Arkema Sa · EURONEXT:AKE
Arkema Sa — Deutsche Bank Global ESG Conference 2022
37 slides from Arkema Sa's conference presentation, Feb 28, 2022
Slide 1: Deutsche Bank Global ESG Conference 2022
Deutsche Bank Global ESG Conference 2022 28 February 2022
Slide 2: Arkema in a snapshot
Arkema in a snapshot Deutsche Bank Global ESG Conference - 28 February 2022 2
Slide 3: Innovative materials for a sustainable world
Innovative materials for a sustainable world A Specialty Materials leader offering unique innovative and sustainable solutions to address our customers’ current and future 24% challenges 29% €8.1bn sales 5 corporate values supporting our vision Simplicity Solidarity Inclusion 32.5% Performance Empow
Slide 4: Arkema at a glance
24.5% Arkema at a glance 31% 32.5% 4% Specialty Materials 27% 85.5% 29% Segments Close to 90% Regions pro forma 2021 * 36% 36% 29% 24% 14.5% 4% Adhesive Solutions Coating Solutions Europe Asia Advanced Materials Intermediates North America ROW * On a pro forma basis, including full year contribution
Slide 5: Strong progress in financial performance
Strong progress in financial performance Covid context 9.5 1,727 8.8 8.7 8.3 1,474 1,457 Covid 762 756 7.9 1,391 context 667 1,182 565 651 499 18.1% 479 16.7% 16.7% 16.7% 15.0% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Sales (€bn) EBITDA (€m) Free cash flow (€m) EBIT
Slide 6: Well established financial resources
Well established financial resources in €m 1,000 900 1.5% 700 1.5% 500 400 0.75% 300 300 2.75% 0.125% 1.5% 150 3.125% 2023 2024 2025 2026 2027 2028 2029 Senior bond Green bond Hybrid bond RCF Deutsche Bank Global ESG Conference - 28 February 2022 6
Slide 7: High value creation for shareholders
High value creation for shareholders Dividend Share price evolution in 2021 (in €/share) per financial year €/share Arkema 3.0 +32.5% 2.2 2.3 2.5 in Covid 2.5 context CAC 40 +28.9% Peers 2 1 2017 2018 2019 2020 2021 +15.2% → In line with the Group’s ambition to progressively increase shareholder ret
Slide 8: Our ambition by 2024
Our ambition by 2024 Become a sustainable and high-performance Specialty Materials leader Sales of €10 to €11bn Cash generation > 40% Deconsolidation of EBITDA margin of 17% the Intermediates segment Strict financial discipline Organic growth 3 to 3.5% / year Deutsche Bank Global ESG Conference - 28
Slide 9: 4 levers underpin our strategy
4 levers underpin our strategy Accelerate Achieve organic growth best-in-class and sustainable CSR performance innovation among chemical players Take action Strengthen in commercial Specialty Materials and operational through excellence acquisitions initiatives Deutsche Bank Global ESG Conference -
Slide 10: 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 11: Key steps achieved in portfolio transformation in 2021
Key steps achieved in portfolio transformation in 2021 Two major steps to refocus our portfolio towards Specialty Materials ASHLAND PERFORMANCE ADHESIVES PMMA Acquisition, expected to close in Q1’22 Divestment to Trinseo, closing 3 May 2021 EV: US$1,650m EV: €1,137m 8.7x EBITDA after pre-tax synergi
Slide 12: High return expansions to capture sustainable growth
High return expansions to capture sustainable growth Bio-based, renewable Kynar® PVDF Forane® Sartomer® Pebax® Rilsan® PA11 Hydrofluoric acid +50% capacity in 15 kt/yr 1233zd +100% photocure +25% global capacity +50% global capacity 40 kt/yr supply Changshu, CN capacity in Calvert resins capacity in
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 Deutsche Bank Global ESG Conference - 28 February 2022 13
Slide 14: We act and innovate for people and the planet
We act and innovate for people and the planet Deutsche Bank Global ESG Conference - 28 February 2022 14
Slide 15: Strong CSR commitment increasingly recognized
Strong CSR commitment increasingly recognized Top percentile → Improved ranking to 3rd in across all sectors DJSI World 2021 vs 6th in 2020 “Chemicals” category Score: 67 CSA by S&P Global score: 82 Rating: A 1st decile (global) (Sept 2021) B for Climate change CAC 40® ESG Among top 1% Integration i
Slide 16: A CSR approach centered around 5 major priorities
A CSR approach centered around 5 major priorities Sustainable Safety Employees and solutions Circular Climate and relations with offering economy plan environment stakeholders Moving toward A sustainable Contain Acting as a A committed higher positive resource global warming responsible value chain
Slide 17: Sustainable solutions offering: moving toward higher positive impact
Sustainable solutions offering: moving toward higher positive impact Global megatrends ImpACT+ target Urbanization and social change Climate change Resource Technological 65% of our sales scarcity transformation significantly contributing to UN SDGs by 2030 Key challenges addressed by Arkema 51% in
Slide 18: Significant opportunities in clean mobility
Significant opportunities in clean mobility HYDROGEN PA11 for tanks CHASSIS PVDF for fuel cells & electrolyzers 100% recyclable composites €1bn sales in batteries by 2030 BATTERY New Center of Excellence for batteries PVDF for cathode and separators HYBRID in France Ultrapure electrolyte salts PA11
Slide 19: High growth potential in 3D printing
High growth potential in 3D printing Leading portfolio of solutions for the major 3D printing technologies Consumer goods >20% CAGR 2019-2024 * Filament extrusion Industry * Source: market estimation, Wohlers report 2019 Radiation Aeronautics curing 3 Centers of Excellence dedicated to each technolo
Slide 20: Increased demand for sustainable lifestyle products
Increased demand for sustainable lifestyle products Consumer goods Customizable & bio-based glass 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 return f
Slide 21: Circular economy: a sustainable resource management
Circular economy: a sustainable resource management 4 main levers Life Cycle Analysis target Maximize the use of renewable and/or recycled materials and packaging 50% of our sales covered by a Life Cycle Maintain Analysis by 2024 products and materials MATERIALS in the use-loop 27% in 2021 (22% in 2
Slide 22: Climate plan: contain global warming
Climate plan: contain global warming GHG emissions Main levers In kt CO2 eq. 1 -34% -38% → Energy efficiency & green energy → Process optimization & Commitment to innovation Paris agreement and Science-Based → Suppliers commitment Target trajectory to climate 4,720 well below 2°C 3,628 3,117 → Low c
Slide 23: Safety and environment: acting as a responsible manufacturer
Safety and environment: acting as a responsible manufacturer Safety Environment 1 TRIR (Number of accidents per million hours worked) Energy VOC COD 1.6 1.3 1.4 -15% -20% -50% -65% -55% -60% 1.0 1.0 ≤ 0.8 2017 2018 2019 2020 2021 2030 2012 2019 2020 2021 2030 2012 2019 2020 2021 2030 2012 2019 2020
Slide 24: Employees and relations with stakeholders: a committed value chain
Employees and relations with stakeholders: a committed value chain Diversity Responsible sourcing in senior management and executive positions Women 30% 80% of our purchases from 23% 23% 24% 26% relevant suppliers in 2025 19% 21% (Together for Sustainability assessed) 2017 2018 2019 2020 2021 2024 2
Slide 25: Detailed Q4'21 & 2021 results and outlook
Detailed Q4’21 & 2021 results and outlook Extract from “Full year 2021 results and outlook” presentation (24 February 2022) Deutsche Bank Global ESG Conference - 28 February 2022 25
Slide 26: 2021 financial highlights
2021 financial highlights → Up by 25.9% vs 2020 at constant scope and currency • 7.3% growth in volumes, driven notably by robust demand for sustainable solutions with high technological content, particularly in batteries, €9,519m sales 3D printing, consumer goods and more environmentally friendly p
Slide 27: Key figures
Key figures in €m Q4’21 Q4’20 Change 2021 2020 Change Sales 2,500 1,985 +25.9% 9,519 7,884 +20.7% EBITDA 417 289 +44.3% 1,727 1,182 +46.1% Specialty Materials 359 261 +37.5% 1,503 1,018 +47.6% Intermediates 80 42 +90.5% 316 231 +36.8% Corporate -22 -14 -92 -67 EBITDA margin 16.7% 14.6% 18.1% 15.0% S
Slide 28: Strong organic sales growth
Strong organic sales growth Sales in €m +18.6% -1.1% -4.1% +7.3% Stronger euro against US Integration of Fixatti, dollar Ideal Work, Poliplas, Edge Adhesives Texas, and Agiplast Adaptation of Improved market selling prices to PMMA disposal on environment tackle high raw 3 May 2021 and materials, ene
Slide 29: Adhesive Solutions (24% of Group sales)
Adhesive Solutions (24% of Group sales) Key figures 2021 highlights in €m Q4’21 Q4’20 Change 2021 2020 Change → Volumes up 5.4% YoY Sales 580 512 +13.3% 2,278 1,996 +14.1% • Robust demand in construction and DIY • Recovery in high performance industrial applications EBITDA 69 69 - 316 261 +21.1% pos
Slide 30: Advanced Materials (32.5% of Group sales)
Advanced Materials (32.5% of Group sales) Key figures 2021 highlights in €m Q4’21 Q4’20 Change 2021 2020 Change → Volumes up 10.3% YoY Sales 874 644 +35.7% 3,087 2,527 +22.2% • Driven by High Performance Polymers’ strong dynamic in most end markets, despite decline in EBITDA 168 123 +36.6% 662 496 +
Slide 31: Coating Solutions (29% of Group sales)
Coating Solutions (29% of Group sales) Key figures 2021 highlights in €m Q4’21 Q4’20 Change 2021 2020 Change → Prices up 37.6% YoY Sales 725 489 +48.3% 2,746 1,911 +43.7% • Necessary price increases in downstream product lines to offset very high raw materials and energy EBITDA 122 69 +76.8% 525 261
Slide 32: Intermediates (14.5% of Group sales)
Intermediates (14.5% of Group sales) Key figures 2021 highlights in €m Q4’21 Q4’20 Change 2021 2020 Change → Scope effect of -29.1% YoY related to PMMA Sales 312 334 -6.6% 1,378 1,425 -3.3% and Functional Polyolefins divestments EBITDA 80 42 +90.5% 316 231 +36.8% EBITDA margin 25.6% 12.6% 22.9% 16.2
Slide 33: 2021 cash flow
2021 cash flow in €m → 2021 tax rate Reconciliation of EBITDA to net cash flow • 20% of REBIT (excl. exceptional items) • In 2022, ~21% of REBIT (excl. exceptional 2021 2020 items) EBITDA 1,727 1,182 → Working capital well controlled Current taxes -233 -121 12.7% of annual sales (excl. PMMA) Cost of
Slide 34: Net debt evolution (including hybrid bonds)
Net debt evolution (including hybrid bonds) in €m 1,910 0.7x LTM EBITDA -756 277 -909 120 1,177 329 206 31/12/2020 Rec. cash Exceptional M&A Dividends & Share FX and 31/12/2021 flow items Hybrid bonds buyback others Deutsche Bank Global ESG Conference - 28 February 2022 34
Slide 35: Further strengthen our Specialty Materials in 2022
Further strengthen our Specialty Materials in 2022 M&A High return projects Innovation CSR → Integrate Ashland → Start up our major → Accelerate development → Reinforce climate actions Performance Adhesives and expansion projects in clean mobility, along the value chain implement synergies with ligh
Slide 36: Outlook
Outlook → In 2022, Arkema should benefit from a positive level of global demand with nuances in different regions and markets, and from its leading positioning on innovative, high performance Specialty Materials. → Environment still volatile at the start of the year, marked by uncertainty related to
Slide 37: 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 the evolution of the situat