Arkema Sa · EURONEXT:AKE
Arkema Sa — Non-Deal Roadshow (September 2022)
40 slides from Arkema Sa's roadshow presentation, September 2022
Slide 1: Arkema Roadshow Presentation
ARKEMA ROADSHOW PRESENTATION SEPTEMBER 2022
Slide 2: Arkema in a snapshot
Arkema in a snapshot Innovative materials for a sustainable world Arkema Roadshow Presentation - September 2022 2
Slide 3: Arkema at a glance (2021)
24.5% Arkema at a glance (2021) 4% 31% 17% 32.5% 20% Specialty Materials 27% 85.5% 29% 15% Close to 90% Segments Markets Regions 36% pro forma 2021* 36% 29% 8% 28% 24% 14.5% 7% 5% 4% Adhesive Solutions Coating Solutions Industry Paints & Coatings Europe Asia Advanced Materials Intermediates Building
Slide 4: Excellent 2021 financial performance in a demanding context
Excellent 2021 financial performance in a demanding context Covid 9.5 1,727 context 8.8 8.7 Covid 7.9 1,474 1,457 context 1,182 18.1% 16.7% 16.7% 15.0% 2018 2019 2020 2021 2018 2019 2020 2021 Sales (€bn) EBITDA (€m) EBITDA margin (%) Arkema Roadshow Presentation - September 2022 4
Slide 5: Strong cash generation
Strong cash generation 786 762 756 → EBITDA to cash conversion rate 604 43.8% in 2021 593 In line with the long-term target of 40% → Tightly controlled working capital 12.7% of sales at end-December 2021 → Recurring capital expenditure €506 m in 2021 2017 2018 2019 2020 2021 Excluding the 2 major pr
Slide 6: Well-established financial resources
Well-established financial resources in €m 1,100 → Average maturity (excl. hybrids) 4.4 years 900 1.5% 700 1.5% → RCF 500 Maturity extended to July 2027 400 0.75% (instead of July 2024) 300 300 2.75% 3 CSR criteria taking into 0.125% 1.5% 150 account Group’s new objectives 3.125% 2023 2024 2025 2026
Slide 7: Strong value creation for shareholders
Strong value creation for shareholders → Gradual increase in the dividend → €300m share buyback program finalized in November 2021 2.2 3.0 → Share capital reduction of 3.2% by 2.3 2.5 Covid 2.5 cancelling shares in January 2022 context 2017 2018 2019 2020 2021 Dividend (in €/share) per fiscal year A
Slide 8: Strategy and ambition
Strategy and ambition Arkema Roadshow Presentation - September 2022 8
Slide 9: Materials science at the core of our streamlined portfolio
Materials science at the core of our streamlined portfolio Adhesive Solutions Coating Resins Advanced Coating Materials Solutions Arkema Roadshow Presentation - September 2022 9
Slide 10: Our 2024 ambition
Our 2024 ambition A Specialty Materials leader Sales of €10 to €11 bn Cash generation > 40% EBITDA margin of Deconsolidation of Strict financial discipline the Intermediates 17% → Net debt (incl. hybrid bonds) segment on EBITDA ratio <2x Organic growth → Solide investment grade rating 3 to 3.5% / ye
Slide 11: A strategy supported by 4 levers
A strategy supported by 4 levers Strengthen Rank among the Specialty Materials best-in-class through bolt-on chemicals acquisitions companies in terms of CSR Accelerate Pursue organic growth operational and and sustainable commercial innovation excellence initiatives Arkema Roadshow Presentation - S
Slide 12: Cash allocation priorities
Cash allocation priorities Estimated cash to allocate over the Subject to market conditions 5 year plan ~€3.5bn at constant leverage3 (~1.6x) Reiterating our progressive dividend policy, targeting +25% 40% payout ratio by 2024 40-45% Return to Opportunistic share buy-back program shareholders Employ
Slide 13: Strict financial discipline
Strict financial discipline ROCE Net debt to EBITDA Solid ratio <2x investment >10% (Incl. hybrid bonds) grade rating Recurring Capex Controlled working capital ~5.5% ~14% of sales of sales Arkema Roadshow Presentation - September 2022 13
Slide 14: Accelerate organic growth and sustainable innovation
Accelerate organic growth and sustainable innovation Arkema Roadshow Presentation - September 2022 14
Slide 15: Expanding opportunities from our sustainability-driven innovation
Expanding opportunities from our sustainability-driven innovation New energies Lightweight materials Living comfort Natural resources Electronics solutions and clean mobility and design and home efficiency and circular economy We expect to generate H2 €1.5 bn of additional sales by 2030 Battery Hydr
Slide 16: Strong growth potential in clean mobility
Strong growth potential in clean mobility Cathode and separators Batteries Electrolyte salts Battery pack €1 bn Cooling line sales in batteries Cell assembly by 2030 Sensors Hydrogen A more recent Electrolyzers roll-out with significant growth H2 tanks potential Fuel cells Arkema Roadshow Presentati
Slide 17: New strategic partnership in EV batteries
New strategic partnership in EV batteries Ultrapure LiFSI electrolyte salts production Recent partnerships with Nippon Shokubai → Key component of car battery cells Equity investment (production of • Power, stability, cycle life high performance and recyclability enhancement batteries) • Next genera
Slide 18: Increased demand for sustainable lifestyle products
Increased demand for sustainable lifestyle products Consumer goods Customizable & bio-based eyeglass frames Bio-based, recyclable toys >20% CAGR 2020-2025 * Technical bio-based textile * Source: Arkema’s demand growth estimation High performance sports 100% recyclable running shoes High energy retur
Slide 19: Extended range of products for living comfort and home efficiency
Extended range of products for living comfort and home efficiency Bio-based Low VOC Kynar Cool roofs, eco-friendly Aquatec® alternative to air-conditioning Siliporite® High thermal insulation double gazing for windows Forane® Highly insulated 1233zd foam panels Bostik “Free from toxic” solutions adh
Slide 20: Upcoming start-ups of our two major projects
Upcoming start-ups of our two major projects Rilsan® polyamide 11 Hydrofluoric acid +50% global capacity in Singapore 40 kT/year supply in partnership with Nutrien in Aurora, US New PA11 powder resins capacity in Changshu, China (1Q’23) US$150 m investment €450 m Capex and €100 m EBITDA at maturity
Slide 21: Ongoing high return expansions to capture sustainable growth
Ongoing high return expansions to capture sustainable growth Bio-based, renewable Kynar® PVDF Forane® Sartomer® Pebax® Recyclable +50% capacity in 15 kt/yr 1233zd +100% photocure +25% global capacity Changshu, CN (end-2022) capacity in Calvert resins capacity in in Serquigny, FR City, US (end-2023)
Slide 22: Strengthen Specialty Materials through bolt-on acquisitions
Strengthen Specialty Materials through bolt-on acquisitions Arkema Roadshow Presentation - September 2022 22
Slide 23: Integration of recent acquisitions to bolster Adhesive Solutions
Integration of recent acquisitions to bolster Adhesive Solutions Permoseal Edge Adhesives (South Africa) (Texas) Ashland Performance Adhesives → Adhesive solutions for DIY, → High performance adhesives packaging and construction for residential construction → €43m sales in 2021 → $12m annual sales →
Slide 24: High value-added acquisition reinforcing the downstream of CS segment
High value-added acquisition reinforcing the downstream of CS segment Polimeros Especiales SA (Mexico) Leading player in solvent-free waterborne acrylic resins Waterborne is one of Arkema’s key-solvent free technologies together with powder resins, as well as UV/LED/EB and high-solid systems → ~US$4
Slide 25: Rank among the best-in-class chemicals companies in terms of CSR
Rank among the best-in-class chemicals companies in terms of CSR Arkema Roadshow Presentation - September 2022 25
Slide 26: Arkema Corporate Social Responsibility policy
Arkema Corporate Social Responsibility policy Our 3 commitments Deliver sustainable Manage our activities Cultivate an open dialogue solutions driven by as a responsible and close relations innovation manufacturer with our stakeholders → Responsible product stewardship → Safety of people and → Ethic
Slide 27: Recognized non-financial performance
Recognized non-financial performance Superior percentile → 3rd place in DJSI World 2021 across all sectors « Chemicals » category Score : 67 CSA score by S&P Global : 82 Rating : A 1st decile (global) (Sept 2021) B for climate change CAC 40® ESG Among the best Inclusion in the new Euronext index per
Slide 28: Ongoing development of our CSR structuring programs
Ongoing development of our 3 CSR structuring programs Archimedes program Circular Economy Climate Plan Moving toward higher positive impact A sustainable resource management Contain global warming ImpACT+ target Life Cycle Analysis target Commitment to Paris agreement Reinforced in July 2022 65% of
Slide 29: A new, more ambitious climate plan
A new, more ambitious climate plan Scopes 1+2 Scope 3 1.5°C trajectory (Mt CO2 eq.) (Mt CO2 eq.) across the full value chain → Replacing previous commitment -46% of a well below 2°C trajectory on scopes 1+2 in 2030 vs 2019 → Science Based Target approach 6.5 → Commitment across full value chain 4.7
Slide 30: Strengthening safety and promoting diversity
Strengthening safety and promoting diversity Safety Diversity TRIR (Number of accidents per million hours worked) in senior management and executive positions 1.6 Women 1.3 1.4 30% 1.0 1.0 24% 26% 0.8 19% 21% 23% 23% 2017 2018 2019 2020 2021 2030 2017 2018 2019 2020 2021 2024 2030 PSER (Process safe
Slide 31: Q2'22 results and outlook
Q2’22 results and outlook Extract from “Second-quarter 2022 results and outlook” presentation (29 July 2022) Arkema Roadshow Presentation - September 2022 31
Slide 32: Q2'22 financial highlights
Q2’22 financial highlights → Up 23.2% vs Q2'21 at constant scope and currency • Benefits of new business developments in high value-added sustainable solutions • Selling price adjustments in the face of very significant raw materials, energy €3,184m sales and transportation cost inflation • Slight d
Slide 33: Adhesive Solutions (25% of Group sales in Q2'22)
Adhesive Solutions (25% of Group sales in Q2’22) Key figures Highlights Q2’22 in €m Q2’22 Q2’21 Change H1’22 H1’21 Change Sales 779 575 +35.5% 1,449 1,130 +28.2% → Sharp price effect at +17.4% YoY, in response to very elevated inflation of raw materials, EBITDA 111 82 +35.4% 201 168 +19,6% energy an
Slide 34: Advanced Materials (35% of Group sales in Q2'22)
Advanced Materials (35% of Group sales in Q2’22) Key figures Highlights Q2’22 in €m Q2’22 Q2’21 * Change H1’22 H1’21 * Change → Prices up 38.4% YoY, highly positive Sales 1,113 785 +41.8% 2,188 1,537 +42.4% in both Business Lines • Selling price increases in a highly inflationary EBITDA 282 184 +53.
Slide 35: Coating Solutions (30% of Group sales in Q2'22)
Coating Solutions (30% of Group sales in Q2’22) Key figures Highlights Q2’22 in €m Q2’22 Q2’21 Change H1’22 H1’21 Change Sales 960 712 +34.8% 1,822 1,279 +42.5% → +26.7% price effect in a still highly inflationary environment EBITDA 207 157 +31.8% 399 235 +69.8% • Price increases for downstream prod
Slide 36: Intermediates (10% of Group sales in Q2'22)
Intermediates (10% of Group sales in Q2’22) Key figures Highlights Q2’22 in €m Q2’22 Q2’21 * Change H1’22 H1’21 * Change Sales 322 315 +2.2% 593 661 -10.3% → Scope effect of -18.4% related to residual impact of PMMA divestment in May 2021 EBITDA 129 81 +59.3% 223 156 +42.9% EBITDA margin 40.1% 25.7%
Slide 37: Cash flow
Cash flow in €million → Q2’22 tax rate Reconciliation of EBITDA to net cash flow 21% of REBIT (excl. exceptional items) Q2’22 Q2’21 H1’22 H1’21 EBITDA 705 478 1,324 836 → Working capital Current taxes -117 -68 -218 -117 • Seasonal volume increase Cost of debt -13 -14 -26 -27 • Higher selling prices
Slide 38: Net debt evolution (including hybrid bonds)
Net debt evolution (including hybrid bonds) in €million 1.3x LTM EBITDA 227 66 2,789 1,507 Dividend : €222m Hybrid bonds: €5m 1,177 -261 73 Ashland Performance Adhesives acquisition 31/12/2021 Rec. cash Exceptional M&A Dividends & FX and 30/06/2022 flow items Hybrid bonds others Arkema Roadshow Pres
Slide 39: Outlook
Outlook → Second half marked by a context of risks of lockdowns in China, geopolitical tensions linked to the war in Ukraine, concerns regarding the availability and price of natural gas and electricity in Europe, as well as the significant increase in the level of inflation, which are all factors t
Slide 40: 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. In the current context, where the Covid-19 epidemic persists across the world, and where the consequences of t