Slide 1: Arkema - ODDO BHF 2020 Forum
ARKEMA ODDO BHF 2020 FORUM LYON, JANUARY 2020
Slide 2: Arkema in a nutshell
INNOVATIVE “@& CHEMISTRY
Slide 3: A leader in specialty chemicals and advanced materials
A LEADER IN SPECIALTY CHEMICALS AND ADVANCED MATERIALS €8.8 bn €237 m sales R&D expenditure 11.6 % 3 REBIT margin regional R&D hubs 20,000 €561 m €2.50 employees capital expenditure (1) dividend per share 55 136 +12%/y countries production sites since 2007 2018 figures (1) Recurring (€500 m) and exc
Slide 4: Breakdown by division and region
BREAKDOWN BY DIVISION AND REGION FY’18 SALES BY DIVISION FY’18 SALES BY REGION Specialties 70% 24% 31% 38% 45% Intermediates 30% 31% 31% High Performance Materials Europe 23% Adhesives 22% Advanced Materials North America Industrial Specialties Asia and RoW Coating Solutions 4 ODDO BHF FORUM – JANUA
Slide 5: An excellent 2018 performance
AN EXCELLENT 2018 PERFORMANCE EBITDA REBIT MARGIN +6% In €m 0.7x EBITDA +6% +30 bps Sales Net debt € 8.8 billion € 1 billion 1,474 1,391 11.3% 11.6% +22.5% +100 bps Adjusted net ROACE* income 15.1% € 725 million 2017 2018 2017 2018 * Return on average capital employed 5 ODDO BHF FORUM – JANUARY 2020
Slide 6: Steady growth in different macro-economic environments
STEADY GROWTH IN DIFFERENT MACRO-ECONOMIC ENVIRONMENTS EBITDA AND EBITDA MARGIN Adjusted EPS In €m In € 1,474 1,391 9.51 1,189 7.82 1,057 5.56 15.8% 16.7% 16.7% 13.8% 4.23 2015 2016 2017 2018 2015 2016 2017 2018 6 ODDO BHF FORUM – JANUARY 2020
Slide 7: Best-in-class cash generation
BEST-IN-CLASS CASH GENERATION Free cash flow and EBITDA to cash conversion rate NET DEBT excluding €700m hybrid bond In €m In €m 1,482 1,379 565 499 1,056 1,006 442 426 Gearing 35% 35% 24% 20% Cash conversion 42% 36% 41% 38% Net debt / EBITDA 1.3x 1.2x 0.8x 0.7x 2015 2016 2017 2018 2015 2016 2017 20
Slide 8: Dividend: a key component of shareholder return policy
DIVIDEND: A KEY COMPONENT OF ARKEMA’S SHAREHOLDER RETURN POLICY DIVIDEND in €/share Policy of paying stable to growing dividend every year 26% payout ratio in 2018 2.50 2.30 2.05 3.3% yield 1.85 1.90 (based on the share price as of 31/12/2018) +8.7% growth 2018 vs. 2017 ~ +8% on average since 2014 2
Slide 9: An ongoing value creative transformation
AN ONGOING VALUE CREATIVE TRANSFORMATION
Slide 10: Our strategic and operational priorities
OUR STRATEGIC AND OPERATIONAL PRIORITIES Innovation Acquisitions High-growth countries Commercial excellence Operational excellence Corporate social responsibility Digitalization 10 ODDO BHF FORUM – JANUARY 2020
Slide 11: Portfolio evolution since 2006
PORTFOLIO EVOLUTION SINCE 2006 (TURNOVER*) €8.8 bn €4 bn EV Acquisitions 8x EBITDA 2018 €5.9 bn €3.9 bn Adhesives, Sartomer, Cray Valley, some of The Dow ~40% of legacy Chemical Company assets, Sunke… assets divested Divested activities Vinyls, Cerexagri €2.2 bn tin additives, activated carbon, Sunc
Slide 12: Invest in future growth
INVEST IN FUTURE GROWTH CAPEX PLAN STRONG CAPEX DISCIPLINE In €m ~5.5% recurring capex as a % of Group sales ~€610m ~€500m exceptional capex over 2018-2021 €561m Exceptional capex €430m x2 thiochemicals Specialty polyamides Recurring expansion plan in Asia capex capacities in Malaysia (incl. +50% gl
Slide 13: Bolt-on acquisitions in High Performance Materials
BOLT-ON ACQUISITIONS IN HIGH PERFORMANCE MATERIALS ARRMAZ PROCHIMIR LAMBSON LIP Specialty surfactants High performance thermobonding Photoinitiators for curing technology used Danish leader in tile adhesives, for crop nutrition, mining and adhesives films for automotive, in 3D printing, electronics,
Slide 14: Recent M&A projects accelerating transformation towards specialties
RECENT M&A PROJECTS ACCELERATING TRANSFORMATION TOWARDS SPECIALTIES Share of specialties Specialties Specialties (as a % of Group sales) 71% 74% 74% 9-month 63% 9-month 2019 sales 44% 2019 sales proforma* 2005 2012 Today proforma* Closing of Closing of Closing of Proposed disposal** of Closing of Ar
Slide 15: 2023 long-term objectives
2023 LONG-TERM OBJECTIVES A global specialty player focused on Delivering strong margins and adhesives and advanced materials (1) cash generation Bostik 2023 objectives Exceed 1/3 of Group sales REBIT margin EBITDA to free cash More than double sales vs 2016 conversion 11.5% to 12.5% 12.5% to 13% RE
Slide 16: Bostik journey on track with further growth potential
BOSTIK JOURNEY ON TRACK WITH SIGNIFICANT FURTHER GROWTH POTENTIAL SALES GROWTH EBITDA (€M) In €bn > +30% Mid-term EBITDA % target 15% in 4 years Engineering adhesives ~300 ~150 2.0 1.5 Non-woven Sealants 2014 2018 2014 2018 2020e (pre-acquisition level) (pre-acquisition level) Ongoing acquisition fl
Slide 17: Arkema corporate social responsibility policy
ARKEMA CORPORATE SOCIAL RESPONSIBILITY POLICY OUR 3 COMMITMENTS: Deliver sustainable Manage our activities Cultivate an open solutions driven by as a responsible dialogue and close innovation manufacturer relations with our stakeholders Solutions that address Safety of people and Ethics societ
Slide 18: Arkema corporate social responsibility performance
ARKEMA CORPORATE SOCIAL RESPONSIBILITY PERFORMANCE OUR PERFORMANCE - KEY ILLUSTRATIONS Safety Environment TRIR PSER Number of Number of process - 54 % - 38 % - 41 % - 12 % accidents per events per million million worked worked hours hours 4.4 1.3 <1,2 <3 Greenhouse Volatile Chemical Net energy 2018
Slide 19: 3Q and 9M 2019 results
INNOVATIVE “@& CHEMISTRY
Slide 20: 3Q'19 performance
3Q’19 PERFORMANCE SALES EBITDA ADJ. NET INCOME FREE CASH FLOW In €m In €m In €m In €m 9m’19 72% +2.9% €2.19 + €138m SPECIALTIES YoY ADJ. EPS vs. 2018 2,167 2,216 374 385 227 218 186 166 3Q'18 3Q'19 3Q'18 3Q'19 3Q'18 3Q'19 3Q'18 3Q'19 As of 1 January 2019, the Group applies the IFRS 16 standard “Leas
Slide 21: 3Q'19 financial highlights
3Q’19 FINANCIAL HIGHLIGHTS +2.3% YoY (€2,167m in 3Q’18) €2,216m sales Slight growth in volumes of +0.7% 3% up against the record performance of 3Q’18 €385m EBITDA Driven by the strong increase of specialties (1) 17.3% in 3Q’18 17.4% EBITDA margin Stable at a high level despite a more challenging and
Slide 22: 3Q'19 sales bridge
3Q’19 SALES BRIDGE SALES In €m Scope Volumes Price of business Currency +0.7% (4.4)% +3.9% +2.0% Growth driven by Lower propylene Acquisition of Stronger US dollar Coating Solutions, in Coating ArrMaz, mainly against the euro Thiochemicals and Solutions niches in High Challenging Performance market
Slide 23: High Performance Materials (48% of group sales)
HIGH PERFORMANCE MATERIALS (48% OF GROUP SALES) 3Q’19 KEY FIGURES 3Q’19 SALES DEVELOPMENT 3Q’19 SALES BY BUSINESS LINE In €m 3Q’18 3Q’19 Change Volumes (4.1)% 21% Bostik Sales 987 1,068 +8.2% 30% Prices +3.0% EBITDA 162 182 +12.3% Performance Additives Currency +2.1% EBITDA margin 16.4% 17.0% 49% Te
Slide 24: Industrial Specialties (28% of group sales)
INDUSTRIAL SPECIALTIES (28% OF GROUP SALES) 3Q’19 KEY FIGURES 3Q’19 SALES DEVELOPMENT 3Q’19 SALES BY BUSINESS LINE In €m 3Q’18 3Q’19 Change Volumes +2.8% 14% PMMA Sales 646 606 (6.2)% 31% Prices (10.8)% Thiochemicals EBITDA 165 152 (7.9)% 28% Currency +1.7% Fluorogases EBITDA margin 25.5% 25.1% 27%
Slide 25: Coating Solutions (24% of group sales)
COATING SOLUTIONS (24% OF GROUP SALES) 3Q’19 KEY FIGURES 3Q’19 SALES DEVELOPMENT 3Q’19 SALES BY BUSINESS LINE In €m 3Q’18 3Q’19 Change Volumes +7.0% Sales 527 535 +1.5% Prices (10.7)% Coating Resins 47% and Additives EBITDA 65 70 +7.7% 53% Currency +2.3% EBITDA margin 12.3% 13.1% Acrylics Rec. opera
Slide 26: 9M'19 key figures
9M’19 KEY FIGURES In €m (except EPS) 9M’18 9M’19 ∆ Sales 6,609 6,685 +1.1% EBITDA 1,187 1,162 -2.1% EBITDA margin 18.0% 17.4% Recurring operating income (REBIT) 860 775 -9.9% REBIT margin 13.0% 11.6% Adjusted net income 607 523 -13.8% Adjusted EPS (in euros) 7.97 6.87 -13.8% Free cash flow 243 381 N
Slide 27: Excellent cash generation in 9M'19
EXCELLENT CASH GENERATION IN 9M’19 RECONCILIATION OF EBITDA TO NET CASH FLOW HIGHLIGHTS In €m 9m’18 9m’19 Limited increase of working capital EBITDA 1,187 1,162 ● Tight management, activity levels and Current taxes (162) (144) favorable impact of lower raw materials costs on inventories Cost of debt
Slide 28: 9M'19 net debt bridge
9M’19 NET DEBT BRIDGE 1.2x LTM EBITDA In €m Includes €124 m WC cash outflow, which 34% gearing represents a significant improvement versus the prior year’s €308 m 110 1,770 outflow 38 30 190 619 158 1,164 (381) 1,006 Favorable refinancing of €400 m hybrid bonds in June 2019 ● €400 m tender offer at
Slide 29: 2019 outlook
2019 OUTLOOK 4Q’19 macro-economic environment should remain challenging and volatile ● Ongoing geopolitical uncertainties are weighing on global demand ● Cautious inventory management expected from our customers Continued focus on internal momentum and implementation of our long term strategy In 4Q’
Slide 30: 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