Arkema Sa · EURONEXT:AKE
Arkema Sa — KeplerCheuvreux Autumn Conference 2017
39 slides from Arkema Sa's conference presentation, Sep 14, 2017
Slide 1: Autumn Conference 2017 KeplerCheuvreux
Autumn Conference 2017 KeplerCheuvreux Paris, 14 September 2017 Key elements from July 2017 Capital Markets Day Second quarter 2017 results and 2017 outlook
Slide 2: Key elements from July 2017 Capital Markets Day
Key elements from July 2017 Capital Markets Day
Slide 3: A strong track record...
A strong track record... Share of specialties Sales outside Europe EBITDA Free cash flow In % of sales In % of sales In €m In % of EBITDA 72% 64% 1,189 36% 43% 44% 355 20% 2006 2016 2016 2006 2016 2016 2006 2016 2016 2006 2016 Arkema 3 ROADSHOW – SEPTEMBER 2017
Slide 4: ... including a significant step-up in financials
... including a significant step-up in financials Sales EBITDA REBIT margin Free cash flow In €m In €m In % In €m 7.5 +426 +27% 1,189 +220bp 9.7% 6.0 +52% x3 7.5% 784 +145 2014 2016 2016 2014 2016 2016 2014 2016 2016 2014 2016 2016 4 ROADSHOW – SEPTEMBER 2017
Slide 5: Significant achievements since last Capital Markets Day
Significant achievements since last Capital Markets Day... Malaysia New step in the attractive Further streamlining Expansion in Globalization of the adhesives and sealants market of the portfolio PVDF Kynar® Thiochemicals footprint Development of Bostik Divestments of activated carbons +25% product
Slide 6: Main levers of transformation
Main levers of transformation Organic growth Portfolio management Innovation, partnerships €3.7 bn sales acquired and geographic expansion €2.2 bn sales divested Productivity plans Lower capital intensity Reduction of working capital Offset 1/2 to 2/3 of inflation 5.6% of sales in 2016 14.5% in 2016
Slide 7: Arkema at a glance (2016)
Arkema at a glance (2016) A strong portfolio of businesses A global and balanced footprint €7.5 bn sales Specialties 72% 19,700 employees 24% 34% 36% 46% Present in 50 countries 30% 30% 133 industrial sites High Performance Materials Europe 25% Advanced Materials 21% Adhesives North America €222 m R
Slide 8: Our portfolio of businesses
Our portfolio of businesses High Performance Materials Industrial Specialties Coating Solutions Advanced Materials Fluorogases Acrylic Monomers Upstream of PVDF Upstream of PMMA Performance Coatings 46% Adhesives 30% Engineering plastic 24% of sales of sales of sales Performance Coatings Thiochemica
Slide 9: 2016 sales by end markets
2016 sales by end markets Emerging Home 24% Lightweighting Design 19% Regulations Low-VOC 19% countries Megatrends 11% efficiency and insulation Consumer Coatings Chemicals & Building & Goods Plastics Construction 7% Access 5% Lightweighting Mobility 7% 8% to clean water New energies Others Automoti
Slide 10: Leading positions on all key product lines
Leading positions on all key product lines Rank Business Lines Main peers #3 Bostik (adhesives and sealants) Henkel, Sika, H.B. Fuller #1 Specialty Polyamides Evonik, Ems-Chemie, Ube #1 PVDF (fluoropolymers) Solvay, Kureha #1 Sartomer (UV curing resins) Allnex, Miwon #1 Thiochemicals Chevron Phillip
Slide 11: Our vision
Our vision A global specialty chemical group strongly focused on adhesives and advanced materials, fostering customers innovation in megatrends and sustainability, and delivering best-in-class financial, operational and CSR performance. 11 ROADSHOW – SEPTEMBER 2017
Slide 12: Long-term financial objectives (2023)
Long-term financial objectives (2023) REBIT margin EBITDA to free cash conversion 11.5% to 12.5% 35% Under strict financial discipline ROCE Net debt Rating at least 10% <2x EBITDA Solid investment grade Defined in normalized market conditions and under current IFRS rules 12 ROADSHOW – SEPTEMBER 2017
Slide 13: Maintain disciplined capital allocation policy
Maintain disciplined capital allocation policy Organic growth M&A Dividend Support development Reinforce A key element of of main growth pillars current portfolio shareholder return policy Bolt-on acquisitions with Stable to growing significant synergies and divestments Targeted capex dividend every
Slide 14: Our strategic priorities
Our strategic priorities Innovation Acquisitions Emerging countries Commercial excellence Operational excellence Corporate social responsibility Digitalization 14 ROADSHOW – SEPTEMBER 2017
Slide 15: Accelerate growth of Advanced Materials and Adhesives
Accelerate growth of Advanced Materials and Adhesives 2016 2023 Specialties Specialties 72% >80% High Performance Materials Industrial Specialties Coating Solutions Advanced Materials + Adhesives 15 ROADSHOW – SEPTEMBER 2017
Slide 16: Reinforce footprint in higher growth countries
Reinforce footprint in higher growth countries 30% 33% 33% 36% 2016 2023 34% 33% Europe North America Asia and RoW 16 ROADSHOW – SEPTEMBER 2017
Slide 17: 3 major growth pillars
3 major growth pillars Adhesives Advanced Materials Thiochemicals 17 ROADSHOW – SEPTEMBER 2017
Slide 18: A wave of significant projects supporting our objectives
A wave of significant projects supporting our objectives Adhesives Advanced Materials Thiochemicals Further organic growth and cost Build and start the PEKK plant in Mobile Double site capacity at Kerteh optimization of Bostik “legacy” (Alabama, USA) (Malaysia) Development of Den Braven and CMP Cont
Slide 19: Planned calendar of these projects
Planned calendar of these projects Start-up Ramp-up Development of Den Braven and CMP PEKK plant in Mobile Series of PVDF expansions Significant polyamide 11 expansion in Asia Molecular sieves in Honfleur +30% Sartomer capacity in Asia Doubling of Kerteh in Thiochemicals Announced today 2016 2017 20
Slide 20: Adhesives
Adhesives Market Fragmented market and ongoing consolidation by the leaders Barriers to entry, resilience and low capital intensity Substitution of mechanical fasteners by adhesives Increasing needs for home efficiency and insulation Arkema / Bostik Participate in the consolidation of the market Foc
Slide 21: Adhesives long-term ambition
Adhesives long-term ambition Exceed 1/3 of Group sales More than double sales versus 2016 in completing GDP+ organic growth by an ambitious bolt-on acquisition program 12.5% to 13% REBIT margin Maintain capex level below 3% of sales 21 ROADSHOW – SEPTEMBER 2017
Slide 22: Advanced Materials
Advanced Materials Ranking of polymers pricing and performance Arkema’s products Market Bio-based PEKK Consolidated market with limited number of players Significant opportunities from megatrends Lightweighting, clean water, new energies, 3D printing PVDF High-performance Rilsan® HT polymers Pebax®
Slide 23: Advanced Materials long-term ambition
Advanced Materials long-term ambition Exceed 25% of Group sales 14% to 15% REBIT margin Support long-term growth of bio-based polyamide 11 with ~€300 m exceptional capex in Asia R&D expenses at 4% of sales, up to 8% in certain applications 23 ROADSHOW – SEPTEMBER 2017
Slide 24: Targeting excellence is our driver
Targeting excellence is our driver Commercial excellence Operational excellence Accelerate our long-term growth Objective: €30 m to €40 m gain /year Program to be launched at the To offset at least 1/2 of inflation on fixed costs 2017 worldwide Senior Management convention Key account management Peo
Slide 25: A strong and balanced debt structure
A strong and balanced debt structure €3.8 bn of financial resources €2.6 bn of financial resources with maturity beyond 3 years In €m In €m 1.5% 1.5% 4.75% 700 900 4.0% 3.85% 900 900 2,230 700 500 480 3.125% 700 150 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Mid- and LT bonds* Credit lin
Slide 26: Dividend policy
Dividend policy Dividend In € per share Arkema confirms its policy 2.05 aiming to pay a stable 1.8 1.85 1.85 1.9 to growing dividend each year 1.3 The dividend has grown 1 at 13% per year on average since 2010 37% payout in 2016 2010 2011 2012 2013 2014 2015 2016 2016 A key element of shareholder re
Slide 27: Second quarter 2017 results and 2017 outlook
Second quarter 2017 results and 2017 outlook
Slide 28: 2Q'17 key take-aways
2Q’17 key take-aways +12.6% up YoY €2,198 m sales +8.9% at constant scope and FX +17% up on strong 2Q’16 (€341 m) €398 m EBITDA An all time high in a quarter 17.5% in 2Q’16 18.1% EBITDA margin Confirms Group’s ability to adapt to a rising raw materials context +28% up YoY €172 m adjusted net income
Slide 29: Excellent year-on-year quarterly performance
Excellent year-on-year quarterly performance EBITDA REBIT Adjusted EPS Net debt In €m In €m In € In €m +16.7% +27.4% 34% gearing 398 +24.9% 2.28 1,496 1,471 341 286 1.79 229 2Q'16 2Q'17 2Q'16 2Q'17 2Q'16 2Q'17 31/03/17 30/06/17 29 ROADSHOW – SEPTEMBER 2017
Slide 30: A very significant growth in first half 2017
A very significant growth in first half 2017 EBITDA REBIT Adjusted EPS Net debt In €m In €m In € In €m Stable +17.1% +26.2% +31.5% 753 1,482 1,471 643 530 4.22 420 3.21 1H'16 1H'17 1H'16 1H'17 1H'16 1H'17 31/12/16 30/06/17 30 ROADSHOW – SEPTEMBER 2017
Slide 31: Breakdown by segment and region
Breakdown by segment and region 1H’17 sales by segment 1H’17 sales by region Specialties 71% 24% 33% 45% 38% 31% 29% High Performance Materials Europe Coating Solutions North America Industrial Specialties Asia and RoW 31 ROADSHOW – SEPTEMBER 2017
Slide 32: 2Q'17 key figures
2Q’17 key figures In €m (except EPS) 2Q’16 2Q’17 CHANGE Sales 1,952 2,198 +12.6% EBITDA 341 398 +16.7% EBITDA margin 17.5% 18.1% Recurring operating income (REBIT) 229 286 +24.9% REBIT margin 11.7% 13.0% Adjusted net income 134 172 +28.4% Net income – Group share 147 160 +8.8% Adjusted EPS (in euros
Slide 33: 2Q'17 sales bridge
2Q’17 sales bridge Sales In €m Scope Volumes Price of business Currency +1.8% +7.1% +3.1% +0.5% Benefits from Ongoing actions to Integration of innovation in pass through rising Den Braven Advanced Materials * raw materials and CMP Good demand Gradual Divestments of 1,952 in Asia improvement of acti
Slide 34: High Performance Materials
High Performance Materials 2Q’17 key figures 2Q’17 sales development 2Q’17 sales by Business Line In €m 2Q’16 2Q’17 Change Volumes +2.9% Specialty Sales 879 990 +12.6% 27% 22% Adhesives Prices +2.2% EBITDA 165 174 +5.5% Performance Additives Currency (0.1)% EBITDA margin 18.8% 17.6% 51% Technical Re
Slide 35: Industrial Specialties
Industrial Specialties 2Q’17 key figures 2Q’17 sales development 2Q’17 sales by Business Line In €m 2Q’16 2Q’17 Change Volumes +4.5% 11% PMMA Sales 609 701 +15.1% 31% Prices +9.5% Thiochemicals EBITDA 134 176 +31.3% 32% Currency +1.2% Fluorogases EBITDA margin 22.0% 25.1% 26% Hydrogen Rec. operating
Slide 36: Coating Solutions
Coating Solutions 2Q’17 key figures 2Q’17 sales development 2Q’17 sales by Business Line In €m 2Q’16 2Q’17 Change Volumes (4.0)% Sales 457 499 +9.2% Prices +13.6% Coating Resins 41% and Additives EBITDA 63 64 +1.6% 59% Currency +0.9% EBITDA margin 13.8% 12.8% Acrylics Rec. operating Scope (1.4)% 34
Slide 37: 2Q'17 cash flow
2Q’17 cash flow In €m 2Q’17 EBITDA 398 Change in working capital (1) (42) • Reflects the usual seasonality of working capital and higher sales price Change in fixed assets payables (1) (2) • 15.5% working capital over annualized sales ratio versus 17.2% end of June 2017 (2) Current taxes (81) Cost o
Slide 38: 2017 outlook
2017 outlook Focus on internal drivers ● Growth in adhesives and integration of Den Braven ● Innovation in Advanced Materials and downstream acrylics ● Better prices in Fluorogases ● Arkema will continue to ensure that higher cost of certain raw materials is reflected in its selling prices ● Operati
Slide 39: 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