Arkema Sa · EURONEXT:AKE
Arkema Sa — Shareholder Meeting (May 2012)
55 slides from Arkema Sa's shareholder meeting presentation, May 23, 2012
Slide 1: Annual General Meeting May 23, 2012
ARKEMA The world is our inspiration > ~ e a Annual General M eeting May 23, 2012
Slide 2: 2011: Accelerating Group's transformation
2011 Accelerating Group’s transformation
Slide 3: Arkema in 2011
Arkema in 2011 EBITDA (€m) & Sales (€m) EBITDA margin (%) Adjusted net income (€m) 5,900 17.5% 1,034 16.6% 574 4,869 809 431 + 21% + 33% 2010 2011 2010 2011 2010 2011 Free cash flow (€m) Recurring Capex (€m) 311 Vinyl activities 377 320 243 Sales (€m) : 1,090 Employees : 2,630 2010 2011 2010 2011 In
Slide 4: A year of major portfolio change
A year of major portfolio change Acquisitions Cessions ~ € 1 bn ~ € 1 bn Total Specialty Resins Project to divest Vinyl activities* 2010 • €848m sales • €1,090m sales • Closing expected mid-2012 sales Alkoxylates from Seppic • €53m sales Hipro and Casda (China) • $230m sales * Project remains in par
Slide 5: Higher profitability and greater resilience
Higher profitability and greater resilience 17.5% 16.6% Continuing activities EBITDA* (€m) and EBITDA margin (%) 11.6% 1,034 10.1% 9.9% 809 8.7% Worldwide crisis 484 428 373 341 2006 2007 2008 2009 2010 2011 Net debt unchanged at ~ 600 m€ * From 2006 to 2009, figures exclude results of the whole Vin
Slide 6: Share price in 2011
Share price in 2011 80 Arkema joins the CAC Next 20 index in Paris Euronext 70 60 Arkema +1.5% 50 SBF 120 -16.2% 40 30 31/12/2010 31/03/2011 30/06/2011 30/09/2011 31/12/2011 In 5 years, Arkema +41 % SBF 120 -41% Peers* -13% * AkzoNobel, BASF, Clariant, DSM, Lanxess, Solvay 6 - ARKEMA / Assemblée Gén
Slide 7: Start-up of a fluoropolymer unit in China
Start-up of a fluoropolymer unit in China PVDF Kynar® unit started in March 2011 in Changshu Announcement of a 50% capacity increase due to start mid-2012 Applications : coatings, new energies, high performance materials, etc. PVDF unit 7 - ARKEMA / Assemblée Générale 2012 7
Slide 8: Development of Changshu industrial platform in China
Development of Changshu industrial platform in China 1st industrial site of the Group in the world Start-up of Coatex unit (dispersants / thickeners) in August 2011 Opening of first R&D center in China scheduled at the end of 2012 On-going projects in fluorogases, fluoropolymers and in emulsions Coa
Slide 9: Thiochemicals platform project in Malaysia
Thiochemicals platform project in Malaysia Production unit for sulfur specialties (oil and gas applications) and for bio-methionine (used for animal nutrition) World-scale unit with innovative bio process Partnership with South Korean company CJ CheilJedang Investment of about US$200m (Arkema’s shar
Slide 10: Participation in a fluorspar mine in Canada
Participation in a fluorspar mine in Canada Strategic integration in the raw material for the fluorochemical chain Partnership with Canadian company Canada Fluorspar Inc. (CFI) Based in St Lawrence (Newfoundland) St Lawrence (Canada) 10 - ARKEMA / Assemblée Générale 2012 10
Slide 11: Acquisition of specialty resins of Total
Acquisition of specialty resins of Total Closing on July 1st 2011 and successful integration Full-year Sales of €850m Strategic strengthening of the acrylic downstream Arkema becomes one of the worldwide leaders in paint and coating materials 11 - ARKEMA / Assemblée Générale 2012 11
Slide 12: Acquisition of specialty alkoxylates from Seppic
Acquisition of specialty alkoxylates from Seppic World-scale site in Antwerpen (Belgium), €53m sales with 50 employees Complement surfactant product range of CECA Niche markets: warm mix asphalt for roads and industrial detergents Anwerpen site 12 - ARKEMA / Assemblée Générale 2012 12
Slide 13: Acquisitions in bio-sourced polyamides in China
Acquisitions in bio-sourced polyamides in China Two Chinese companies: Casda Biomaterials and Hipro Polymers (total sales: US$230m and 750 employees) Casda, worldwide leader for sebacic acid derived from castor oil Hipro, polyamides 10 producer, will strengthen Arkema’s unique position in specialty
Slide 14: Project to divest Vinyl activities
Project to divest Vinyl activities * Focusing the Group on specialty chemicals Vinyl activities: €1bn sales, 2,630 employees Creation of a European leader of the PVC industry, with strong balance sheet and a coherent industrial project Saint-Fons Project to sell to Klesch group, specialized in commo
Slide 15: Examples of innovations in 2011
Examples of innovations in 2011 Flexible tubes Ultra flexible Rilsan® HT: specialty polyamides Replacement of metal in automotive parts Celocor™ : coating resins Partial replacement of titanium dioxide in waterborne paints 15 - ARKEMA / Assemblée Générale 2012 15
Slide 16: Examples of innovations in 2011
Examples of innovations in 2011 Altuglas Shield-up®: PMMA Replacement of glass in vehicle sun-roof Module de filtration Membranes for nano filtration: fluoropolymers Drinking water treatment 16 - ARKEMA / Assemblée Générale 2012 16
Slide 17: Arkema, 1st French chemical player
Arkema, 1st French chemical player 3 main on-going investments: • Modernization of Carling site (2010-2012): €40m • Maintain sulfur supply for Thiochemicals activities in Lacq (2012-2014): €33m • Conversion of mercury electrolysis at Jarrie(2011-2013): €60m 2/3 of R&D efforts made in France 5 R&D ce
Slide 18: Lacq 2014 project
Lacq 2014 project Maintain sulfur supply for Thiochemicals activities in Europe for an additional 30 years after depletion of Total gas field at Lacq Total investment of about €150m*, of which €33m for Arkema * This project is supported by a €5.6m subsidy from the Ministry of Industry (OSEO Grand Em
Slide 19: Environment and safety, the focus of our concern
Environment and safety, the focus of our concern Safety : Environment : 11.3 2,3 8.3 5.9 5.9 5.7 4.4 2,7 4.5 2,4 2.4 2.1 2.8 2005 2008 2009 2010 2011 2005 2008 2009 2010 2011 Total Recordable Injury Rate Greenhouse gas emissions (mt eq CO2) 19 - ARKEMA / Assemblée Générale 2012 19
Slide 20: 2011 Financial results: A record year
2011 Financial results A record year
Slide 21: Summarized income statement
Summarized income statement In €m 2010 2011 Variation Sales 4,869 5,900 +21% EBITDA 809 1,034 +28% EBITDA margin 16.6% 17.5% Recurring operating income 562 762 +36% Recurring net income (continuing operations) 431 574 +33% Net income (discontinued operations) (78) (587) n.m. Net income (Group share)
Slide 22: +21% sales year-on-year
+ 21% sales year-on-year Sales (€m) Scope of FX rate – Price business translation effect + 9% - 2% + 14% Specialty 5,900 1.0 resins from 4,869 Total 2010 2011 22 - ARKEMA / Assemblée Générale 2012 22
Slide 23: Industrial Chemicals: strong growth and high profitability
Industrial Chemicals: strong growth and high profitability Sales (€m) EBITDA (€m) & + 24% EBITDA margin (%) 18.6% 18.0% 3,928 3,171 732 571 2010 2011 2010 2011 + 24% sales Integration of Total specialty resins (€408m sales in 2nd half 2011) High contribution of Fluorochemicals High unit margins in a
Slide 24: Performance Products: successful turnaround driven by innovation and Asia
Performance Products : successful turnaround driven by innovation and Asia Sales (€m) EBITDA (m€) & EBITDA margin (%) + 16% 17.4% 1,952 1,680 15.5% 339 260 2010 2011 2010 2011 Excellent performance now best-in-class + 4% volumes Excellent positions on fast-growing niche markets Very positive price e
Slide 25: Vinyls activities subject to divestment project
Vinyls activities subject to divestment project * Impact on 2011 financial statements : 2011 2011 incl. Transaction continuing (€m) vinyl activities impact operations Sales 6,990 1,090 5,900 EBITDA 1,010 (24) 1,034 Net income – Group share (19) (587) 568 €(505)m non-recurring expenses + €(82)m net i
Slide 26: Working capital and capex
Working capital and capex Working capital / sales (%) Recurring capex without Vinyls* (€m) 311 350 13.8% 15.0% 13.3% 243 2010 2011 2011 2010 2011 2012e at constant pro forma scope of • Not including €50m business • Including resins from non recurring capex in Total and alkoxylates 2012e related to s
Slide 27: Strong balance sheet
Strong balance sheet Shareholders’ equity €2.2bn Net debt €603m Gearing 27% Available financing sources: • New syndicated credit line of €700m signed in July 2011 • New bond of €230m issued in April 2012 (3.85% interest rate) • More than €1.4bn financing source available after 4 years Maturity of fi
Slide 28: Good 1st quarter 2012, with a significant increase versus end 2011
Good 1st quarter 2012, with a significant increase versus end 2011 Sales (€m) EBITDA (€m) + 14% 289 253 1,623 1,424 145 1Q’11 1Q’12 1Q’10* 1Q’11 1Q’12 €253m EBITDA close to historical high of 1st quarter 2011 • 2nd best performance in a first quarter • Well above 4th quarter 2011 (€158m) 15.6% EBITD
Slide 29: Dividend
Dividend Dividend (€/share) 1.3 + 15% / year +30% dividend to reflect strong performance of continuing 1.0 operations and balance sheet 0.75 2.4% dividend yield 0.6 0.6 (based on share price at end 2011) 2007 2008 2009 2010 2011* Dividend policy: “Arkema intends to pay a stable to reasonably rising
Slide 30: 2012 priorities
2012 priorities Benefits from acquisitions FY contribution of Specialty Resins Development of Seppic alkoxylates Integration of Hipro and Casda (China) Close project to divest Vinyl activities* Continue strong pace of development in Asia FY contribution of units started in 2011 (Kynar®, Coatex) Star
Slide 31: Strong growth platform for the future
Strong growth platform for the future
Slide 32: Our ambition: a top world specialty chemical player
Our ambition : a top world specialty chemical player Accelerating growth • Innovation • Emerging countries • Bolt-on acquisitions • Operational excellence Well established growth platform Profitability restored Spin off 2005 2010 2015 32 - ARKEMA / Assemblée Générale 2012 32
Slide 33: High quality portfolio
High quality portfolio Six main product lines of specialty chemicals Limited number of players on small to mid-size segments Proprietary technologies and know-how Attractive development opportunities in emerging countries Portfolio well positioned to benefit from mega-trends 33 - ARKEMA / Assemblée
Slide 34: Global leadership positions
Global leadership positions Coatings PMMA Thiochemicals #3 #2 #1 Fluorochemicals Specialty PVDF polyamides #2 # 1/2 #1 34 - ARKEMA / Assemblée Générale 2012 34
Slide 35: Well balanced portfolio and geographical coverage
Well balanced portfolio and geographical coverage 2011 sales by business line * 2011 sales by region * Coatings Performance 35% Asia and Row Europe Products 26% 33% 42% €6.5 bn €6.5 bn 32% Industrial Chemicals Industrial North America Specialties 32% * Proforma sales including full year contribution
Slide 36: Our goal: bring solutions for tomorrow's challenges
Our goal : bring solutions for tomorrow’s challenges World population will 1 billion people do not have hit 9 billion in 2050 access to drinking water World population (in bn) Access to drinking water % of population 9.3 80 6.8 60 2.5 40 1950 2010 2050 1970 2010 2050 The demand in energy will more t
Slide 37: Well positioned on tomorrow's challenges
Well positioned on tomorow’s challenges New energies / Water Lightweight Estimated Renewable Energy efficiency management materials growth* Coatings + 3.5% PMMA + 3.5% Thiochemicals + 4.5% Fluoropolymers PVDF + 7% Specialty Polyamides + 5% * Average annual growth rate. Arkema internal estimates 37 -
Slide 38: Example of fluoropolymers: PVDF Kynar
Example of fluoropolymers : PVDF Kynar® Oil and gas Water treatment Intermediate Raw material product 142b VF2 Kynar® Fluorspar Fluorogas Fluoropolymer High performance Gaz fluoré Monomère coating Li-ion batteries Photovoltaic 38 - ARKEMA / Assemblée Générale 2012 38
Slide 39: PVDF Kynar: a high performance polymer
PVDF Kynar® : a high performance polymer Performances PEKK PVDF PVDF exceptional properties • Durability Price High HT PA performance PA 11 polymers PA 12 PA 10 • High temperature resistance • Excellent chemical resistance PMMA • Easy to process Engineered polymers EVA • UV and moisture barrier Comm
Slide 40: Fluoropolymers: a global footprint
Fluoropolymers : a global footprint Philadelphia Calvert-City Serquigny Kyoto Pierre-Bénite Changshu Arkema, the only PVDF player with a manufacturing footprint on the three continents Production sites R&D centers 40 - ARKEMA / Assemblée Générale 2012 40
Slide 41: Outlook
Outlook 41 - ARKEMA / Assemblée Générale 2012 41
Slide 42: Upgrade long-term targets (2016)
Upgrade long-term targets (2016) Sales €8 bn Previous target: EBITDA €1,250m €1,050m in 2015 Gearing ~ 40% In a normalized environment 42 - ARKEMA / Assemblée Générale 2012 42
Slide 43: Very well balanced breakdown in 2016
Very well balanced breakdown in 2016 2016e sales by business line 2016e sales by region Coatings Performance 30% Asia and Row Europe Products 40% 30% 35% 35% Industrial Chemicals Industrial North America Specialties 30% Arkema internal estimates 43 - ARKEMA / Assemblée Générale 2012 43
Slide 44: Governance
Governance 44 - ARKEMA / Assemblée Générale 2012 44
Slide 45: Activity of the Board of Directors and its Committees in 2011
Activity of the Board of Directors and its Committees in 2011 6 meetings of the Board of Directors • Attendance rate: 88% • Close of the 2010 accounts • Assessment of the Board of Directors • Review of various strategic projects Audit and Accounts Nominating, Compensation Strategy Committee Committe
Slide 46: Annual assessment of the Board of Directors
Annual assessment of the Board of Directors Board assessment done by an external consultant every 3 years • Assessment done beginning 2012 by Spencer Stuart • Report presented to the Nominating, Compensation and Corporate Governance Committee The performance of the Board has globally improved since
Slide 47: Compensation of the officers
Compensation of the officers Compensation of the Chairman and Chief Executive Officer • 2011 fixed compensation unchanged since 1 January 2008: €610,000 • Variable compensation due for the year: €915,000 • Achievement rate of financial targets (variable compensation): 100% • No attendance fee • Fixe
Slide 48: Performance shares and stock options
Performance shares and stock options PERFORMANCE SHARES 2010 2011 2012 Number of allocated shares 204,500 200,000 240,000 To Chairman and CEO 18,800 16,400 26 000 Number of beneficiaries 640 640 714 Allocation authorised for 3 years by the General Meeting of 15 june 2009: 3% of share capital Effecti
Slide 49: Employee share ownership
Employee share ownership 2012 share capital increase 5.50% 5.08% 2010 share capital increase 3.64% 2.26% 2008 share capital increase 0.70% Dec-06 déc-06 Dec-07 déc-07 Dec-08 déc-08 Dec-09 déc-09 Dec-10 déc-10 Dec-11 déc-11 Successful 2012 share capital increase • Subscription from 6,150 employees an
Slide 50: Presentation of resolutions
Presentation of resolutions 50 - ARKEMA / Assemblée Générale 2012 50
Slide 51: Proposed resolutions: Ordinary General Meeting
Combined General Meeting of 23 May 2012 Proposed resolutions Ordinary General Meeting 1st and 2nd resolutions Approval of the Company’s financial statements and consolidated statements for year ended 31 December 2011 3rd resolution Allocation of the net income for year ended 31 December 2011 4th res
Slide 52: Proposed resolutions: Ordinary General Meeting
Combined General Meeting of 23 May 2012 Proposed resolutions Ordinary General Meeting 6th resolution Agreement referred to in Article L.225-42-1 of the French Commercial Code Agreement concerning the contractual indemnity of Chaiman and Chief Executive Officer, on the basis of performance criteria 7
Slide 53: Proposed resolutions: Extraordinary General Meeting
Combined General Meeting of 23 May 2012 Proposed resolutions Extraordinary General Meeting 12th resolution Authorisation to increase the share capital with shareholders’ preferential subscription right 13th resolution Authorisation to increase the share capital without shareholders’ preferential sub
Slide 54: Proposed resolutions: Extraordinary General Meeting
Combined General Meeting of 23 May 2012 Proposed resolutions Extraordinary General Meeting 16th resolution Authorisation to increase share capital reserved to employees 17th resolution Authorisation to grant stock options 18th resolution Authorisation to grant performance shares free of charge 19th
Slide 55: 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