Arkema SA · EURONEXT:AKE
Arkema SA — Oddo MidCap, Lyon (January 2010)
20 slides from Arkema SA's conference presentation, Jan 7, 2010
Slide 1: Arkema
Arkema Thierry Lemonnier, Directeur Financier 7 & 8 janvier, 2010 Oddo MidCap, Lyon
Slide 2: Arkema at a glance
Arkema at a glance > Strong leading positions in most businesses > Diversified end markets > Growing exposure to Asian markets > Unique R&D know-how > Very solid balance sheet Sales by segment in 9m’09 Diversified geographic base Industrial 24% North Chemicals Performance America 47% Sales* World le
Slide 3: A step by step transformation
A step by step transformation 2011 A leading chemical player Growth and performance 2008 First step fully achieved A more solid and focused 2005 Group initiating a targeted growth Prepare Arkema for independence Strong assets but a significant profitability gap with peers 3
Slide 4: A transformation strategy based on four axes
A transformation strategy based on four axes Cumulated fixed cost savings (€ m) > Reduce fixed costs € 600m fixed cost savings in 2010 vs 2005 600 Target increased twice in past 12 months 507 170 337 > Reinforce presence in Asia 20% sales in Asia in 2012 > Focus R&D on two main long term orientation
Slide 5: €600m fixed cost savings in 2006-2010
€600m fixed cost savings in 2006-2010 Cumulated fixed cost savings (in € m) 50 > Other productivity 57 initiatives > Major announced plans: NA reorganization € 263m 120 Methacrylates in Europe (*) in 2009 PVC downstream and 2010 Shared Service Centers Fixed cost 600 savings 86 > Already achieved in
Slide 6: Maintain capex efforts in China
Maintain capex efforts in China € 260m CAPEX in 2009 (€ 330m in 2008) Changshu: Arkema’s future MHSE 3rd worldwide industrial site Coatex € 140m 2011 € 50m > 3 major projects Fluorogas Fluoropolymer PVDF HFC-125 in Changshu (China) 2011 € 70m 2010 3rd generation of fluorogases Polyamides (HFC125): p
Slide 7: Continue to leverage R&D unique opportunities
Continue to leverage R&D unique opportunities > Over 2.5% of sales invested in R&D Acquisition of Oxford >40% in Performance Products Performance Materials 10% in corporate R&D for breakthrough projects Founded in 2000 Based in Enfield (USA) Development and marketing of high > Two main R&D long term
Slide 8: Key initiatives since spin-off
Key initiatives since spin-off 18,377 Fluorochemicals at Pierre-Bénite (Fr) 14,156 MMA/PMMA in Europe > Fixed costs Vinyls at Saint-Auban (Fr) North American reorganization 2005 06/30/09 Functional Additives restructuring Headcount Headcount H2O2 in Shanghai (China) Fluorochemicals JVs with Daikin >
Slide 9: Q3'09 results
Q3’09 results > Solid results in challenging market conditions
Slide 10: Solid results delivered in 3Q'09
Solid results delivered in 3Q’09 > +44% EBITDA versus 2Q’09 > EBITDA margin increased at 9.2%, at the level of 3Q’08 Excellent performance in Industrial Chemicals: EBITDA margin >15% Significant improvement in Performance Products: EBITDA margin >10% > Positive adjusted net income > +€ 71m Free Cash
Slide 11: Several improvements in challenging market conditions overall
Several improvements in challenging market conditions overall Lower YoY volume decline Sharp YoY decrease of raw material index 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09 2Q'09 3Q'09 -13% -18% -23% Jan-08 Jul-08 Jan-09 Jul-09 -27% + Overall strong volumes in September + Price increase in PVC and Acrylics vs 2Q’0
Slide 12: Strong sequential improvement of EBITDA
Strong sequential improvement of EBITDA in € m (except EPS) 1Q’09 2Q’09 3Q’09 3Q’08 Variation* Sales ………..….………..………..….…………… 1,092 1,167 1,103 1,450 (23.9)% EBITDA ………....….………..………..….…… 57 70 101 134 (25)% EBITDA margin ……..………..….…… 5.2% 6.0% 9.2% 9.2% Recurring operating income …. (12) 2 36 72
Slide 13: Stabilized volumes at lower level
Stabilized volumes at lower level > End of de-stocking in most end-markets in Europe and in the US > Volumes lower than before the crisis > Raw material costs at a peak in 3Q’08 > Resilient prices in polymers in most businesses in € m Prices (10.7%) Volumes FX rate - (13.4)% translation Scope of eff
Slide 14: Successful adaptation to tough market conditions
Successful adaptation to tough market conditions > +44% EBITDA in 3Q’09 vs 2Q’09 despite usual weak seasonality in Europe in August > 9.2% EBITDA margin at the level of 3Q’08 > Ongoing restructuring plans and G&A reductions in line with €170m fixed cost savings full year target > Benefits from incre
Slide 15: Results by segment
Results by segment 2 Vinyl Products: Weak results 2Q’09 3Q’09 1Q’09 > Volumes lower than before the crisis (7) (8) > Low unit margins (higher ethylene costs and low caustic soda prices) > PVC price increased in 3Q’09 vs 2Q’09 in order to offset higher ethylene costs 15.3% Industrial Chemicals: EBITD
Slide 16: +€206m free cash flow in 9 months 2009
+€206m free cash flow* in 9 months 2009 Quarterly FCF* (€ m) Evolution of net debt (in € m) +96 580 495 435 420 +71 359 +39 1Q’09 2Q’09 3Q’09 09/30/08 12/31/08 03/31/09 06/30/09 09/30/09 > Continued focus on the optimization > Net debt decreased by € 136m of working capital since beginning of year >
Slide 17: Strong benefit from reduction in working capital
Strong benefit from reduction in working capital Inventory level in €m Working capital Rec. reduction capex* -24% 1,026 (182) 816 782 in 9m’09 in €m 305 Tax & 12/31/08 06/30/09 09/30/09 debt NR (56) items Other (56) items EBITDA (33) Free Cash 228 Flow** +€206m * Recurring capex excluding capex rela
Slide 18: Outlook
Outlook > 4th quarter 2009 Traditional weaker seasonality in December Asia should maintain good momentum Visibility still limited in Europe and North America > Full year 2009 targets Increase Free Cash Flow* target to around +€ 140m Confirm fixed cost saving target of € 170m Capex below € 260m > Con
Slide 19: A major milestone in Arkema's transformation
A major milestone in Arkema’s transformation* > Arkema’s long term strategy in acrylics Arkema’s current position in acrylics Secure competitive world-scale monomer production base in each geographical area Strengthen downstream integration Carling 275kt/yr Bayport > Highlights of the deal 65kt/yr*
Slide 20: 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 inaccura