 2016 2016 A key element of shareholder re
Slide 43: Key take-aways
Key take-aways Accelerate growth in Achieve a strong Advanced Materials and Adhesives and resilient REBIT margin Achieve consistently Speed-up innovation Establish CSR and Digital as superior cash generation in megatrends key catalysts of transformation 43 CAPITAL MARKETS DAY 10-11 JULY, 2017
Slide 44: Glossary
Glossary Recurring operating income (REBIT): is calculated as the difference between operating income and other income and expenses. It excludes the depreciation and amortization resulting from the revaluation of tangible and intangible assets as part of the allocation of purchase price of acquired
Slide 45: Disclaimer
Disclaimer The information disclosed in this document may contain forward-looking statements with respect to the financial condition, results of operations, business and strategy of Arkema. Such statements are based on management’s current views and assumptions that could ultimately prove inaccurate