Arkema Sa · EURONEXT:AKE
Arkema Sa — Shareholder Meeting (May 2014)
51 slides from Arkema Sa's shareholder meeting presentation, May 15, 2014
Slide 1: 2014 Annual General Meeting
2014 ANNUAL GENERAL MEETING May 15th, 2014 arkema ¢ INNOVATIVE “AX CHEMISTRY —
Slide 2: 2013 highlights
2013 highlights
Slide 3: Arkema in 2013
Arkema in 2013 13,908 1,200 employees researchers 90 10 production sites R&D centers €6.1 bn €902 m sales EBITDA €481 m 14.8% capex EBITDA margin 3
Slide 4: Balanced businesses and geographical presence
Balanced businesses and geographical presence Sales breakdown by segment Sales breakdown by region High Europe Performance Incl. France: 11% Incl. Germany: 7% Materials Industrial 30% 33% Specialties 41% 34% North America 37% 20% Asia Coating Solutions 5% China: 9% Rest of the world 4
Slide 5: Among the first 3 leaders in our businesses
Among the first 3 leaders in our businesses POSITION MAIN PLAYERS % GROUP SALES • Evonik #1 Specialty polyamides • Ems 13% #1 PVDF • Solvay #1 Thiochemicals • Chevron Phillips 9% • Akzo Nobel #2 Organic peroxides • United Initiators 4% • Dupont #2 Fluorogases • Honeywell 9% ~ 90% #2 PMMA • Evonik 11
Slide 6: Diversified end-markets
Diversified end-markets Others 6% 21% 17% Consumer goods Chemicals, plastics Health, hygiene and beauty, wellness, sports and leisure, packaging, textile, etc. Electronics 3% Water 4% 14% Industrial coatings Automotive, marine, metal protection, Nutrition 4% adhesives & selants, 3D printing, etc. 6%
Slide 7: Arkema share
Arkema share 100 80 €77.52 60 40 €27.5020 0 May-06 May-07 May-08 May-09 May-10 May-11 May-12 May-13 mai-06 mai-07 mai-08 mai-09 mai-10 mai-11 mai-12 mai-13 Performance since spinoff (May 18th 2006) Current market capitalization ARKEMA +182% €4.9 bn CAC 40 - 8% Evolution since spinoff x3 Data as of A
Slide 8: Share ownership
Share ownership By type of shareholder By geographical region (December 31st, 2013) (December 31st, 2013) Institutional shareholders United Kingdom 16% 86.6% France 35% Rest of 18% Europe Rest of 26% the world 5% Treasury 0.4% shares 4.1% 8.9% North Employees * Individual America shareholders * Acco
Slide 9: Acrylics in the United States
Acrylics in the United States • Capex: US$110 m • 2-EHA in Bayport: new unit started in 2012 • Acrylic acid in Clear Lake (+60 kt): capacity expansion started in Q2 2013 • Methyl acrylate in Clear Lake (+45 kt): start-up of new unit expected in Q2 2014 • Improved yields and stronger competitiveness
Slide 10: Coating resins in China
Coating resins in China • New unit in Changshu started end 2013 • Emulsion polymers for adhesives and coatings markets • Capex: $US 30 m • Close proximity to the new R&D center of Changshu • Upstream integration with the site of Taixing* * After completion of the acquisition project of acrylic asset
Slide 11: Hipro Polymers development in China
Hipro Polymers development in China • Development of Hipro PA10 acquired in 2012 • Biosourced specialty polyamides from castor oil • x3 capacity at Zhangjiagang: start-up in 2013 • Ramp-up from 2014 11
Slide 12: Acquisition of a stake in Ihsedu Agrochem
Acquisition of a stake in Ihsedu Agrochem • Subsidiary of Jayant Agro in India • Producer of castor oil, a strategic raw material for polyamides 10 and 11 • Acquisition of a 24.9% stake • Long-term secured and competitive access to this raw material 12
Slide 13: Accelerate organic peroxides development
Accelererate organic peroxides development • Construction project of the very first plant in Middle-East • Capex: US$ 30 m, start-up expected in 2015 • Secure and supply service for local big petrochemical players • x2 of production capacity at Changshu, start-up expected in 2016 • 15% debottlenecki
Slide 14: Lacq Cluster Chimie 2030
Lacq Cluster Chimie 2030 • Reconversion project of Lacq gas Basin with Total and SOBEGI • Inauguration of the new gas treatment unit (end 2013) • Extraction of the remaining gas in the Lacq field at low flow for another 30 years • Total capex*: €154 m * Invested by Total, SOBEGI and Arkema with the
Slide 15: Electrolysis conversion at Jarrie (Fr)
Electrolysis conversion at Jarrie (Fr) • New membrane electrolysis for chlorine-caustic soda production • Inaugurated on April 30th, 2014 • Capex: €60 m net of subsidies • Site modernization and energy efficiency improvement • Implementation of Technological Risks Prevention Plan (‘PPRT’) • Securiza
Slide 16: Innovation highlights
Innovation highlights • Inauguration of Changshu R&D center • Acquisition of a majority stake in AEC Polymers (methacrylate adhesives) • Research in composite materials reinforced • PEKK, high temperature polyamides, nanostructured PMMA, etc. • Launch of "3D printing" platform • 199 patent applicati
Slide 17: Successful year for innovation
Successful year for innovation • Composite industry: JEC Award • Thermoplastic resins for composite parts • Rilsan® HT: 2013 Pierre Potier Prize • High-temperature resistance and flexibility • Replacement of metal in high-temperature under-the-hood applications, lightweight materials • Top 100 Globa
Slide 18: Innovations in high-potential markets
Innovations in high-potential markets PVDF Kynar® Separators for batteries Elium® resin Paladin® carbon fiber filled Soil fumigation Prototype hood Pebax® Rnew High-range sport equipment Piezotech Rilsan® HT electroactive polymers Electronics Under-the-hood parts 18
Slide 19: Trimaran Arkema-Région Aquitaine sponsorship
Trimaran "Arkema-Région Aquitaine" sponsorship, an illustration of our know-how 19
Slide 20: Financial results
Financial results a. ©
Slide 21: 2013 key figures
2013 key figures In €m 2012 2013 variation Sales 6,395 6,098 -4.6 % EBITDA 996 902 -9.4 % EBITDA margin 15.6% 14.8% Recurring operating income 678 588 -13.3 % Adjusted net income* 441 368 -16.6 % Net income (Group share) 220 168 -23.6 % Adjusted EPS* (in euros) 7.09 5.87 -17.2 % * For 2012, adjusted
Slide 22: Sales bridge
Sales bridge Sales (€m) Scope of FX rate – Volume Price business translation effect 6,395 1.4% (2.0)% (1.9)% (2.1)% 6,098 ● Significant volume ● Temporary ● Divestment of ● Strengthening of growth in Coating challenges in tin stabilizers the euro vs the Solutions Fluorogases US dollar and the Japans
Slide 23: Performance by segment
Performance by segment Sales (€m) EBITDA (€m) EBITDA margin (%) High Performance Materials 2,101 17.2 17.2 ● EBITDA margin maintained at 17.2% 1,842 ● High basis of comparison in 2012 361 ● Market conditions temporary less favorable 316 in oil & gas and photovoltaic ● Benefit from new developments a
Slide 24: Targeted growth capex
Targeted growth capex Capex (€m) • 2013 recurring capex: €329 m 481 • Growth projets: 438 450 • Acrylic acid at Clear Lake (United States) • Coating resins unit in China 365 • "Ambition" program to optimize the supply chain • Maintenance, safety and environment capex • 2013 non-recurring capex: €152
Slide 25: Financing structure
Financing structure €923 m 39% 1.0 x Net debt Gearing Net debt / EBITDA (December 31st, 2013) (net debt / shareholders’equity) Average maturity > 4 years (€m) Rating 700 Standard & Poor’s BBB stable outlook Moody’s Baa2 stable outlook 500 480 120 150 2015 2016 2017 2020 2023 25
Slide 26: First quarter 2014 results
First quarter 2014 results Sales (€m) EBITDA (€m) 1,563 1,523 234 213 • +0.7% • High basis of comparison in at constant scope and FX Fluorogases in 1Q’13 • +3.3% volumes (+7% EBITDA excluding Fluorogases) • -2.6% prix mainly in Fluorogases • 14.0% EBITDA margin 1Q’13 1Q’14 1Q’13 1Q’14 EBITDA (€m) an
Slide 27: 2014 outlook
2014 outlook • Assumptions • Moderate worldwide growth with contrasted market conditions by regions • Stable €/US$ exchange rate versus 2013 (unchanged assumption despite unfavorable rate in 1Q’14) • 2nd quarter 2014: • 2 very large maintenance turnarounds in Thiochemicals (Beaumont, US) and Technic
Slide 28: Dividend
Dividend 1.85 Dividend (€/share) 1.8 • 32% payout on adjusted net income 1.3 • Versus 25% payout in 2012 • In line with target to reach a 30% 1.0 payout ratio on adjusted net income 0.75 • Reflects confidence in mid-term outlook and solid balance sheet 0.6 0.6 • 2.2% dividend yield (based on share p
Slide 29: Financial authorizations proposed to Annual General Meeting
Financial authorizations proposed to Annual General Meeting • Share buy-back (13th resolution) • Authorization to increase share capital with preferential subscription rights (14th resolution) • Authorization to increase share capital by way of public offer without preferential subscription rights a
Slide 30: Long-term outlook
Long-term soutlook 3,
Slide 31: The right strategy to create significant value long-term
The right strategy to create significant value long-term INNOVATION Leverage a unique R&D and applicative know-how focused on megatrends BOLT-ON EMERGING ACQUISITIONS COUNTRIES Reinforce market positions Customer Entrepreneurial Operational Towards completely and enhance profile intimacy culture exc
Slide 32: Step-by-step transformation
Step-by-step transformation A world leader in specialty chemicals and advanced materials 2020 Acceleration of growth • Low GWP Fluorogases (1234yf, 1233zd) • Acquisitions in High 2016 Performance Materials and acrylics downstream Consolidation and • Acrylics in Clear Lake (US) • Innovation breakthro
Slide 33: Cash allocation over 2013-2016
Cash allocation over 2013-2016 €3.6 bn cash resources available Cumulative cash Borrowing Capex flow from capacity €1.7 bn operating activities M&A, dividends and others €931 m €1.9 bn M&A €350 m Dividends €230 m Others Cumulative cash out over 2013 and 2014e. 33
Slide 34: Unique quality of projects to sustain growth
Unique quality of projects to sustain growth High Performance Materials Industrial Specialties Coating Solutions 2016 EBITDA 2016 EBITDA 2016 EBITDA MARGIN TARGET 18% MARGIN TARGET 17% MARGIN TARGET 15% • Technical Polymers: • Thiochemicals: • Acrylics: x3 capacity of Hipro PA10 Construction of a pl
Slide 35: Thiochemicals: reinforce leadership
Thiochemicals: reinforce leadership • #1 worldwide • 9% of Group sales • Strong-growth niche markets: • Oil & gas, animal nutrition • Expected growth: +4.5% /year on average over the coming years Beaumont United States (TX) Lacq France Kerteh Rotterdam Malaysia Netherlands under construction Houston
Slide 36: Kerteh (Malaysia): a growth platform for Asia
Kerteh (Malaysia): a growth platform for Asia Thiochemicals platform* Bio-methionine platform ** CheilJedang Methyl Bio-methionine Sulfur mercaptan Other mercaptans DMDS Animal nutrition Traditional markets Expected growth Oil, gas, petrochemicals 7% / year in Asia * Joint venture Arkema (86%) / CJ
Slide 37: Progress of the Thiochemicals platform construction project in Malaysia
Progress of the Thiochemicals platform construction project in Malaysia Groundbreaking ceremony Launch of the platform Start-up expected in H2 2014 project in partnership with CJ CheilJedang 2011 2012 2013 2014 37
Slide 38: Strategy in Coating Solutions
Strategy in Coating Solutions • Step-by-step construction of an integrated segment • Acquisitions: Coatex (2007), assets from Dow (2010), Total resins (2011) and Resicryl (2012) • Upstream: securisation of a competitive production base in each region • Capex program in United States (Clear Lake, Bay
Slide 39: Acquisition project in acrylics in China
Acquisition projet in acrylics in China • Creation of Sunke, JV with Jurong Chemical, the leader in acrylics in China • Modern and competitive site of Taixing started in 2012 • 2 acrylic acid production lines of 160 kt/year each • 3rd line of 160 kt/year under construction • Transaction highlights*
Slide 40: Asia: 50% of worldwide acrylic acid market
Asia: 50% of worldwide acrylic acid market Chinese acrylic acid market: 1.2 mt Jurong - Taixing Hipro site Changshu (2013e consumption) Others SAP Acrylic polymers 9% 6% 23% UV-curing resins 6% Water treatment 6% Shanghai 10% 22% Adhesives Textiles 18% Paints & coatings • Excellent location of Taixi
Slide 41: A unique opportunity
A unique opportunity • Accelerate the Group’s growth in Asia • Respond to the strong demand of local customers • Become #3 worldwide with a balanced geographical footprint • Accelerate the development of downstream units started in Asia Carling (Fr) Clear Lake (TX) 275 kt/year 270 kt/year Taixing (C
Slide 42: Sustainable growth
Sustainable growth 5 commitments Safety: 2020 targets • Be a top quartile performer in safety • Total recordable injury rate 2.0 in the chemical industry • Peer observation (% of sites) 100% • Reduce significantly the environmental • AIMS* audited sites (% of audited 100% footprint of the Group’s ac
Slide 43: Reinforce operational excellence
Reinforce operational excellence Total recordable injury rate (TRIR)* • 4 priority areas (with and without lost-time) • Rank among the reference chemical 11.3 manufacturers in terms of safety and environment • Position the main production sites in the top quartile in terms of competitiveness 2.8 2.0
Slide 44: Corporate Governance
4 Corporate Governance
Slide 45: The Board of Directors in 2013
The Board of Directors in 2013 • Composition • 11 members • 9 independent members, i.e. 90% in accordance of AFEP-MEDEF Code revised in June 2013 • 2 women • 1 director representing shareholder employees • Activity • 7 meetings • Attendance rate: 92% • Committees Audit and Nominating, Strategy Accou
Slide 46: Renewal and appointment of directors
Renewal and appointment of directors Claire Pedini Fonds Stratégique de Participations 5th resolution Represented by Isabelle Boccon-Gibod 6th resolution Director representing shareholder employees* Patrice Bréant Hélène Vaudroz Candidacy proposed by the company mutual Candidacy proposed by the comp
Slide 47: Structure of the Chairman and CEO's compensation for 2013
Structure of the Chairman and CEO’s compensation for 2013 Fixed part Long-term 26% Performance shares 46% • Quantitative criteria: maximum weight of 110% of the fixed compensation 28% 73% • EBITDA: 55% • Recurring cash flow: 27.5% • Margin on variable costs of new Variable part developments: 27.5% •
Slide 48: Elements of 2013 compensation submitted to advisory vote
Elements of 2013 compensation submitted to advisory vote (10th resolution) • Fixed part • €750,000 • Unchanged since May 2012 (renewal of term of office as director) • Variable part • €800,250 (23% less than in 2012) • 106.7% of the fixed compensation • Global achievement rate: 71% • 63% in respect
Slide 49: Directors' attendance fees
Directors’ attendance fees Proposition to AGM (9th resolution) Current attendance fees after a benchmark* • Annual amount of the fees that could • Annual amount of the fees that could be allocated: €470,000 be allocated: €550,000 • 9 directors • 10 directors • No attendance fees for the Chairman and
Slide 50: A dynamic employee shareholding policy
A dynamic employee shareholding policy • Purpose of the 19th resolution: continue a dynamic employee shareholding policy • Plans proposed every 2 years • To employees of some 20 countries (95% of Group’s employees) • 4 plans implemented since spin-off in 2006 • 2014 share capital increase • 6,000 su
Slide 51: 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