Arkema Sa · EURONEXT:AKE
Arkema Sa — Investor Day (September 2023)
38 slides from Arkema Sa's investor day presentation, Sep 27, 2023
Slide 1: Lead for sustainable growth
Lead for sustainable growth Strategy Update 27 September 2023 Capital Markets Day 2023 11/1/2021
Slide 2: Agenda for today
Agenda for today 2 p.m. - 3 p.m. 1 p.m. - 2 p.m. Showroom visit Lunch with management team 3 p.m. - 3:50 p.m. Deep dive sessions Batteries Efficient buildings and homes Sustainable lifestyle Advanced electronics 11 a.m. - 1 p.m. Management presentation 3:50 p.m. - 4:15 p.m. and Q&A Q&A and closing r
Slide 3: Introduction
Introduction Our last Strategy Update, which took place in April 2020 This document outlines our significant in the unusual Covid context, financial and non-financial set ambitious targets for 2024 achievements since 2020, in a volatile and challenging environment We are now sharing the Group’s grow
Slide 4: Arkema is a high-performance Materials company
Arkema is a high-performance Materials company
Slide 5: Our world is being transformed by disruptive megatrends
Our world is being transformed by disruptive megatrends Natural resources Urbanization Transition Technology Social change preservation and and living to electric disruptions and consumer decarbonization standards mobility and AI behaviors Capital Markets Day 2023 27 September 2023 5
Slide 6: Our vision is shaped by the accelerating demand for high-performance materials
Our vision is shaped by the accelerating demand for high-performance materials A SIGNATURE “Be the Specialty Materials leader, offering the most innovative and FOR A VISION sustainable solutions to address our customers’ current and future challenges” Capital Markets Day 2023 27 September 2023 6
Slide 7: 3 unique and complementary capabilities
Our know-how is centered on materials science 3 unique and complementary capabilities to seize opportunities from global megatrends Creating and strengthening Bonding and assembling Protecting and modifying materials materials materials Capital Markets Day 2023 27 September 2023 7
Slide 8: These capabilities define our Specialty Materials segments
These capabilities define our 3 Specialty Materials segments 38% 38% 28% 25% 28% 25% INTERMEDIATES Fluorogases and Asia Acrylics 2022 sales Capital Markets Day 2023 27 September 2023 8
Slide 9: Our segments serve attractive end-markets with a balanced geographical presence
Our segments serve attractive end-markets with a balanced geographical presence Transportation Rest of the world and energy General industry Europe Asia 13% Pacific 4% Water, health and nutrition 27% 33% 28% 13% Markets Regions 21% 26% 35% Consumer goods Building and and electronics construction Nor
Slide 10: Our global footprint is the backbone of our strong customer intimacy
Our global footprint is the backbone of our strong customer intimacy R&D Europe 1,800 researchers North America 60 7 16 R&D centers Asia 44 5 >200 filed patents/y 31 4 €270m spendings Rest of the world Manufacturing 13 ~€650m capex/y 55% growth incl. exceptional capex1 45% maintenance 148 production
Slide 11: We have achieved a strongly value creative transformation
We have achieved a strongly value creative transformation
Slide 12: Our talents have been the cornerstone of our success
Our talents have been the cornerstone of our success Increasing diversity Employee engagement in leadership positions 77% of employees fully engaged Arkema Cares global internal satisfaction survey 26% 40% 7.8% of Arkema shares women non-French held by employees 0.7% in 2006 2022 data 2022 data Empl
Slide 13: Our business profile has been significantly upgraded
Our business profile has been significantly upgraded 2006 2012 2022 Sales breakdown Towards 100% 50% 75% 91% Specialty Materials Specialty Materials Intermediates 4% 4% 5% 33% 28% 13% 21% 40% Balanced geographical footprint 25% 58% 34% Europe North America Asia Pacific Rest of the world 35% Capital
Slide 14: Portfolio management has been a key enabler
Portfolio management has been a key enabler Creating the Coating Solutions and Adhesive Solutions segments 26 acquisitions Key steps since 2020 CMD c. €5bn sales ACQUISITIONS Ashland adhesives Average EV/EBITDA Bostik 11.2x Acrylic assets Crayvalley/ of Dow Sartomer Den Fixatti Permoseal Chemical JV
Slide 15: We strongly improved our financial performance
We strongly improved our financial performance Start Great of Covid financial crisis €9.4bn Diversified Specialized peers1 peers2 €7.0bn CAGR €1.6bn €5.7bn sales3 +3.9% +1.7% +4.6% 2010 to 2023e €1.1bn CAGR 16.7% EBITDA3 +5.1% +0.8% +5.4% 2010 to 2023e €0.6bn 15.0% Post-Covid tightness TSR 01/2010 +
Slide 16: We are on track to reach our 2024 targets
We are on track to reach our 2024 targets 2024 Ambition1 Average from 2020 CMD 2020-2023 Net sales €10-11bn €9.7bn Group c. 17% 16.7% EBITDA margin EBITDA to cash conversion rate2 >40% 48% Net debt /EBITDA3 <2x 1.4x 1. In normalized macroeconomic and market conditions as defined in the “Strategy Upd
Slide 17: Our cash allocation is fully in line with our 2024 targets
Our cash allocation is fully in line with our 2024 targets CMD target Estimated cash to allocate1 cash allocated1 2020-2024 2020-2023 1 €1.3bn returned to shareholders 2024 dividend not yet included Return to 40- shareholders €1.4-1.6bn 40% €0.9bn in dividends 45% €0.3bn 2021 share buyback €0.1bn em
Slide 18: We have strengthened our CSR performance over the years
We have strengthened our CSR performance over the years Climate & environment Safety Per million hours worked 1.2 5 1 4 Energy 0.8 3 Process safety event rate GHG emissions Scopes 1+2 0.6 2 Air 0.4 Water 1 Injury rate 0.2 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2012 2013 2014 2015 2
Slide 19: Our 2028 ambition
MAB di Our 2028 ambition
Slide 20: We are now ready to progress to the next phase
We are now ready to progress to the next phase 3 Accelerate organic 2 growth driven by sustainability 2028 1 +7-8%/y organic Transforming the portfolio EBITDA growth Restructuring toward specialties 7.3% EBITDA margin 60% Specialty Materials in 2006 to 14.5% in 2011 in 2011 to >90% in 2023 €340k sal
Slide 21: Our strategy underpins ambitious financial objectives
Our strategy underpins ambitious financial objectives 2028 Strict financial discipline c. €12bn Sales Net debt to EBITDA ≤2 Solid investment grade rating EBITDA c. 18% margin Operating cash ~70% conversion rate1 Sales +4%/y Organic CAGR EBITDA +7-8%/y over 2024-28 ROCE ~10% 1. Free cash flow before
Slide 22: Each segment has aligned its targets with the Group objectives
Each segment has aligned its targets with the Group objectives Forecasts defined in normalized macroeconomic and market conditions Advanced Materials Adhesive Solutions Coating Solutions % of Group sales in 2028 c. 45% c. 30% c. 25% Organic sales CAGR +6%/y +3.5%/y +3%/y over 2024-28 2028 EBITDA mar
Slide 23: EBITDA growth is driven by well identified levers
EBITDA growth is driven by well identified levers +€650m Cumulative EBITDA +€350m from major capex focused on superior growth markets 2024-28 ~€10bn +€300m from ongoing organic growth combining: -30% c. €500m from increased volumes, pricing and product mix, including for tax, interest expense, recov
Slide 24: Capital allocation will be value driven and attractive for our shareholders
Capital allocation will be value driven and attractive for our shareholders Operating cash flow over 2024-28 period c. €7bn Allocated to: Maintenance and regulatory capex Around +15% vs last 5y period (2019-23) to reflect ~55% Capex inflation, decarbonization and increased focus on batteries Growth
Slide 25: We place sustainability at the heart of our strategy
We place sustainability at the heart of our strategy Leverage the Achieve superior Ramp-up Further strengthen Drive our strength of growth from recent major capex the portfolio manufacturing One Arkema to sustainable and carry out with bolt-on M&A excellence including enhance employee innovation in
Slide 26: One Arkema culture amplifies the strength of our 3 segments
One Arkema culture amplifies the strength of our 3 segments Customers at the One Arkema center of our actions 3 complementary capabilities Acting as One Arkema to in materials driving cross strengthen customer intimacy business line expertise Joint innovation driving Joint communication strategy and
Slide 27: We identified 5 key submarkets with superior growth
We identified 5 key submarkets with superior growth driven by sustainable megatrends Our end-markets Selected submarkets with outstanding growth Transportation and energy Green energy and electric mobility Advanced electronics Consumer goods and electronics Sustainable lifestyle Building and constru
Slide 28: Over time, we have built an unmatched portfolio of cutting-edge technologies
Over time, we have built an unmatched portfolio of cutting-edge technologies High-performance polymers Advanced (bio PA11, PA12, Pebax®, PVDF, PEKK, Polyimide1) Materials Fluorospecialties (1233zd, electrolyte salts) Creating and strengthening Niche performance additives (DMDS, biosurfactants) Press
Slide 29: With these differentiated technologies, we are uniquely positioned to serve the key submarkets
With these differentiated technologies, we are uniquely positioned to serve the key identified submarkets Advanced Materials Adhesive Solutions Coating Solutions Green energy and electric mobility Advanced electronics Sustainable lifestyle Efficient buildings and homes Water filtration, medical devi
Slide 30: This combination of technologies x submarkets will accelerate our growth
This combination of technologies x submarkets will accelerate our growth 15% 25% 2023 2028 85% €9.5-10bn sales 75% c. €12bn sales 3x higher organic sales CAGR than Group’s average Over 50% of Arkema R&D spendings Green energy Water filtration, medical devices Advanced electronics Efficient buildings
Slide 31: Recent capex and acquisitions are driving Arkema's vision
Recent capex and acquisitions are driving Arkema’s vision Capex Acquisitions Bio-based PA11/Pebax® - 2022-23 New units or expansions in Singapore, China and France PI Advanced Materials expected end-20231 for consumer goods, sustainable lifestyle and mobility Leader in ultra high-performance PI film
Slide 32: New attractive capex initiatives will be implemented
New attractive capex initiatives will be implemented Additive Decarbonization of Niche additive for biofuels acrylics production for renewable energy DMDS capacity Manufacturing process Expansion in Changshu, in Beaumont, US. modification at Carling, China. “Mission critical” Essential additive in F
Slide 33: We will bolster operational excellence
We will bolster operational excellence Increase competitiveness Review overall efficiency of internal processes and interfaces between functions €250m/y cost savings after 5 years Continue manufacturing cost optimization through yield improvement, energy efficiency and product quality uniformity 50%
Slide 34: A clear CSR roadmap is embedded in our strategy
A clear CSR roadmap is embedded in our strategy Climate Scopes 1 + 2 Sustainable Sales contributing Safety Total recordable by 2030 vs 2019 GHG emissions solutions significantly by 2030 injury rate TRIR to UN SDGs -48.5% 0.8 Process safety Near-term Scope 3 event rate PSER SBTi targets GHG emissions
Slide 35: We will continue to decarbonize our value chain
We will continue to decarbonize our value chain Upstream - Scope 3 Operations - Scopes 1 + 2 Downstream - Scope 3 (Italy) of Agiplast E.g.: ramp-up Increase bio-based and recycled Shift to low carbon energy and steam Grow our portfolio raw materials E.g.: biomethane contract with Engie (France) of s
Slide 36: We are paving the way to Net-Zero by 2050
We are paving the way to Net-Zero by 2050 2019 2022 2030 GHG emissions -34% Scopes 1 + 2 1.5°C near-term targets baseline -49% Scope 3 approved by SBTi -48.5% Scopes 1 + 2 -54% Scope 3 Towards Net-Zero 2050 3.7 Mt CO2e 2.4 Mt CO2e 1.9 Mt CO2e -90% (Scopes 1 + 2) (Scopes 1 + 2) (Scopes 1 + 2) Scopes
Slide 37: Key takeaways
Key takeaways Arkema is a Specialty Progressing to an With a value driven Materials leader ambitious next phase capital allocation Unique set of complementary Objective to reach c. €12bn sales Support organic growth with some capabilities in materials science and c. 18% EBITDA margin in 2028 more si
Slide 38: 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 world economy and the consequences of the Russian offensive in Ukraine on ge