Arkema Sa · EURONEXT:AKE
Arkema Sa — Cheuvreux Autumn Conference 2010
30 slides from Arkema Sa's conference presentation, Sep 28, 2010
Slide 1: Arkema at Cheuvreux Autumn Conference
Arkema Cheuvreux Autumn Conference Paris,September 28th, 2010
Slide 2: 2Q'10 results: A record performance
2Q’10 results A record performance
Slide 3: 2Q'10 performance: a new milestone in Arkema's transformation
2Q’10 performance: a new milestone in Arkema’s transformation EBITDA (€m) ● +38% sales versus 2Q’09 (former Dow acrylic assets accounting for +11%) 241 x3.4 ● Highest EBITDA in Arkema’s history at €241m • x 3.4 versus 2Q’09 70 • +76% versus 1Q’10 2Q’09 2Q’10 ● All segments contributed to EBITDA grow
Slide 4: 2nd quarter 2010 at record level
2nd quarter 2010 at record level EBITDA (€m) & EBITDA margin by quarter since spin off 15% 300 10.7% 250 241 200 159 Previous 150 high 100 50 0 2005 2006 2007 2008 2009 2010 4
Slide 5: Highlights of the quarter
Highlights of the quarter ● Successful start-up of HFC-125 production unit in Changshu (China) ● Registration of the Paladin® for soil fumigation by the Environmental Protection Agency (EPA) in the US ● Approval received from the EPA to market Arkema’s carbon nanotubes in the US (Graphistrength®) ●
Slide 6: 2Q'10 key figures
2Q’10 key figures 2Q’10 vs in €m (except EPS) 2Q’09 2Q’10 1Q’10 2Q’09 Sales 1,167 1,605 +38% 1,308 EBITDA 70 241 x 3.4 137 EBITDA margin 6.0% 15.0% 10.5% Recurring operating income 2 169 x 85 67 Net income (group share) (114) 119 na 40 Adjusted EPS (diluted) (0.41) 1.92 na 0.68 Net income of 2nd qua
Slide 7: +38% sales versus 2Q'09
+38% sales versus 2Q’09 Sales in €m Scope of FX rate - business translation +10.7% Volumes effect Price +12.2% +3.9% +10.7% Mainly former Dow Price acrylic 1,605 increases assets exceeded higher raw 1,167 material costs 2Q’09 2Q’10 7
Slide 8: Key factors for 2Q'10 performance
Key factors for 2Q’10 performance ● Favorable market conditions YoY volume development • Strong demand in Asia • Improving volumes in North America • Acrylic monomer margins above mid-cycle +20% • However: - Volumes still below pre-crisis level +12% 2009 2010 - Challenging market conditions in Vinyl
Slide 9: Strong contribution from 4 years of company transformation
Strong contribution from 4 years of company transformation Acrylic assets from Dow ● Significant positive effect on bottom line from new businesses (high performance polymers, renewables, photovoltaic, alternative energies, etc.) ● Benefits from new plants in Asia Start up of HFC-125 in Changshu ● L
Slide 10: Contribution by segment
Contribution by segment Vinyl Industrial Performance Products Chemicals Products +57% Sales (€m) Ex-Dow acrylics +26% +12% 854 543 448 266 298 355 2Q’09 2Q’10 2Q’09 2Q’10 2Q’09 2Q’10 EBITDA (€m) and 20.6% EBITDA margin (%) 13.8% 176 17.0% 75 6.5% 76 (7) 0 23 2Q’09 2Q’10 2Q’09 2Q’10 2Q’09 2Q’10 10
Slide 11: Vinyl Products: Market conditions remain challenging
Vinyl Products: Market conditions remain challenging 2Q’10 vs in €m 2Q’09 2Q’10 1Q’10 2Q’09 Sales 266 298 +12.0% 271 EBITDA (7) 0 na (8) EBITDA margin (2.6)% 0% (3.0)% Rec. op. income (19) (13) na (22) ● Break-even EBITDA ● Construction market still weak in Europe ● Low unit margins • PVC price incr
Slide 12: Industrial Chemicals: Above 20% EBITDA margin
Industrial Chemicals: Above 20% EBITDA margin 2Q’10 vs in €m 2Q’09 2Q’10 1Q’10 2Q’09 Sales 543 854 +57.3% 661 EBITDA 75 176 x 2.3 96 EBITDA margin 13.8% 20.6% 14.5% Rec. op. income 43 140 x 3.3 62 ● +33% sales at constant scope of business vs 2Q’09 • ~50% price effect and ~50% volume effect ● Tradit
Slide 13: Performance Products: EBITDA multiplied by 3 versus 2Q'09
Performance Products: EBITDA multiplied by 3 versus 2Q’09 2Q’10 vs in €m 2Q’09 2Q’10 1Q’10 2Q’09 Sales 355 448 +26.2% 372 EBITDA 23 76 x 3.3 54 EBITDA margin 6.5% 17.0% 14.5% Rec. op. income 0 53 na 32 ● +19% volumes versus 2Q’09 • Strong demand in Asia • Reasonable growth in Europe and North Americ
Slide 14: 1st half 2010 results
st 1 half 2010 results Reflecting the magnitude of transformation
Slide 15: 1H'10 highlights
1H’10 highlights Sales (€m) ● +29% sales versus 1H’09 (former Dow acrylic assets accounting for +8%) 2,913 2,259 ● EBITDA at €378m • x 3 versus 1H’09 • +22% above FY’09 EBITDA 1H’09 1H’10 ● 13% EBITDA margin versus 5.6% in 1H’09 • 17% excluding Vinyls • Versus 10.6% in 1H’08 (previous high) EBITDA (
Slide 16: Repositioning Arkema
Repositioning Arkema Sales by region 1H’09 1H’10 RoW RoW Asia Asia 18% 17% (18.5% w/o North North Dow acrylics) America 23% America 29% €2.3bn €2.9bn sales sales 54% 49% Europe Europe Sales by segment Vinyls Vinyls Performance Performance 23% 20% Products 30% Products 28% €2.3bn €2.9bn sales sales 4
Slide 17: Sales by business unit in 1H'10
Sales by business unit in 1H’10 Vinyl Products Industrial Chemicals Performance Products €569m sales €1,515m sales €820m sales Emulsions 4% Coatex 3% Hydrogen Peroxide 4% Fluorochemicals 9% Thiochemicals 8% Functional Additives 9% Pipes & Profiles 3% PMMA 11% Specialty 5% Vinyl Compounds 4% Chemical
Slide 18: 1H'10 key figures
1H’10 key figures 1H’10 vs in €m (except EPS) 1H’09 1H’10 1H’09 Sales 2,259 2,913 +29% EBITDA 127 378 x 3.0 EBITDA margin 5.6% 13.0% Recurring operating income (10) 236 na Net income (group share) (149) 159 na Adjusted EPS (diluted) (0.91) 2.60 na 18
Slide 19: +29% sales versus 1H'09
+29% sales versus 1H’09 Sales in €m Scope of FX rate - business translation Volumes effect +8.4% +15.8% +1.2% Price +3.6% Mainly former Still below Dow pre-crisis acrylic assets 2,913 levels 2,259 1H’09 1H’10 19
Slide 20: EBITDA bridge
EBITDA bridge EBITDA in €m Others Inventory Environment +40 +7 Absence +127 of 1H’09 Internal negative achievements effect 378 +77 Mainly volume-driven Growth, 127 M&A, fixed cost savings 1H’09 1H’10 Strong contribution from internal achievements 20
Slide 21: Positive free cash flow despite strong sales increase
Positive free cash flow despite strong sales increase in €m Working capital as % of sales** EBITDA 378 Working capital variation (131) 19.0% 16.2% Recurring capex (113) 14.7% Tax & cost of debt (71) Continuing Restructuring outflows (33) optimization Others (16) 06/30/09 12/31/09 06/30/10 Free cash
Slide 22: Outlook
Outlook
Slide 23: Increased target
Increased target ● Market conditions in July in line with 2Q’10 ● Traditional seasonality of our businesses • 2Q>3Q>4Q and 1H>2H • Impact of August and December in Europe ● Strong benefits from internal projects ● EBITDA target significantly increased for full year 2010 with an EBITDA that should ex
Slide 24: On track to deliver 2014 targets
On track to deliver 2014 targets ● Further reducing fixed costs • Lowering break-even in Vinyls by an additional €50m • Offsetting most part of inflation on fixed costs ● Growing our presence in Asia • 22% sales in 2014(e) ● Developing new high-value added products • €400m sales in 2014(e) from new
Slide 25: A new roadmap 2010-2014
2010-2014 A new roadmap
Slide 26: Enhanced portfolio
Enhanced portfolio 2005 2009 5-year proforma* target Strategy Contributors Focus on 14% Cost and partnerships competitive assets Vinyl 21% Products 24% Emergence of a global New acrylic assets 20% integrated player acquired from Dow Acrylics & Coatex 17% 4 first-class Industrial growth platforms 42%
Slide 27: Balanced geographic position
Balanced geographic position Sales by region 2005 2009 proforma* 5-year target 5% 4% 5% 13% 17% 22% 57% 50% 41% 25% 29% 32% Europe North America Asia RoW 27 * Including the acrylic assets acquired from Dow
Slide 28: Capitalizing on Asia and innovation
Capitalizing on Asia and innovation Reinforce presence in Asia Fuelling the innovation pipe Target 22% of sales in Asia in 2014 €400m sales from new high-margin products by 2014 ●Successfully achieve current projects in China ● Keep strong momentum on •HFC-125 successful start up in 2Q’10 • Solution
Slide 29: 5-year (2014) mid-cycle targets
5-year (2014) mid-cycle targets 5 year (2014) EBITDA margin mid-cycle target* Performance Products 15% Industrial Chemicals w/o Acrylics 17% Acrylics 14 to 15% Vinyls 8 to 9% Corporate (1)% Arkema >13.5% 29 * Normalized environment
Slide 30: 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