Arkema Sa · EURONEXT:AKE
Arkema Sa — IPO Roadshow (May 2006)
31 slides from Arkema Sa's IPO roadshow presentation, May 2006
Slide 1: Roadshow Presentation
Roadshow Presentation CONFIDENTIAL
Slide 2: Important Notice
Important Notice Total and Arkema have prepared a prospectus describing in detail the spin-off of the Arkema businesses by Total, which received visa No. 06-106 from the Autorité des marchés financiers (the “AMF”) on 5 April, 2006 (the “Prospectus”). You have been furnished with a copy of the Prospe
Slide 3: Management Team
Management Team Bernard Boyer Thierry Le Hénaff Strategy Chairman and CEO Member of the executive committee Thierry Lemonnier Frédéric Gauvard CFO Investor relations Member of the executive committee Investor relations: Frédéric Gauvard: + (33) 1 49 00 82 53 Sophie Fouillat: + (33) 1 49 00 86 37 CON
Slide 4: Creation of Arkema in October 2004
Creation of Arkema in October 2004 2004 2005 2006 Decision Organization Launch of AMF visa on on spin-off put in place key restructuring and the prospectus Feb 19 development projects Apr 5 Total shareholders’ Presentation approval Finalize of Arkema Creation of to analysts spin-off process and spin
Slide 5: Arkema 2005 overview
Arkema 2005 overview Presence world-wide Sales: €5.7 bn Europe 57% of sales 60 plants 4 R&D centers 76% of the workforce EBITDA*: €355 m North America 25% of sales Asia 20 plants 13% of sales 1 R&D center 10 plants 16% of the Capital employed**: €3.1 bn workforce 1 R&D center 7% of the workforce 200
Slide 6: Integrated and coherent portfolio
Integrated and coherent portfolio Sales by segment Vinyl Products Vinyl Performance Products A well integrated sector from chlorine production Products 24% 34% to PVC converting Mature and cyclical market 3 business units 42% Industrial Chemicals Industrial Chemicals 2005* Intermediates for a large
Slide 7: Wide range of end-markets
Wide range of end-markets Automotive Sport & leisure Packaging Vinyl Compounds, Vinyl compounds, PVC, PMMA, Fluorochemicals, PMMA, Technical Polymers, Technical Polymers, Technical Polymers Additives, Additives, Organic Peroxides Organic Peroxides Chemical industry Hygiene & beauty Chlorochemicals,
Slide 8: Strong improvement of results in 2005
Strong improvement of results in 2005 (€ m) 2003 2004 2005 Sales 5,047 5,318 5,710 Improving market Sales growth +5.4% +7.4% conditions EBITDA (recurring) 249 301 355 Price increases in a Rec. EBITDA margin 4.9% 5.7% 6.2% context of high raw material costs Operating income (recurring) (48) 11 128 Re
Slide 9: Investment Highlights
Investment Highlights CONFIDENTIAL
Slide 10: A strategy to create shareholder value
A strategy to create shareholder value A clear path forward Shape a profitable Clear strategy chemical player Strong emphasis with strong Unique strengths foundations on productivity Focus on profitable Leading global market growth positions Solid asset base and Insufficient Build on technical exper
Slide 11: Leading global market positions
Leading global market positions Position Europe America Asia PVC No3 Europe Vinyl Compounds No1 Europe Acrylics No 5 PMMA No 1 Thiochemicals No 1 Fluorochemicals No 2 Hydrogen Peroxide No 3 Speciality Polyamides No 1 PVDF No 1 Molecular Sieves No 2 Organic Peroxides No 2 PVC Tin Stabilizer No 2 Busi
Slide 12: Solid asset base and technical expertise
Solid asset base and technical expertise Production assets in each region Track record of complex industrial start-ups Proprietary knowledge and know-how 33% of R&D budget for process improvement Loyalty and professionalism of teams Organic Peroxides Thiochemicals Technical Polymers Changshu (China)
Slide 13: Strong balance sheet
Strong balance sheet Balance sheet €678 m write-offs of fixed assets (cumulated 2004-2005) Working Capital Equity Equity after €1,348 m €1,463 m €532 m capital increase Significant level of liabilities Non current Net Debt €567 m retained by Total before spin-off Assets* €1,768 m Provisions €1,086 m
Slide 14: Corporate governance
Corporate governance Board of Directors* Executive committee T. Le Hénaff Thierry Le Hénaff – Chairman CEO François Enaud Bernard Kasriel B. Boyer (Strategy) M. Delaborde (HR & Communication) Laurent Mignon A. Devic (Manufacturing and HSE) Thierry Morin P. Goebel (Performance Products) Jean-Pierre S
Slide 15: A clear strategy
A clear strategy Strong emphasis on productivity Focus on profitable growth Improve profitability Accelerate product innovation Improve free cash generation 10 to 15% recurring EBITDA growth per year* *Calculated as an average annual growth for the next three years compared to 2005 CONFIDENTIAL
Slide 16: Strong emphasis on productivity
Strong emphasis on productivity Optimize manufacturing assets 6 main restructuring plans Shutdown loss-making operations Chlorochemicals [France] 523 p. Transfer production to most Thiochemicals [ France] 74 p. efficient plants Thiochemicals [USA] 60 p. Further cost reduction program PMMA Sheet Euro
Slide 17: Focus on profitable growth
Focus on profitable growth Developments with high return in Extension projects Europe and North America Average unit CAPEX new site = base 100 100 Products with sustained growth Mont (Technical Polymers) Careful consideration of 40-60 Calvert City (Fluorochemicals) supply/demand balance Becancour (H
Slide 18: Accelerate product innovation
Accelerate product innovation Overview (2005) R&DPatents by segment 3.3% of sales Breakthrough 1,400 researchers Approximately Vinyl 130 12% new inventions filed perProducts year 12% Near 100 joint projects with universities 51% Performance Products Significant know-how (non-patented) 6 R&D centers
Slide 19: Improve free cash generation
Improve free cash generation Improve cash generation from CAPEX by segment* operations Average 2003-2005 Medium Term 15% Very low gearing at spin-off in order 35% 21% 35% to cover cash requirements from non- recurring items 44% 50% CAPEX to be kept at €300 m per year Vinyl Products Industrial Chemic
Slide 20: Segment Review
Segment Review CONFIDENTIAL
Slide 21: Vinyl Products: An integrated chain from chlorine to PVC conversion
Vinyl Products : An integrated chain from chlorine to PVC conversion Chlorochemicals & PVC Business Units Vinyl Compounds Pipes & Profiles (Alphacan) Cyclical and commodity Mature Western European market Business drivers Large number of players Cost driven No3 in Europe in PVC Assets Integrated chai
Slide 22: Insufficient profitability prior to restructuring plan
Insufficient profitability prior to restructuring plan (€m) 2003 2004 2005 Sales by business units Sales 1,219 1,367 1,387 In € m , 1500 1,387 Sales growth 12% 1.5% 1,367 1,219 EBITDA (recurring) 1 44 20 1000 , Rec. EBITDA margin - 3.2% 1.4% Operating income (recurring) (59) (16) 8 Other expenses an
Slide 23: Industrial Chemicals: Leadership positions on growing markets
Industrial Chemicals : Leadership positions on growing markets Acrylics PMMA Business Units Thiochemicals Fluorochemicals Hydrogen peroxide Attractive growth potential Business drivers Opportunities in Asia Each business driven by specific cycles Product lines ranking among the world leaders Assets
Slide 24: Solid EBITDA growth
Solid EBITDA growth (€m) 2003 2004 2005 Sales by business units Sales 2,020 2,143 2,406 In € m 2 ,500 2,406 Sales growth 6% 12% 2,143 2,020 EBITDA (recurring) 191 220 316 2,000 Rec. EBITDA margin 9.5% 10.3% 13.1% 1,500 Operating income (recurring) 72 106 204 1,000 Other expenses and income (42) (47)
Slide 25: Performance Products: Application driven, broad spectrum of end markets
Performance Products : Application driven, broad spectrum of end markets Technical Polymers Specialty Chemicals (Ceca) Organic Peroxides Business Units Additives Urea Formaldehyde Resins Agrochemicals (Cerexagri) Broad spectrum of end-markets Business drivers New applications / usages Asian growth S
Slide 26: Starting to restore profitability in 2005
Starting to restore profitability in 2005 (€m) 2003 2004 Sales by business units 2005 Sales 1,802 1,800 1,907 €m 1,907 2, 000 1,802 1,800 Sales growth 0% 6% EBITDA (recurring) 132 99 109 1,500 Rec. EBITDA margin 7.3% 5.5% 5.7% 1,000 Operating income (recurring) 27 (4) 19 Other expenses and income (9
Slide 27: Financial Review
Financial Review CONFIDENTIAL
Slide 28: Summary income statements
Summary income statements Sales bridge (€ m) 2003 2004 2005 In € m 8.9% -1.5% 0.2% - 0.2% 5,710 Sales 5,047 5,318 5,710 5.5% - 2.8% - 1.1% Sales growth % 5.4% 7.4% 3.8% 5,318 Operating expenses (4,419) (4,670) (4,932) 5,047 Research & development expenses (191) (183) (188) Selling and administrative
Slide 29: Summary balance sheet
Summary balance sheet Fixed assets** bridge In € m 633 In € m 2003 2004 2005 2,265 517 15 1,718 Fixed assets 2,265 1,766 1,718 678 Working capital 1,065 1,163 1,348 Capital employed 3,330 2,929 3,068 X 03 05 rs f PE n of e tio 20 20 e- th CA 2/ 2/ ia r it O Provisions and net deferred tax 958 935 1,
Slide 30: Cash flow statement
Cash flow statement Recurring operating cash flow* In € m In € m 2003 2004 2005 339 230 273 164 Operating cash flow 156 109 109 209 53 before WC and cost of debt 156 109 109 Cost of debt (5) (3) (8) Change in working capital (44) (120) (162) 2003 2004 2005 Operating cash flow 107 (14) (61) Recurring
Slide 31: Conclusion
Conclusion CONFIDENTIAL