Arkema Sa · EURONEXT:AKE
Arkema Sa — Shareholder Meeting (June 2015)
44 slides from Arkema Sa's shareholder meeting presentation, Jun 2, 2015
Slide 1: 2015 Annual General Meeting
2015 Annual General Meeting 2 June 2015
Slide 2: Strategy and 2014 highlights
Strategy and 2014 highlights
Slide 3: Arkema in 2014
Arkema in 2014 € 6.0bn 14,280 10 R&D sales employees centres € 784m 13.2% 89 Presence in 40 186 patent 1,200 EBITDA EBITDA margin production sites countries applications researchers Reinforced by the acquisition of Bostik on 2 February 2015 € 1.5bn € 158m 4,880 sales EBITDA employees 3
Slide 4: A global presence
A global presence Europe 41 % 45 production sites 6 R&D centres 8,555 employees North America 35 % 28 production sites 2 R&D centres 2,609 employees Asia and rest of the world 24 % 16 production sites 2 R&D centres 3,116 employees Sales by region 4
Slide 5: A clear strategy to support our ambition
A clear strategy to support our ambition OUR AMBITION: « Become a world leader in advanced materials » INNOVATION Unique know-how focused on 6 megatrends BOLT-ON EMERGING ACQUISITIONS COUNTRIES Reinforce market Towards Customer Entrepreneurial Operational position and balanced presence enhance profi
Slide 6: Successfully executing our strategy in 2014
Successfully executing our strategy in 2014 Acquisition in High Performance Materials World-scale unit in Thiochemicals Platform in Kerteh (Malaysia) World-scale unit in Acrylics Stake in Sunke in China Acceleration of development Elium®, Rilsan ® HT, in composites Rilsan® Clear, PEKK, etc. Further
Slide 7: Three major investments in 2014
Three major investments in 2014 BOSTIK THIOCHEMICALS SUNKE N°3 worldwide in 1st world-scale platform Competitive production base adhesives with a strong in Asia in acrylic monomers in Asia mid- and long-term growth potential Enterprise value Investment of around Acquisition price (1st line) €1.74bn
Slide 8: Bostik in a nutshell
Bostik in a nutshell N°3 worldwide in adhesives €1.53bn sales Created in 1889 4,880 employees Previously part of the Total group Acquisition closed on 2 February 2015 A well-balanced portfolio (sales by segment) Powerful brands Construction & Consumer #3 worldwide 45% €1.53bn sales 55% Industry #3-4
Slide 9: An acquisition closed in a tight timetable
An acquisition closed in a tight timetable 2014 2015 19 2 September October November December January February Announcement Closing of the project Information-consultation process in France at Bostik, Total and Arkema Approval by antitrust authorities Financing €1.74bn enterprise value Hybrid bond S
Slide 10: An attractive adhesives market
An attractive adhesives market €33bn* worldwide market Industry Construction Grand Public Consumer 69% of global market 25% of global market 6% of global market Tapes & labels Floor and walls Do-It-Yourself stores Transport Tiles Food stores Non-woven Sealants Electronics New energies Structural bon
Slide 11: Bostik, solutions for everyday life
Bostik, solutions for everyday life Wall systems Roofing systems Energy efficiency, insulation, Photovoltaic and integrated ventilation, sealants solar thermal solutions, lamination Flooring systems Acoustic and vibration control, artificial turf adhesives Sealing systems 11
Slide 12: Growing global presence
Growing global presence Sales by region Global presence (number of sites by country) 48 sites* 40 countries Compiègne R&D centre 29% Shanghai R&D centre €1.53bn 50% Europe USA 16 China 21% 8 Turkey 2 2 Morocco 1 1 Mexico 2 1 Proforma 2014 figures Egypt India Milwaukee 5 SEA R&D centre Brazil 3 Europ
Slide 13: A delivering strategy
A delivering strategy Emerging countries R&D Brands Increase presence in Reinforce Rationalize the portfolio higher-growth countries innovation investments of brands • Start-up of new units in • New regional R&D centre Malaysia and Brazil opened in Shanghai (China) in 2012 • Ramp-up in China and Egy
Slide 14: A business resilient to changes in economic cycles
A business resilient to changes in economic cycles Low capital intensity Resilience in downturn Capex as % of sales 2008-2009 EBITDA variation (%) 10% 5.5% > 6% Bostik peer* Chemical 3%* average industry average 0% Bostik (10%) Adhesives sector Bostik Arkema Chemical (20%) + Bostik industry (target)
Slide 15: Bostik acquisition will create significant value
Bostik acquisition will create significant value Mid-term target Long-term target +30% 14 to 15% EBITDA EBITDA margin €158m 10.3% 2014 2017e 2014 2020e Proforma 2014 figures A smooth integration • Strong commitment and great spirits of the teams • Promising 2015 first results, fully in line with ann
Slide 16: Malaysia: Group's largest industrial project since the spin-off
Malaysia: Group’s largest industrial project since the spin-off Around €200m investments First-rate technical success with successful start-up beginning of 2015 Current good demand in animal nutrition, refining and petrochemical markets Smooth ramp-up from 2Q’15 in line with expectations 16
Slide 17: Acrylics: a growing market
Acrylics: a growing market Attractive end-markets Strong growth in Asia Coatings Demand by region Expected growth* Paints Coatings Europe 22% +1 to 2% per year Superabsorbents North America Diapers 25% Feminine hygiene +2 to 3% per year Others Water treatment Asia Adhesives 52% +7 to 8% per year (Ch
Slide 18: Now a global player in Acrylics
Now a global player in Acrylics Asia (Sunke) Production joint-venture with Jurong Chemical Access to 160kt/year acrylic North America Europe acid (since end 2014) Carling (France) Acquisition of Clear Lake Extension until January 2016 beginning of 2010 Historical production base of of the period to
Slide 19: Innovation in 2014
Innovation in 2014 Strength of a composite, LED: Fluoropolymers for lithium recyclability new generation acrylic batteries in Asia of thermoplastics glass for LED lighting Ranked in the 100 most At the World Cup New generation innovative companies for with Nike and Puma for engine parts the 4th cons
Slide 20: Innovation: future prospects
Innovation: future prospects New transparent and rigid Development New generation biosourced polyamides of the Kepstan® PEKK flame-retardant adhesives for smartphones and tablets “polymer of the extreme” for aircraft interior Genius-Fix: Flexible 3D New hydrophilic high green strength, electronics p
Slide 21: Continuous progress on safety
Continuous progress on safety Total recordable injury rate 11.3 8.4 Launch of 7.1 Arkema Safety Academy 5.9 5.9 5.7 Safety training for all Group employees end of 2015 4.4 3.4 2.8 2020 target revised 1.9 from 2.0 to 1.7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Spin-off 21
Slide 22: Sustainable development: a Group priority
Sustainable development: a Group priority Further reduce the Promote individual Develop openness environmental and collective development and dialogue footprint of the Group’s of the Group’s men with stakeholders activities and women 2020 targets (versus 2012) to 86% of employees Close to 1,000 “Com
Slide 23: Our involvement in sailing
Our involvement in sailing Our know-how at the service of performance and innovation • Lalou Roucayrol: 2nd in the 2014 Route du Rhum in Multi 50 A renewed partnership • Renewal for 4 years • New partnership in Mini 6.50 with Arkema’s innovative materials (Elium® composites, AEC Polymers structural
Slide 24: Financial results
cay oo 2 Financial results : a
Slide 25: 2014 key figures
2014 key figures In €m (except EPS) 2013 2014 Variation Sales 6,098 5,952 (2.4)% EBITDA 902 784 (13.1)% EBITDA margin 14.8% 13.2% Recurring operating income 588 447 (24.0)% Adjusted net income 368 239 (35.1)% Net income (Group share) 168 167 (0.6)% Adjusted EPS* 5.67 3.62 (36.2)% * For 2013, the adj
Slide 26: Sales bridge
Sales bridge Sales (€m) Scope FX rate – Volumes Price of business translation effect 6,098 +1.0% (2.4)% (0.7)% (0.3)% 5,952 ● +2.3% excluding ● Unfavorable market ● Acquisition of a stake impact of the conditions in in Sunke (Acrylics) closure of Chauny Fluorogases (Fr) activity ● Divestment of Coat
Slide 27: Key drivers of 2014 performance
Key drivers of 2014 performance EBITDA (€m) 902 Fluorogases Acrylics Other Polyamides business lines 784 ● Challenging ● Unit margins ● High basis of ● +8.5% EBITDA market from close to comparison in 2013 versus 2013 conditions mid-cycle early in polyamide 12 2014 down to ● Good positions in ● Condi
Slide 28: Performance by segment
Performance by segment High Performance Materials In €m 2013 2014 • Basis of comparison of 2013 in polyamide 12 and maintenance shutdown in 2Q’14 in Mont (Fr) Sales 1,842 1,826 • Performance of the other business lines up supported EBITDA 316 284 by good innovation momentum • EBITDA margin at a good
Slide 29: Focusing on growth capex
Focusing on growth capex Capex 2014 recurring capex: €346m (€m) • Growth project: finalization of the investment plan in Acrylics in the US (US$110m over 3 years) 481 470 ~450 • “Ambition” program to optimize the supply chain • Maintenance, safety and environment capex Bostik 2014 non recurring cape
Slide 30: Maintain a strong balance sheet
Maintain a strong balance sheet Financing of Bostik acquisition Debt maturity profile (€m) • €350m share capital increase with preferential 900 subscription rights • €700m perpetual hybrid bond issue • Coupon of 4.75% / year 700 • €700m bond issue 500 480 • Coupon of 1.50% / year Renewal of the €900
Slide 31: Solid 1st quarter 2015 performance
Solid 1st quarter 2015 performance Sales (€m) EBITDA (€m) 1,871 237 • EBITDA up excluding Bostik 1,523 201 contribution • +22.8% including Bostik • Benefits from favorable contribution of €272m currencies • (2.0)% volumes ** • EBITDA margin at 12.7% despite acrylics cycle and • (3.1)% prices Bostik’
Slide 32: 2015 outlook
2015 outlook Macro-economic assumptions • Market conditions expected to remain volatile and contrasted with different dynamics depending on geographic regions and product lines • Trends in FX rates (mainly US$/€) expected to remain favorable offsetting, at least, low-cycle unit margins in acrylic mo
Slide 33: Dividend
Dividend Dividend (€/share) Reminder of dividend policy: “aims to reach a 30% payout ratio on adjusted net income 1.85 1.85* and not to reduce dividend” 1.8 Dividend maintained at €1.85 (payout ratio of 51%) 1.3 • Despite lower adjusted net income • Despite a higher number of shares outstanding 1.0
Slide 34: Arkema's share
Arkema’s share 100 80 68.34 60 40 26.54 20 0 mai-06 May-06 mai-07 May-07 mai-08 May-08 mai-09 May-09 mai-10 May-10 mai-11 May-11 mai-12 May-12 mai-13 May-13 mai-14 May-14 mai-15 May-15 Spin-off Performance since spin-off Current market capitalization ~€5.0bn (18 May 2006)* (€1.7bn at the date of the
Slide 35: Governance
cay oo 3 Governance : a
Slide 36: Board of Directors
Board of Directors Composition and activity Main topics reviewed in 2014 • 11 directors at the date of this meeting • The Group’s strategy and its implementation • 90% independence rate* • Follow-up of the Group’s main organic • 27% women growth projects (Thiochemicals in • 1 director representing s
Slide 37: Strong involvement of the Board in Bostik acquisition
Strong involvement of the Board in Bostik acquisition Strong mobilization of the directors for organization of meetings • Project discussed at several Board meetings • 3 meetings fully dedicated to the project and scheduled in a tight timetable • 1 meeting of the Board, 1 of the Strategy Committee a
Slide 38: Nominating, Compensation and Corporate Governance Committee
Nominating, Compensation and Corporate Governance Committee Composition and activity Main topics reviewed in 2014 • 4 independent members • Composition of the Board and its Committees • Thierry Morin (Chairman) • Independence of the directors • Diversity and balanced gender representation • Victoire
Slide 39: Changes in the Board functioning in 2015
Changes in the Board functioning in 2015 Changes regarding the Strategy Committee • Replaced in 2015 by an annual seminar of the Board of Directors dedicated to the Group’s strategy • Objectives: • Involve all directors in the discussions relating to the Group’s strategic orientations • Give all dir
Slide 40: Renewal of terms of office and appointment
Renewal of terms of office and appointment Victoire de Margerie François Énaud Renewal (6th resolution) Renewal (7th resolution) Independent director Independent director Member of the Nominating, Compensation Member of the Nominating, Compensation and Corporate Governance Committee and Corporate Go
Slide 41: Compensation principles of the Chairman and Chief Executive Officer
Compensation principles of the Chairman and Chief Executive Officer Principles unchanged since 2012, date of the renewal of the Chairman and CEO’s term of office as director Structure of the compensation in 2014 LONG-TERM COMPENSATION: PERFORMANCE SHARES 3 stringent criteria 37.6 % 32.5 % FIXED PART
Slide 42: Elements of 2014 compensation submitted to shareholders' opinion
Elements of 2014 compensation submitted to shareholders’ opinion (9th resolution) (in euros) Amount Description Fixed compensation 750,000 Unchanged since May 2012 • 14% less than in 2013 and 34% less than in 2012 • Quantitative criteria: 73% of the variable part, Variable compensation 688,500 quali
Slide 43: Audit and Accounts Committee
Audit and Accounts Committee Composition and activity Main topics reviewed in 2014 • 3 independent members • Review of the financial statements and financial • Philippe Vassor (Chairman) information • Isabelle Boccon-Gibod • Review of internal control procedures and risk (permanent representative of
Slide 44: 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