Slide 1: Arkema, a company under transformation
Arkema, a company under transformation June 2008
Slide 2: Arkema overview
Arkema overview Sales*: €5,675 m 2007 Sales by segment** EBITDA*: €518 m Performance 30% Products Industrial EBITDA margin*: 9.1% Chemicals 45% Net income (group share)*: €122 m 25% Vinyl Products Net debt*: €459 m 2007 Sales by geographic region Capital employed*: €3,263 m North R&D expenses: aroun
Slide 3: Three business segments
Three business segments Industrial Chemicals • Intermediates for a large number of industrial sectors • World leading positions 6 BUs incl. “Acrylic Specialty Polymers” (Coatex) 347 51% 2007 33% EBITDA* Performance Products • Innovative chemical solutions 16% • Among world leaders in niche markets 3
Slide 4: Well diversified end-markets
Well diversified end-markets chemical industry**, 15-20%* construction coating & adhesives, 5-10%* electronics, automotive, packaging, general industry energy, paper, environment, health - hygiene & beauty, <5%* animal nutrition & agrochemicals, sport & leisure, infrastructure & sign posting 4 * % o
Slide 5: A rapid and radical transformation
2005-2010 A rapid and radical transformation 5
Slide 6: Implementing a winning long term strategy
Implementing a winning long term strategy Large cost reduction Market-driven innovation Accelerating business development in Asia Portfolio management to speed up transformation 6
Slide 7: Large cost reduction
Large cost reduction Target of cumulative fixed cost €500m cost savings target by 2010 savings by 2010 vs 2005 in €m Net EBITDA impact of +€200m Fixed cost savings €500m Cumulative cost savings of €230m Inflation on fixed costs €(200)m over two years Volume loss from restructuring €(100)m Headcount
Slide 8: Market-driven innovation
Market-driven innovation Long term 2007: R&D projects are already bearing results breakthrough 15% R&D expenses around 3% of sales Product and process 40% development Several success stories 33% New products PMMA Capstock 12% Transparent technical polymers New processes High temperature polyamides S
Slide 9: Committed to sustainable development
Committed to sustainable development Developing innovative materials for the future Materials for renewable energy technology Nanostructured materials Raw materials from renewable resources Process intensification Producing more with less energy Polyamides from renewable resources Mini channels reac
Slide 10: Accelerating business development in Asia
Accelerating business development in Asia % of sales in Asia World-class sites 20% 13% Over €50m capex per year (€m) 747 Building on Changshu platform (China) 2007 2012(e) 2007 2008 2009 2010 80kt H2O2 Kynar® (Shanghai) (Changshu) Other projects: Polyamides Acrylic Acid in India (MOU) (Changshu) Tec
Slide 11: Portfolio management to speed up transformation
Portfolio management to speed up transformation Reshaping portfolio Shut-down loss-making units More focused (€120m impact on revenue) €380m of revenue divested €380m of revenue sold Cerexagri 02/07 €202m Specialty amines (Riverview) 05/07 €56m Urea formaldehyde resins 11/07 €101m Higher share New p
Slide 12: Strong balance sheet: a real competitive advantage
Strong balance sheet: a real competitive advantage €1.1 bn credit line at 32.5 bp until 2012 Gearing maintained below 40% with Coatex acquisition 40% gearing Strong conversion of EBITDA into cash 48% 122 Pre-spin off 580 212 NR items (€m) 459 Liabilities well covered by provisions 324 Net debt and w
Slide 13: 2007 Full year results
2007 Full year results 13
Slide 14: Results significantly above guidance
Results significantly above guidance Sales (€m) EBITDA (€m) & EBITDA margin 9.1% 7.3% +4% excluding 5,664 5,675 conversion and perimeter effects 411 518 +26% +0.2% 2006 2007 2006 2007 Net income Free cash flow* (€m) group share (€m) 186 Recurring 115 net income x2.7 128 122 79 +62% Net income 45 200
Slide 15: Major contribution from internal projects
Major contribution from internal projects +€17m +€7m €518m +€83m + €83m coming from internal projects Others Market Savings environment (11) €411m Volume New loss from businesses Internal Price increases restruct- compensated for uring (42) projects higher raw +26 material and energy costs (€m) +110
Slide 16: Vinyl Products: good demand & cost savings
Vinyl Products: good demand & cost savings 2007 performance 2007 initiatives Implementation of chlorochemical consolidation plan (€m) 2005 2006 2007 ∆* €44m capex in 2007 Sales 1,387 1,379 1,418 +2.8% +€30m EBITDA impact since 2005 EBITDA 20 38 90 x2.4 3 new restructuring plans downstream EBITDA mar
Slide 17: Industrial Chemicals: strong resistance of results
Industrial Chemicals: strong resistance of results 2007 performance 2007 initiatives Key partnerships in Asia (€m) 2005 2006 2007 ∆* fluorochemicals with Daikin Sales 2,406 2,494 2,529 +1.4% 3 new restructuring plans EBITDA 316 267 289 +8% -302 positions Downstream acquisitions EBITDA margin 13.1% 1
Slide 18: Performance Products: double-digit EBITDA margin
Performance Products: double-digit EBITDA margin 2007 performance 2007 initiatives 5 new restructuring plans launched in Functional (€m) 2005* 2006 2007 ∆** Additives and Polyamides Sales 1,907 1,784 1,723 (3.4)% -263 positions EBITDA 109 156 184 +18% R&D emphasis on renewable materials EBITDA margi
Slide 19: Strong and structural improvement of cashflow
Strong and structural improvement of cashflow CAPEX In €m 2006 2007 336 325 340 EBITDA 411 518 31 25 chlorochemical 44 consolidation 48% growth & CAPEX (recurring*) (305) (281) 52% productivity recurring Tax & financial result (31) (93) (€m) 305 281 315 capex* 52% 48% maintenance ∆ WC 16 47 Others 4
Slide 20: 2008 Target confirmed
2008 Target confirmed 20
Slide 21: Keeping a strong focus on internal improvement
Keeping a strong focus on internal improvement A more challenging environment Target built with a strong level of internal projects EBITDA Projects with an impact in 2008 Chlorochemicals, Loison, Chantonnay, Dorlyl, Productivity +€42m Vlissingen, Feuchy, Pierre-Bénite, Lacq, Carling, €5,675m €518m M
Slide 22: Excellent set of results in Q1'08
Excellent set of results in Q1’08 Q1’07 Q1’08 Variation Sales 1,488 1,492 +0.3% EBITDA 134 159 +19% EBITDA margin 9.0% 10.7% Operating income (recurring) 80 100 +25% Non recurring items (27) 5 Adjusted net income 52 67 Net income (group share) 44 72 +64% Net debt (end of year) 459 576 22
Slide 23: Q1'08 highlights
Q1’08 highlights An excellent set of results which EBITDA (€m) & EBITDA margin demonstrates clearly our ability to resist in a more challenging environment 10.7% 9.0% EBITDA margin of Industrial Chemicals & Performance Products > 13.5% 134 159 +19% Benefits from a quick and in-depth transformation Q
Slide 24: Confirm 2008 target
Confirm 2008 target A more challenging environment High raw material and energy costs €m 10% Unfavorable euro/US dollar exchange rate 9.1% 600 Remaining pressure on Vinyl Products margins as C2 price continue to increase 500 7.3% 518 6.2% In-depth transformation continues 400 +26% 411 Implementation
Slide 25: Towards 2010 Growth platforms implemented
Towards 2010 Growth platforms implemented 25
Slide 26: On track to reach 2010 targets
On track to reach 2010 targets A clear path forward 12 %* Variable 12% EBITDA margin Portfolio costs Growth 9.1% Productivity Working capital at 18% of sales 2007 2010 A portfolio with sound 2010 portfolio and EBITDA margin growth profile beyond 2010 Industrial Vinyl Vinyl Products at 18% of sales C
Slide 27: Building a major chemical player
Building a major chemical player 2007: successful milestones delivered Excellent set of results 20 new projects launched to prepare the future First dividend proposed Confirming sound and ambitious targets 10% EBITDA margin in 2008 12% EBITDA margin in 2010 Phase by phase transformation for the long
Slide 28: 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 inaccurate