Arkema SA · EURONEXT:AKE
Arkema SA — FY2006 Earnings Presentation
31 slides from Arkema SA's earnings presentation, Mar 14, 2007
Slide 1: Results reflect momentum in transformation
Results reflect momentum in transformation Paris, March 14th, 2007 2006 overview and mid-term perspectives
Slide 2: Create step by step a strong company
Create step by step a strong company 2008 – 2010 Be a competitive 2006 – 2008 and growing Creation chemical player of Arkema Profitability Set mid-term objectives Oct. 2004 – May 2006 Build solid foundations Independence 10-15% annual EBITDA growth* Successful Spin off Strong Balance Sheet 2 * Calcu
Slide 3: 2006 overview
2006 overview (( Well above targets )) 3
Slide 4: Financial targets exceeded
Financial targets exceeded Targets Achieved +10 to 15% +20% EBITDA growth Î €390 to 408m €425m Net income €45m >0 Î (including €93m (group share) of NR items) Cash flow €79m (before pre-spin off > 0 from 2007 Î non-recurring items*) in 2006 Gearing 30 to 40% Î 28%** Note: All financial figures inclu
Slide 5: A year of significant achievements
A year of significant achievements Spin off Chlorochemicals Headquarters Cerexagri • +45% since listing (end 2006) Restructuring • 6 major plans before spin off Lavéra / Fos (France) Paris (France) Disposal • 6 new plans launched in 2006 after spin off Fluorochemicals Technical Polymers Thiochemical
Slide 6: Key figures
Key figures EBITDA (€m) & Operating income (€m) & Sales (€m) EBITDA margin* Operating income margin* +7.2% +3.6% +65% +6.2% +20% +2.2% 5,866 5,710 +2.7% 425 211 355 128 2005 2006 2005 2006 2005 2006 Sales by segment** EBITDA by segment** Performance Vinyl Products Performance Vinyl Products Products
Slide 7: Financials: a highly positive trend
Financials: a highly positive trend In €m 2004 2005 2006 ’05 -’06 Variation Sales 5,318 5,710 5,866 +2.7% EBITDA (recurring) 301 355 425 +20% EBITDA margin 5.7% 6.2% 7.2% Operating income (recurring) 11 128 211 +65% NR items (605) (514) (93) Net income (group share) (618) (427) 45 Net debt (end of y
Slide 8: Improved profitability of Performance Products
Improved profitability of Performance Products Vinyl Products Chlorochemicals restructuring plan on track 2.8% • Still limited benefit from plan as expected 1,387 1,379 1.4% • Volume reduction due to closure of loss-making units 38 • Good demand for PVC in Europe 20 2005 2006 2005 2006 Industrial Ch
Slide 9: Sales growth supported by price increases
Sales growth supported by price increases 0.8% (1.5)% 3.8% (0.2)% (0.2)% Organic €5,866m €(202)m Growth Volume loss Scope Conversion from effect €5,710m restructuring €5,664m Prices Cerexagri Related to shutdown (disposal of loss-making operations Feb. 1, 07) +2.7% Sales* Sales* Consolidated 2005 20
Slide 10: High impact of productivity initiatives
High impact of productivity initiatives €120m €(24)m €(44)m €18m €425m €(14)m Volume loss from €411m restructurings Inflation on Others Cerexagri €355m fixed costs (disposal Feb. 1, 07) Fixed costs savings + Price initiatives + Growth projects - Acrylics cycle - Raw material & Of which €28m EBITDA e
Slide 11: A positive cash flow (before pre-spin off NR items)
A positive cash flow (before pre-spin off NR items) EBITDA Positive cash balance already at 7.2% EBITDA margin €425m Cash flow** + €79m €16m €(24)m Working capital Provisions Tax reduction €(23)m & others Cost of debt €(10)m Cerexagri €(79)m CAPEX* disposal €615m €(305)m €(110)m Less than 1% €536m o
Slide 12: CAPEX in line with guidance
CAPEX in line with guidance CAPEX by segment* €336m CAPEX include €31m for Vinyl Products consolidation plan Vinyl Products Performance (part of pre-spin off NR items) Products 26% 23% Balanced spendings between maintenance €336m and growth & productivity 51% IRR of major growth projects between 15-
Slide 13: End 2006: already a different company
End 2006: already a different company Successful spin off Achievements exceed targets Reduced fixed costs base A simplified and more efficient organization Many value creating projects across the company Further significant potential of EBITDA growth Very strong balance sheet (( A solid basis to bui
Slide 14: 2007 priority
2007 priority (( Sustain the pace of transformation )) 14
Slide 15: 2007: a very active start
2007: a very active start January Pipes & Profiles Restore competitiveness* 28 positions Chantonnay* (France) Thiochemicals 48 positions Site optimization* Lacq* (France) +30% DMDS capacity Acrylics MOU with Essar (JV 50/50) World-scale plant in Asia India Access to electricity based Exeltium LT sup
Slide 16: 2007 priorities: a clear path forward
2007 priorities: a clear path forward Æ Finalize the implementation of plans launched in 2006 (Chlorochemicals, Loison, headquarters, …) Lower fixed cost Æ Implement new productivity initiatives announced in early 2007* base (Chantonnay, Lacq, Dorlyl, Carling) Æ Continue to upgrade manufacturing ass
Slide 17: Example of turnarounds
Example of turnarounds Thiochemicals Specialty Chemicals • Closure of sulfonyls in Riverview (US) Lower fixed cost • Closure of Pierrrefitte (F) • Restructuring of MLPC (F) base • Reduction by 20% of G&A expenses • Convert Lacq into a competitive site (F)* • Building on the site of Beaumont(US) • Ex
Slide 18: '06-'08: in line with the 10-15% annual EBITDA growth
‘06-‘08: in line with the 10-15% annual EBITDA growth* Mid-year review presentation - September 2006 €540m End 2006 €475m Additional productivity measures + 20% €355m Î Offset ± ¾ of inflation on fixed costs Î ~ €100m fixed costs savings achieved in 2008 vs. 2005 +€80m Other Additional productivity
Slide 19: Arkema in 2010
Arkema in 2010 (( A competitive player of the chemical industry )) 19
Slide 20: Accelerate the implementation of strategy
Accelerate the implementation of strategy 2010 Strategic priorities • Manufacturing excellence • Increased presence in Asia • Market-driven innovation Solid foundations Culture & Strong Lean Sustainable organization Balance Sheet corporate development Oct. 2004 20
Slide 21: Rely on solid foundations
Rely on solid foundations Culture & Strong Lean Sustainable organization Balance Sheet corporate development Æ Increased Æ Low gearing Æ Reduce cost of Æ Take advantage of accountability corporate new regulations Æ Very limited cash out Æ « The right people in of liabilities (pensions, Æ Renewable m
Slide 22: Achieve manufacturing excellence
Achieve manufacturing excellence Develop world-scale sites Amongst the largest sites worldwide • Carling: Acrylics 240KT Æ 275KT • Lavéra: VCM 475KT Æ 525KT • Jarrie: H 2 O2 105KT Æ 115KT • Shanghai: H 2 O2 38KT Æ 77KT Production efficiency Acrylics, Carling (France) • Safety performance (-15% per y
Slide 23: Increase presence in Asia
Increase presence in Asia 13% of Arkema’s sales High value of LT industrial partnerships • Daikin (Japan): Fluorochemicals development 8% of Arkema’s workforce • Shanghai Cooking (China): H2O2 expansion • Essar (India): MOU to produce Acrylics in India Main sites in Asia Focused approach Example of
Slide 24: Enhance market-driven innovation
Enhance market-driven innovation (( 50% of R&D spent in Performance Products )) • Nanostructured materials Corporate • Products from renewable resources 4 main cornerstones Research • Materials for energy/environment applications • Process intensification • DMDS for fumigation of soils Industrial De
Slide 25: A more focused, less cyclical portfolio
A more focused, less cyclical portfolio Disposals of non core assets ~ €400m of sales • €200m (sales) - Divestment of Cerexagri • €90m (sales) - Process of disposal of UF resins Mid 2008 • €100m (sales) - Small size non-core activities Acquisitions in our core activities €500 to 800m of sales • Smal
Slide 26: Financial targets for 2010
Financial targets for 2010 EBITDA margin at 12%* Working capital down to 18% of sales Gearing below 40% (( Dramatic improvement of financials in 5 years )) 26 * In mid-cycle conditions under a normalized environment
Slide 27: 12% EBITDA margin in 2010
12%* EBITDA margin in 2010 12%* 7.2% 6.2% 5.7% EBITDA 4.9% margin** €425m €355m €301m €249m EBITDA in €m** 2003 2004 2005 2006 2010 High cycle Mid cycle Mid cycle environment Low cycle Vinyl Products Industrial Chemicals Performance Products Cyclical Moderately cyclical Non-cyclical * In mid-cycle c
Slide 28: 2005-2010 EBITDA evolution
2005-2010 EBITDA evolution 2010 EBITDA margin at 12%* Fixed costs savings +3 points + Fixed costs savings: €500m Of which €280m launched as of today - Volume loss from restructuring: €(100)m - Inflation on fixed costs: €(200)m Variable costs savings • Energy savings initiatives • Optimize yields +0.
Slide 29: Our ambition
Our ambition 3 strategic priorities • Achieve manufacturing excellence • Increase presence in Asia 2010 targets • Enhance market-driven innovation y EBITDA margin at 12%* y Working capital down to 18% of sales y Gearing below 40% Strong foundations • Entrepreneurial culture • Pro-active organization
Slide 30: Q&A session
Q&A session ARKEMA
Slide 31: 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