Slide 1: Oddo Midcap Forum 2011
Arkema Oddo Midcap Forum 2011 Lyon – January 6th and 7th, 2011
Slide 2: Arkema's transformation project at the time of the spin off
Arkema’s transformation project at the time of the spin off Spin Spin off off in in May May 2006 2006 Challenge Challenge Financial Financial targets targets 44 strategic strategic axes axes Strong Strong cost costreductions Transform Transform Arkema Arkema 12% 12% EBITDA EBITDA reductions into int
Slide 3: Three business segments
Three business segments Vinyl Products Industrial Chemicals Performance Products 18% of 2010e sales 52% of 2010e sales 30% of 2010e sales Well integrated chain from Large integrated chemical lines Leadership positions in niche chlorine to PVC conversion markets Worldwide leadership positions #3 Euro
Slide 4: Best performance since spin off
Best performance since spin off Sales (€m) EBITDA (€m) EBITDA margin (%) 624 14.0% +33% 4,472 x2.7 6.8% 3,362 228 9m’09 9m’10 9m’09 9m’10 9m’09 9m’10 Net income- Group share (€m) Adjusted EPS (€) 289 4.7 3.1 2.4 1.9 9m’09 2009 9m’10 2006 2007 2008 9m’10 (0.8) (152) 4
Slide 5: 2010 outlook (reminder of 3Q'10 release)
2010 outlook (reminder of 3Q’10 release) FY’10 EBITDA target significantly increased to around €740m Market conditions remain well orientated Traditional far lower seasonality in 4Q’ Impact of the external strikes (refineries and Marseille harbor) related to the national pension reform in France est
Slide 6: EBITDA more than doubled in 5 years
EBITDA more than doubled in 5 years EBITDA (€m) and EBITDA margin (%) 740* (12.5%) worldwide 518 crisis 498 355 411 (6.2%) 310 2005 2006 2007 2008 2009 2010(e) 615** Net debt (€m) ~300 * Including - €20m negative impact from national external strikes related to pension reform in France ** Net financ
Slide 7: Transformation drives performance turnaround
Transformation drives performance turnaround EBITDA (€m) (20) Organic growth 120 Others Net productivity 315 (65) 740 +90 (55) Internal Vinyls improvements 355 cycle Acrylics M&A cycle Structural gains 2005 2010(e) Spread PVC Acrylic unit margin Max Max Mid Mid Low Low 2005 2010 2005 2010 Negative i
Slide 8: Improved and more uniform performance
Improved and more uniform performance EBITDA margin distribution (% of total sales excluding corporate) % 100 80% of sales delivering >10% EBITDA 50 margin Mainly Vinyls 2005 2010(e) EBITDA margin >15% >10-15% 5-10% <5% 8
Slide 9: Positive cash generation on strong EBITDA
Positive cash generation on strong EBITDA in €m 9m’10 Working capital as % of sales** EBITDA 624 18.2% 16.2% 15.0% Working capital variation (154) Capex (185) Tax & cost of debt (116) 09/30/09 12/31/09 09/30/10 Restructuring outflows (51) Net debt (€m) and gearing (%) Others (8) 20% 19% Free cash fl
Slide 10: Successful diversification of debt sources
Successful diversification of debt sources Financial resources end 2009 Financial resources end 2010 Bond Bondissue: issue:€500m €500m (October 2017) (October 2017) Revolving Revolvingcredit creditfacility: facility:€1,100m €1,100m Revolving Revolvingcredit creditfacility: facility:€1,100m €1,100m (
Slide 11: Entering 2011 with confidence
Entering 2011 with confidence Assumptions for 2011 market conditions Similar market conditions expected in acrylic acid and MMA (2010 average = 2011 average) €/$ exchange rate at 1.35 Raw material costs to remain at current high levels Some improvement of PVC spread on higher caustic soda prices Inc
Slide 12: Our ambition for 2015
— aya my A | Bi } | investor 2010 Our ambition a for 2015 ARKEMA The world is our inspiration
Slide 13: Continuity of strategy but acceleration of growth component
Continuity of strategy but acceleration of growth component Strict control of fixed and variable costs Competitiveness Competitiveness On Vinyls, - €50m net cost reductions Emerging Emergingcountries countries +60% sales Innovation Innovation €400m new sales Selective SelectiveM&A M&A €700m net addi
Slide 14: Strategic priorities by segment
Strategic priorities by segment Vinyl Products • Continue to refocus on best sites and reinforce competitiveness Sales by segment • Open to partnerships Industrial Chemicals 18% 12% • Develop acrylic downstream 30% 2010e 2015e • Increase manufacturing presence in Asia • Strengthen partnerships with
Slide 15: Our ambition for 2015: a new breakthrough
Our ambition for 2015: a new breakthrough EBITDA Above €1bn ~€7.5 bn X 14% sales EBITDA margin Vinyl Products 8% Industrial Chemicals 16% Performance Products 16% Corporate (1)% gearing <40% Assumptions: Mid-cycle conditions in a normalized environment Worldwide GDP growth at 3% / yr over the period
Slide 16: Our analysis on… sales bridge
Our analysis on… sales bridge Sales (€bn) Acquisitions Organic Divestments 1.0 7.5 1.0 7.5 (0.3) GDP +1 bp 5.8 on Industrial 1.0 €0.7bn Chemicals and net contribution Performance from M&A Products 2010(e) 2015(e) 16
Slide 17: Our analysis on…sales by region
Our analysis on…sales by region Europe 48% North America 40% 32% Asia 30% 23% 18% 2010e 2015e 2010e 2015e 2010e 2015e Row 4% 5% 2010e 2015e Emerging countries +60% sales in next five years 1/3 to 1/2 of growth capex On track: HFC-125, PVDF, Coatex, Acrylic emulsions, Polyamides Under thoughts: Acryl
Slide 18: Selective acquisitions
Selective acquisitions +€1 bn sales from acquisitions over next 5 years - €0.3 bn sales from disposals in next 5 years Selective and strict criteria Strategic fit with our existing core businesses Accretive from first full year No better use of cash Successful track-record on M&A Net EBITDA impact:
Slide 19: Superior underlying growth
Superior underlying growth Business Main end-markets Growth drivers Increasing poultry consumption Animal nutrition Thiochemicals Projects in Asia and Middle-East Refineries / Petrochemicals Stronger regulations on sulfur content Coatings Substitution to higher performance formulations Superabsorban
Slide 20: Planned acquisition by Arkema of Total's Photocure and Coatings Resins
Planned acquisition by Arkema of Total’s Photocure and Coatings Resins
Slide 21: Planned acquisition by Arkema of Total's Photocure and Coating Resins
Planned acquisition by Arkema of Total’s Photocure and Coating Resins Belonging Belongingto toTotal Totalspecialty specialtychemical chemicalactivities activities With Sartomer,,acquire WithSartomer acquireaaunique uniquespecialty specialtyacrylate acrylateresin resinbusiness business in inthe the
Slide 22: Reminder of Arkema acquisition strategy
Reminder of Arkema acquisition strategy (Investor Day November 23, 2010) +€1bn +€1bnsales salesfrom fromacquisition acquisitionbetween between2011 2011and and2015 2015 Priority Priorityon onbolt-on bolt-onacquisitions acquisitions Downstream from main chemical lines of Industrial Chemicals and Downs
Slide 23: Highlights of the project
Highlights of the project 2010e sales : €850m 1,750 people in 13 countries 20 sites around the world Enterprise EnterpriseValue Value €550m Targeted sales : €900m* Expected ExpectedContribution Contributionin in2015 2015 (net of ~€100m inter-company sales) Targeted EBITDA margin : 14%* Net NetResult
Slide 24: Two business segments
Two business segments UV UV Curing Sartomer)) Curing ((Sartomer Coatings Coatings ((Cray CCP)) Valley,, CCP Cray Valley Photocurable Photocurable resins resins made made of of Emulsions, Emulsions, resins resins and and rheology rheology acrylates acrylates sold sold to to high high value- val
Slide 25: Sartomer: a global leader in photocure markets
Sartomer : a global leader in photocure markets Photocure technology : Ultra Violet and Electron Beam curing Multifunctional acrylic esters (monomers) Products Products Epoxy, urethane, polyester acrylates (oligomers) High curing speed Key Keycharacteristics characteristics 100% dry content (no sol
Slide 26: Sartomer: global asset base, combined with unique technology
Sartomer® : global asset base, combined with unique technology Split by end market Graphic Arts Electronics Industrial Coatings Adhesives Composites Others Competition Highly technical products and applications High added value for the customers Environmentally friendly Strong growth potential (6% A
Slide 27: The Coating Resins of Total (Cray Valley and CCP)
The Coating Resins of Total (Cray Valley and CCP) AAwide widerange rangeof ofcoating coatingtechnologies technologies Production facility Among the 3 European leaders with a solid presence in Asia VOC regulation : well positionned to take advantage of regulation challenges 27
Slide 28: The Coating Resins of Total: main markets
The Coating Resins of Total : main markets Main markets in the coating industry • Architectural coating • Coil coating • Can coating, packaging and graphic arts • Marine and corrosion protection • Adhesive and sealants • General Industries Leading position in Rheological Additives 3% market AAGR* (*
Slide 29: Arkema: new position as a supplier to the coating markets
Arkema : new position as a supplier to the coating markets Arkema position* Worldwide North America Europe RoW Acrylic monomers #3 #2 #2 Specialty Emulsions #4 #2 #6 Solvent-borne resins #3 #6 #3 #1** Coating Powder resins #4 #3 #3 materials Kynar® binders Co-leader Co-leader Co-leader Co-leader Pho
Slide 30: Reinforce the acrylic value chain
Reinforce the acrylic value chain Sartomer ® Sartomer ®and andCoating Coatingresins resinsincrease increaseArkema’s Arkema’sacrylic acrylicdownstream downstreamintegration integrationto to40% 40% Perfect Perfectfit fitwith withArkema’s Arkema’sacrylic acrylicstrategy strategystarted startedin in2006
Slide 31: Establish Arkema as a global player in the acrylic value chain
Establish Arkema as a global player in the acrylic value chain 2005 2010 2011 and 2012 * * * Acrylic monomers Emulsions Coatex Businesses to be Sartomer Emulsions Coatings acquired from Total (*) : 50/50 JV with Nippon Shokubai 31
Slide 32: Significant upside potential for the planned deal
Significant upside potential for the planned deal Position PositionArkema Arkemaas asaaglobal globalleader leaderacross acrossall allcoating coatingmaterial materialmarkets markets Multiple product streams Multiple product streams Global geographical footprint Global geographical footprint Leading L
Slide 33: Conclusion
Conclusion We deliver constantly on our targets Very promising platform for future growth Successfully repositioned on higher value markets with strong potential on sustainability Confident on 2011 both on acrylic momentum and benefits from internal projects Ambitious target for 2015 leading to sign
Slide 34: 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