Arkema Sa · EURONEXT:AKE
Arkema Sa — Non-Deal Roadshow (September 2020)
42 slides from Arkema Sa's roadshow presentation, September 2020
Slide 1: Arkema Roadshow Presentation September 2020
ARKEMA ROADSHOW PRESENTATION SEPTEMBER 2020
Slide 2: Arkema in a Snapshot
ARKEMA IN A SNAPSHOT
Slide 3: Arkema at a Glance
ARKEMA AT A GLANCE 2019 SALES SPLIT 7% 4% 21% 24% 7% 22% 28% 7% 36% Businesses End markets Regions 15% 22% 24% 31% 20% 32% Adhesive Solutions General industry Building & Construction Europe Advanced Materials Consumer goods Automotive & Transportation North-America Coating Solutions Electrics, elect
Slide 4: A High-Level Financial Performance
A HIGH-LEVEL FINANCIAL PERFORMANCE 1,391 1,474 1,457 8.8 8.7 8.3 7.5 1,189 16.7% 16.7% 16.7% 15.8% 2016 2017 2018 2019 2016 2017 2018 2019 Sales EBITDA (€m) (€b) and EBITDA margin (%) 4 ROADSHOW - SEPTEMBER 2020
Slide 5: Record Cash Flow Generation in 2019
RECORD CASH FLOW GENERATION IN 2019 EBITDA to cash conversion rate 52% 667 above the target of 35% 565 499 Working capital (% of annual sales) 13.8% close to the very good level of 2018 Recurring and exceptional capital expenditure €607 m acceleration of major organic growth projects 2017 2018 2019
Slide 6: A Very Solid Balance Sheet
A VERY SOLID BALANCE SHEET Gearing 900 900 (net debt excluding hybrids divided 1.50% by shareholders’ equity) 700 31% 1.50% 500 400 0.75% Net debt (excl. hybrids) / EBITDA 300 2.75% 300 1.1x 4.75% 1.50% 150 3.125% Hybrid bonds 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 (booked as shareholders
Slide 7: Strong CSR Requirements
STRONG CSR REQUIREMENTS NON-FINANCIAL RATINGS OUR AMBITION 2015 2019 42 65 BB A C B • Rank among the Top 1% best perfoming companies Global n.a.1 4e/38 chemist • Inclusion in the DJSI EUROPE 120 INDICES EUROZONE 120 INDICES 1. Not disclosed 7 ROADSHOW - SEPTEMBER 2020
Slide 8: Evolution of the Share Price Since 1 January 2019
EVOLUTION OF THE SHARE PRICE SINCE 1st JANUARY 2019 Arkema : -1.7% TSR since May 2006 Average of peers* : -11.8% (with reintegrated dividends) 100 CAC 40 : -16.3% Arkema more than 80 80 x4 74.96 Average of peers* Arkema : + 26.3% around Average of peers* : + 18.1% 60 60 CAC 40 : + 26.4% x2.5 CAC 40
Slide 9: Our Long Term Ambition
OUR LONG TERM AMBITION
Slide 10: Our Vision
OUR VISION Be the Specialty Materials leader offering the most innovative and sustainable solutions to address our customers’ current and future challenges 10 ROADSHOW - SEPTEMBER 2020
Slide 11: Arkema Has Unique Materials Capabilities to Address These Challenges
ARKEMA HAS UNIQUE MATERIALS CAPABILITIES TO ADDRESS THESE CHALLENGES Structuring Bonding Protecting Additive Surface Piezoelectric materials materials surfaces technology science materials Change picture (wind turbine blade) Composite Recyclable Bio-based Rheology UV curing Nanoscience materials mat
Slide 12: Know-How Organized into Synergistic Growth Platforms
THIS KNOW-HOW IS ORGANIZED INTO 3 SYNERGISTIC GROWTH PLATFORMS Adhesive Advanced solutions materials Specialty Materials Coating solutions Building & Automotive & General industry Consumer goods Electric & energy Paint & coatings Nutrition & water construction transportation Key end markets 12 ROADS
Slide 13: Platforms Developed Since 2005 Through a Profound Portfolio Shift
THESE 3 PLATFORMS ARE DEVELOPED SINCE 2005 THROUGH A PROFOUND PORTFOLIO SHIFT Colored boxes represent the largest acquisitions and divestments over the period Select Dow Seppic specialty Oxido polymer XL Coatex acrylic assets surfactants Sunke crosslinkers Brands Prochimir LIP 7.6x €4.4b Average EV/
Slide 14: Business Structure Aligned with Our Vision
WE HAVE ALIGNED OUR BUSINESS STRUCTURE WITH OUR VISION 2019 FINANCIALS Specialty Materials Adhesive Solutions Advanced Materials Coating Solutions Intermediates High- PMMA Construction Industrial Performance Coating Coating Performance Fluorogases & Consumer Assembly Additives Resins Additives Polym
Slide 15: Vision to Become a Pure Specialty Materials Player
OUR VISION IS TO BECOME A PURE SPECIALTY MATERIALS PLAYER SPECIALTY MATERIALS INTERMEDIATES OUR 2024 AMBITION €10-11b sales 3-3.5% p.a. average annual organic revenue growth GDP+ organic growth > M&A to more than double Develop differentiated High group profitability organic growth strategies
Slide 16: Each Platform Has Set Growth and Profitability Ambitions
EACH PLATFORM HAS SET GROWTH AND PROFITABILITY AMBITIONS Adhesive Solutions Advanced Materials Coating Solutions Be a consolidator of the market, Invest and innovate to support Continue to enhance focused on high performance exponential needs for materials the value proposition bonding and construct
Slide 17: Adhesive Solutions Strategy at a Glance
ADHESIVE SOLUTIONS STRATEGY AT A GLANCE 2019 KEY FINANCIALS 2019 REVENUE SPLIT 2024 AMBITION €2.1b 10% Building & Construction sales 42% Do-it-yourself3 High single-digit 48% Industry3 Annual sales growth 12.9% incl. M&A2 EBITDA margin 3% 30% CAPEX intensity1 46% Europe North America +300 bps Asia &
Slide 18: Advanced Materials Strategy at a Glance
ADVANCED MATERIALS STRATEGY AT A GLANCE 2019 KEY FINANCIALS 2019 REVENUE SPLIT 2024 AMBITION 4% Building & Construction €2.7b 10% 8% 35% Consumer goods sales General industry 4% 11% Electrics, electronics & energy Annual organic sales growth 21.7% 14% 18% Automotive & Transportation EBITDA margin Pa
Slide 19: Coating Solutions Strategy at a Glance
COATING SOLUTIONS STRATEGY AT A GLANCE 2019 KEY FINANCIALS 2019 REVENUE SPLIT 2024 AMBITION Paint & coatings €2.1b 8% 8% Consumer goods Nutrition & Water sales 8% 3% General industry 60% 14% Annual organic sales growth 14.4% Building & Construction Electrics, electronics & energy EBITDA margin 5-6%
Slide 20: Differentiated Strategy Across Intermediates Businesses
INVESTIGATING DIFFERENTIATED STRATEGY ACROSS INTERMEDIATES BUSINESSES … Sales 2019, €b MMA/ PMMA FLUOROGASES ASIA ACRYLICS 0.61 0.7 0.3 Explore potential disposal Focus on specialty segment Balance acrylic monomer Once these strategies are of MMA/ PMMA (~€0.2b) high-value capacity in Asia through ex
Slide 21: Cash Allocation Priorities
CASH ALLOCATION PRIORITIES Estimated cash to allocate over the 5 year plan ~€3.5b at constant leverage 3 (~1.6x) SUBJECT TO MARKET CONDITIONS +25% 40-45% Reiterating our progressive dividend policy, targeting 40% payout ratio by 2024 Return to shareholders Opportunistic share buy-back program
Slide 22: Maintain Strict Financial Discipline
MAINTAIN STRICT FINANCIAL DISCIPLINE ROCE Net debt to EBITDA ratio Solid investment grade rating >10% <2x Incl. hybrid bonds Recurring Capex Controlled working capital ~5.5% ~14% of sales of sales 22 ROADSHOW - SEPTEMBER 2020
Slide 23: Strong Commitment on Climate and Environment
STRONG COMMITMENT ON CLIMATE AND ENVIRONMENT CLIMATE CLIMATE PLAN ENVIRONMENT Commitment to Paris agreement New targets for 2030 and Science-Based Target trajectory well below 2°C AIR WATER ENERGY GHG EMISSIONS in kt eq. CO2 Greenhouse gas emissions 6,480 (GHG) new target for 2030 -65% -60% -20% vs
Slide 24: Innovation to Support Sustainable Development
INNOVATION TO SUPPORT SUSTAINABLE DEVELOPMENT Industry leading range of bio- Large range of VOC-free Lightweight composites Circular economy initiatives based specialty polyamides coating solutions to reduce GHG emissions (e.g. recyclable resins) PORTFOLIO SUSTAINABILITY ASSESSMENT RESEARCH & INNOVA
Slide 25: Cultivate an Open Dialogue with Our Stakeholders
CULTIVATE AN OPEN DIALOGUE WITH OUR STAKEHOLDERS EMPLOYEES COMMON GROUND® 80% are actively Nearly 1000 engaged initiatives taken From 23% to 25% DIVERSITY PHILANTHROPY in 2025 Promotion of women Funds for and international education, talents in senior salary rounding, management women in senior spon
Slide 26: Q2 and H1 2020 Results
Q2 AND H1 2020 RESULTS
Slide 27: Robust Q2'20 Performance in the Context of Covid-19
ROBUST Q2’20 PERFORMANCE IN THE CONTEXT OF COVID-19 SALES EBITDA ADJ. NET INCOME FREE CASH FLOW In €m In €m In €m In €m -15.6% 15.0% €1.18 x3.2 MARGIN ADJ. EPS 2,254 288 407 1,902 192 286 90 90 Q2'19 Q2'20 Q2'19 Q2'20 Q2'19 Q2'20 Q2'19 Q2'20 27 ROADSHOW - SEPTEMBER 2020
Slide 28: Overall Robust Q2'20 Performance in Exceptional Covid-19 Context
OVERALL ROBUST Q2’20 PERFORMANCE IN THE EXCEPTIONAL COVID-19 CONTEXT Global economy strongly impacted by Covid-19 pandemic Down 15.6% YoY (-10.7% in H1’20) €1,902m sales Significant slowdown in the construction, transportation and industrial sectors Good demand in the nutrition, packaging and hygien
Slide 29: Q2'20 Key Figures
Q2’20 KEY FIGURES In €m Q2’19 Q2’20 Change Sales 2,254 1,902 (15.6)% EBITDA 407 286 (29.7)% Specialty Materials 1 304 233 (23.4)% Intermediates 127 66 (48.0)% Corporate -24 -13 EBITDA margin 18.1% 15.0% Recurring operating income (REBIT) 278 144 (48.2)% REBIT margin 12.3% 7.6% Adjusted net income 19
Slide 30: Q2'20 Sales Bridge
Q2’20 SALES BRIDGE In €m Volumes Prices Scope Currency (12.2)% (5.9)% +2.9% (0.4)% Effect of lockdowns Resilient prices in Integration of Devaluation of Adhesive Solutions ArrMaz, Lambson emerging Slowdown in and Advanced Prochimir and LIP currencies construction, Materials impacting mainly transpor
Slide 31: Adhesive Solutions (24% of Group Sales)
ADHESIVE SOLUTIONS (24% OF GROUP SALES) Q2’20 KEY FIGURES Q2’20 SALES DEVELOPMENT Q2’20 SALES BY BUSINESS LINE In €m Q2’19 Q2’20 Change Volumes (13.2)% Sales 520 453 (12.9)% Construction & Prices (0.9)% Consumer EBITDA 71 50 (29.6)% 216 237 Currency (1.5)% EBITDA margin 13.7% 11.0% Industrial Assemb
Slide 32: Advanced Materials (33% of Group Sales)
ADVANCED MATERIALS (33% OF GROUP SALES) Q2’20 KEY FIGURES Q2’20 SALES DEVELOPMENT Q2’20 SALES BY BUSINESS LINE In €m Q2’19 Q2’20 Change Volumes (11.5)% Sales 650 628 (3.4)% 178 High Performance Prices (2.0)% Polymers EBITDA 142 124 (12.7)% Currency 0.0% EBITDA margin 21.8% 19.7% 450 Performance Addi
Slide 33: Coating Solutions (23% of Group Sales)
COATING SOLUTIONS (23% OF GROUP SALES) Q2’20 KEY FIGURES Q2’20 SALES DEVELOPMENT Q2’20 SALES BY BUSINESS LINE In €m Q2’19 Q2’20 Change Volumes (15.8)% Sales 575 436 (24.2)% 122 Coating Resins Prices (9.5)% EBITDA 91 59 (35.2)% Currency (0.1)% EBITDA margin 15.8% 13.5% 314 Coating Additives Rec. oper
Slide 34: Intermediates (20% of Group Sales)
INTERMEDIATES (20% OF GROUP SALES) Q2’20 KEY FIGURES Q2’20 SALES DEVELOPMENT In €m Q2’19 Q2’20 Change Volumes (8.1)% Sales 502 379 (24.5)% Prices (12.3)% EBITDA 127 66 (48.0)% Currency +0.1% EBITDA margin 25.3% 17.4% Rec. operating income 99 35 (64.6)% Scope (4.2)% Q2’20 HIGHLIGHTS €379m sales, down
Slide 35: Portfolio Management Highlights Since January 2020
PORTFOLIO MANAGEMENT HIGHLIGHTS SINCE 1 JANUARY 2020 Bolt-on acquisitions in Adhesive Solutions Divestment finalization LIP FIXATTI FUNCTIONAL POLYOLEFINS Danish leader in tile adhesives, water proofing Leading global manufacturer of high-performance Sale of Arkema’s Functional Polyolefins business,
Slide 36: Main Organic Capex Since January 2020
MAIN ORGANIC CAPEX SINCE 1 JANUARY 2020 Attractive growth capex in Innovative partnership for the supply Advanced Materials of anhydrous hydrogen fluoride (AHF) KERTEH 2 NUTRIEN Doubling of the methyl mercaptan production capacity Long term stable and competitive AHF supply for at Kerteh site in Mal
Slide 37: H1'20 Performance
H1’20 PERFORMANCE SALES EBITDA ADJ. NET INCOME NET DEBT (incl. hybrid bonds) In €m In €m In €m In €m -10.7% 14.7% €2.49 1.7x MARGIN ADJ. EPS LTM EBITDA 4,469 3,990 2,331 777 2,134 357 586 190 H1'19 H1'20 H1'19 H1'20 H1'19 H1'20 31/12/2019 30/06/2020 37 ROADSHOW - SEPTEMBER 2020
Slide 38: H1'20 Key Figures
H1’20 KEY FIGURES In €m H1’19 H1’20 Change Sales 4,469 3,990 (10.7)% EBITDA 777 586 (24.6)% Specialty Materials 1 596 489 (18.0)% Intermediates 230 134 (41.7)% Corporate -49 -37 EBITDA margin 17.4% 14.7% Recurring operating income (REBIT) 525 304 (42.1)% REBIT margin 11.7% 7.6% Adjusted net income 3
Slide 39: H1'20 Cash Flow
H1’20 CASH FLOW RECONCILIATION OF EBITDA TO NET CASH FLOW H1’20 HIGHLIGHTS In €m H1’19 H1’20 EBITDA 777 586 Tax rate H1’20: ~22% of REBIT (excl. exceptional items) Current taxes (96)1 (55) Cost of debt (49) (42) Strict working capital management Change in working capital and fixed assets payables 2
Slide 40: H1'20 Net Debt Bridge (Including Hybrid Bonds)
H1’20 NET DEBT BRIDGE (INCLUDING HYBRID BONDS) In €m 1.7x LTM EBITDA 2,331 (250) (147) 168 21 11 2,134 700 hybrid bonds 1,000 hybrid bonds 1,631 1,134 31/12/2019 Free cash M&A Dividends Share FX and 30/06/2020 flow buybacks others 40 SECOND QUARTER 2020 RESULTS
Slide 41: 2020 Outlook
2020 OUTLOOK Based on the progressive lifting of lockdown measures in some important countries for the Group, Arkema expects that demand will continue to improve gradually in the second part of the year, while remaining below last year’s level The pace and strength of this improvement are still unce
Slide 42: 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 continues to rapidly spread across the world, and the evol